Vertical requirements for the Data Centre Market 17052012


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Vertical requirements for the Data Centre Market 17052012

  1. 1. South Africa Companies Requirements within the Data Centre Environment One Size Does Not Fit All Date: 17th May 2012 1
  2. 2. Agenda • Overview of the South African Data Centre Market • Key product offerings • Virtualisation • End user requirements • Last word 2
  3. 3. Overview of South African Market •Industry Best Practices 3
  4. 4. DC revenues are expected to grow at a CAGR of 9.6% toreach R4.0 billion by 2016, from R2.3 billion in 2010 South African data centre market revenue forecast 4500A number of trends contribute 2016 Revenues: 4000 R4.0 billionto growth: 1) Outsourcing of data centre 3500 2010 Revenues: R2.3 billion requirements 3000 Revenues (R Million) 2) The SME sector which will 2500 increasingly adopt a variety of data centre services 2000 3) Aging equipment that can no 1500 longer keep up with 1000 performance requirements 4) Insufficient power availability 500 for new high-density servers 0 2010 2011 2012 2013 2014 2015 2016 Source: Frost & Sullivan, data centre operators interviews 4
  5. 5. Companies are increasingly considering centralisingtheir data centre architecture South Africa Data Centre Market: Key Trends, 2011 Consolidation of data centres Consolidation of data centres Growing dependence on third-party Bigger and bigger is better Virtualisation Market Market services Growing dependence Trends Trends on third-party services Going Green Going Green Source: Frost & Sullivan 5
  6. 6. Companies are outsourcing non-business-criticalfunctions to third-party companies South Africa Data Centre Market: Key Trends, 2011 Consolidation of data centres Consolidation of data centres Growing dependence on third-party Bigger and bigger is better Virtualisation Market Market services Growing dependence Trends Trends on third-party services Going Green Going Green Source: Frost & Sullivan 6
  7. 7. Corporate responsibility and a need to lower powercosts are influencing environmentally friendly DCs South Africa Data Centre Market: Key Trends, 2011 Consolidation of data centres Consolidation of data centres Growing dependence on third-party Bigger and bigger is better Virtualisation Market Market services Growing dependence Trends Trends on third-party services Going Green Going Green Source: Frost & Sullivan 7
  8. 8. Escalating costs of power, which contributes 50% ofOPEX spend, is driving uptake in virtualised technology South Africa Data Centre Market: Key Trends, 2011 Consolidation of data centres Consolidation of data centres Growing dependence on third-party Bigger and bigger is better services Virtualisation Market Market Growing dependence Trends Trends on third-party services Going Green Going Green Source: Frost & Sullivan 8
  9. 9. DC market of R2.3bn is dominated by system integrators who contribute over 70% of the total market share Data Centre Market Shares by Revenues, 2010 Competitive Environment Gijima Competitors 17+ 2% Fujitsu Continuity 1% Systems integrators Teraco 1% Market leaders, first to establish data Other Tier I centres 3% 5% e.g. Business Connexion, IBM , T- Neotel 4% BCX Systems 26% Telecoms operatorsVodacom Business Tier II Entered the market over the last 5 years 5% e.g. MTN Business, Vodacom, Telkom MTN Business Internet Service Providers 5% Tier III e.g. Hetzner, MWEB Degree of Rivalry High HP 7% Barrier to Entry High IBM 15% The extent of leased vs. owned data T-Systems Threat of 9% centres threatening and impacting the Substitutes market DiData 14% Location Telkom Competitive SLAs 3% Differentiators Value Added Services Regulatory Compliance Source: Frost & Sullivan, competitor interviews The entry of telecom operators has intensified levels of competition which are expected to be maintained going forward as data centres keep up with trends towards greater virtualisation 9
  10. 10. The sizeable DC operations will meet customer demandfor easily scalable storage and computing resources Providers Data Data Centre Floor Footprint Product Specialisation Strength of Centres Certification Space (m2) Range cloud offering Cloud andBCX 3 III, IV 8,300 National virtualisationNeotel 3 III 3,000 International Backup and WANMTN 4 III 3,300 International Backup and WAN Cloud andIBM 2 III 2,900 International virtualisationDiData/ LAN, Virtualisation, 6 III N/A InternationalIS cloud 2 III 2,100 International Cloud and WANGijima 1 III 800 National Managed servicesVodacom 6 III 4,500 National Collocation, BackupTelkom 6 III 9,700 National Collocation Strong Weak 10
  11. 11. Product offerings•Industry Best Practices 11
  12. 12. As traditional products mature, newer products are beingintroduced Data Centre Adoption Trends Introduction Growth Maturity Decline High WAN Web Hosting Managed DR servers LAN Hosted Enterprise Basic Adoption Rate Security Hosting Remote Hosted Backup Managed Backup Cloud storage, virtual server and desktop, remote backup and hosted exchange are promising Virtual Server service segments as traditional product lines are maturing SaaS Cloud Virtual Low storage Desktop Source: Frost & Sullivan Bubble size represents revenue/subscriber size of service area 12
  13. 13. Virtualisation solutions and cloud-based services willdrive data centre revenues in future Growth forecasts per product sector, 2010 – 2016 CAGR Virtualisation solutions Web-Hosting 8% are a key technology Virtual server 13% trend as they offer SaaS uptake will be significant efficiencies Virtual desktop driven by hosted 30% exchange, CRM and UC and cost savings to SaaS 23% companies of all sizes Remote Backup 10% As a result SaaS, virtual desktop and virtual server Managed Servers 8% are expected to have the LAN 2% highest growth rates toHosted Managed Back up 8% 2016 The importance of coreHosted Enterprise Security Cloud storage is a 10% small sub-product services to overall data of cloud-based Disaster Recovery services 5% centre revenues will Cloud Storage 12% decline by 2016, as these services also become Basic Hosting 5% 2010 more commoditised 2016 0 200 400 600 800 1000 Source: Frost & Sullivan analysis 13
  14. 14. Virtualisation at the heart of the cloud business model Ease of Cost avoidance Application Mobility Implementation Expand capacity at High VM can be built in a minimal cost, by availability, "always matter of hours or maximising the use on" applications even less of existing resources Saves energy costs; Frost & Sullivan and, by decreasing Easy to implement expects virtualised the overall business continuity offerings to overtake footprint, avoids or plans the uptake of defers build out of managed services the data centre Source: Frost & Sullivan analysis 14
  15. 15. Market leading companies are well represented in the top5 providers per product segment Basic Hosting LAN Managed Web Hosting SaaS Hosted Hosted Networking Server Exchange * Exchange forms part of1 Global Micro the SaaS total market2 numbers345 Virtual Virtual Cloud Storage Hosted Remote Disaster Hosted Machines Desktop Managed Backup Recovery Enterprise Backup Security12 No other companies offer stand-3 Global Micro alone cloud storage45 15
  16. 16. End User Requirements •Industry Best Practices 16
  17. 17. Financial sector, government and ICT contribute twothirds of data centre revenuesThe financial services sector is dealingwith an explosion in IT needs, both for Proportion of vertical sector spend for datadata and infrastructure centre services (2010) o Large banks and financial institutions are turning to cloud and virtualisation solutions to Healthcare Retail address these challenges 4% Mining 10% 8%The government sector is likely to Manufacturecontinue outsourcing its DC services to 7% Oil&Gasvendors to comply with good 1% Financial 22%environmental stewardship and carbon Transport 4%emission reduction goals Media 3%Retail relies heavily on serviceproviders to provide fast ICT Government 20%service, adequate support and effective 21%solutions o Price is a key criteria in the decision-making Source: Frost & Sullivan 2009, 2010 process 17
  18. 18. Expenditure on data centres can comprise as much as 85% of total ICT spend as for banks Total spend per sector in the sample Average PC Number of potential PC’s Access for desktop management 22% 78% 34% 66% Retail and mining represent 40% opportunities for 60% virtualised desktops 45% 55% 45% Financial services spend 55% on data centres is high, but a large 44% proportion is in-house 56% 18% Data Centre Spend ICT Spend Proportion of staffNote: Data is presented 82% With access to a PCfor the sample of 50 1 10 100 1000 Without accesscompanies selected inconjunction with Telkom Log of Sum of Expenditure (ZAR Million)) = 4000 PC’s 18
  19. 19. Security will always be a concern but the financial sectorconsistently are looking for ways to cut costs Key solutions for the financial sector The safety of data is critical in the financial sector. RegulationManaged Servers is a barrier to moving data off site, however. The management of servers on site can be outsourced Software as a Service (SaaS) allows the user to effectively rentSaaS the use of select software which saves on licensing fees Virtualisation has been used as a means to reduce hardwareVirtualisa-tion requirements within the financial sector. However, most virtualisation has been restricted in house Low Medium High Barrier Barrier Barrier 19
  20. 20. Most retailers continue to keep data centres in-house, but larger retailers are considering virtualisation Key solutions for retail sector Connectivity is important in the retail sector as informationWAN must be shared and consolidated from different branches Many retailers choose to outsource data centreManaged Servers management services and these are often lucrative contracts This includes virtual desktop, virtual server and cloudVirtualisation storage, and addresses cost sensitivities in the sector Low Medium High Barrier Barrier Barrier 20
  21. 21. Due to the nature of the manufacturing sector, it is notalways conducive to build sophisticated data centres Key solutions for the manufacturing sector Manufacturing companies process large amounts of data Basic Hosting and often have sites all across the country, the servers need to be hosted in a satisfactory manner Virtualisation is a popular adoption trend within the Virtualisa-tion manufacturing sector. Companies see the value in it and are taking steps to prepare for it Connectivity is essential for the manufacturing sector as WAN various branches are scattered around the country Low Medium High Barrier Barrier Barrier 21
  22. 22. Control is rated as one of the most important factorsinfluencing companies to keep DC management in-houseFactors influencing companies to keep data centres in-house (South Africa), 2009 • Control relates to the level of trust companies has in service providers when deciding on retaining a data centre inhouse or outsourcing to a Control third party • Corporations require guaranteed security of data • Organisations require uninterrupted connectivity of its mission criticalReliability processesConcerns • A number of companies are reluctant to outsource relate to the limited reliability of IT networks • Companies have a direct responsibility towards their customers to ensure data securitySecurity • Furthermore, in certain sectors, regulatory compliance also influences a company’s decision to keep data centres inhouse 22
  23. 23. According to most companies, cost savings would be a major driver for outsourcing in the future Factors influencing companies to outsource data centres (South Africa), 2009 • When considering to outsource, many companies weigh up the cost Cost associated with outsourcing vs. investing in their own data centre savings infrastructure and expertise • Cost savings are complemented with a customised offering and efficient service • A lack of facilities is rated as an important driving factor for outsourcing data centre infrastructure and management services Lack of facilities • Many companies find that as the business’ data requirements grow, their current facilities are no longer sufficient and they need to turn either to upgrades or outsourcing • Companies are looking to streamline their business in order to createStreamlining efficiencies amongst the core business processes business • Integration and synchronisation is key to companies and are looking for operations vendors to assist them when outsourcing the data centres 23
  24. 24. Last word•Industry Best Practices 24
  25. 25. Companies needs to make a decision to "make“ or"buy“ data centre solution Application Outsourcing v. In- Outsourcing v. In-house Colocation v. In-house house• Address the challenges of • Application outsourcing will • Colocation will address the business address the challenges of challenges of business continuity, scalability, financials business continuity, scalability continuity, financials, energy and security and financials efficiency and probably also• Difficult for an organisation to • However, the company will not security raise its public green profile meet the wider data centre • Not all colocation centres are• Two major drawbacks, are challenges equipped to offer high power control and labour relations • Application outsourcing should densities therefore be regarded as a quick • Colocation centres offer fix or stop-gap solution scalability, but only to the extent • Energy efficiency and security that the centre itself does not run are two challenges that will likely out of space not be addressed 25