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You are here: Home / Voices of the Industry / Digitization Driving Increasing Requirements for Enterprise IT

Digitization Driving Increasing Requirements for Enterprise IT

By Voices of the Industry - March 5, 2021

Digitization Driving Increasing Requirements for Enterprise IT

The acceleration of digital transformation is changing demands on data center service providers (Image courtesy of QTS)

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Sean Baillie, Executive Vice President, Connectivity at QTS Data Centers explains how digital transformation is putting more pressure on data center providers to provide a flawless experience for a variety of end users in a constantly scaling environment.

Sean Baillie EVP, Connectivity at QTS Data Centers

While the world continues to focus on containing the pandemic, a massive yet silent change is transforming the IT landscape. The process of data digitization, often referred to as digital transformation, is now central to the strategy and mission of businesses, regardless of the markets they serve.

Since 2016, the digital transformation phenomena has generated 90% of the world’s data and this astonishing growth shows no sign of slowing. According to IDC, more than 59 zettabytes (ZB) of data were created and consumed globally in 2020 and this is forecast to grow to 175 ZB by 2025. How much is 1 ZB?  It is equivalent to 100 million HD movies worth of data.

Digitized data, and the application of Artificial Intelligence and Machine Learning to it, is enabling new applications and services once thought to be beyond the reach of computing technology. As is often discussed, mega-scale Internet businesses such as Amazon, Twitter, Uber, Netflix, Youtube and Xbox are now an integral part of our lives and exemplify a new global digital economy. Less understood is how the Enterprise is starting to take steps to join the ranks of these large and growing Internet businesses.

Growing Demand for Space, Power & Connectivity

The flood of digitized data is also increasing requirements for even larger technology stacks to store, compute, analyze and move the data. Enterprises IT deployments are expanding and starting to take on hyperscale-like requirements for data center space, power and connectivity ecosystems.

As a result, Enterprises continue their migration out of their in-house data centers choosing to outsource to third party, multi-tenant colocation data center operators that provide better performance and economies of scale that can not be achieved by internal means.

According to IDC, 72 percent of CIOs responding to a survey plan to increase their use of data center colocation over the next 12 months to accommodate a “new normal” for Enterprise IT taking shape. Growth forecasts are staggering with Gartner forecasting that end-user spending on global data center infrastructure in the US alone is projected to climb to $200 billion in 2021, up 6 percent from 2020.

Increasing Enterprise demand for power is commensurate with increases in space required to accommodate expanding compute and storage deployments in colocation data centers. Over the last six months, QTS has seen a significant increase in requests for proposals (RFP)s from enterprises across verticals with rapidly escalating requirements. What used to be normal requests for 250-500 KW environments are now becoming requests for multi-megawatt, multi-site environments.

Along with the space and power demand growth, sophisticated demand for bandwidth of all types is an associated requirement.  This is highlighted by internet and cloud access but also includes traditional transport services as well as access to sub-sea capacity.

While the world’s largest hyperscale companies continue to purchase space, power and connectivity at enormous scale, enterprise organizations are asking themselves “How do I balance the ever-increasing complexity of compute, storage, connectivity with service delivery to end users both now and for the long-term? How do I meet the demands and expectations of our customers across multiple platforms and geographies in a way that is scalable and does not introduce undo technical risk or avoidable cost?”

Enterprises continue their migration out of their in-house data centers choosing to outsource to third party, multi-tenant colocation data center operators that provide better performance and economies of scale that can not be achieved by internal means.

QTS’ discussions with large enterprise prospects (banks, social media platforms, mega-scale retail) are increasingly beginning with discussions about overall network strategy. While these organizations understand deploying servers and developing applications, they are looking for guidance on how to best account for bandwidth scale, low latency options and avoiding the risk and expense of unnecessary network routes and elements.

As connectivity continues to increase in complexity, Enterprises are recognizing that to reach their end users in this new environment they need to better understand cloud access, internet routing, internet exchanges and the asynchronous systems (ASNs) that participate in them. They are asking about access to content delivery networks (CDNs) as another solution to push content to closer to users. And the global economy has them increasingly interested in international connectivity available from a growing number of high-capacity low latency transatlantic and transpacific subsea cables.

The Looming Paradox

These Enterprise network specialists also realize that the current status quo for connectivity design based on an aging system of exchanging Internet traffic through in a limited number of Internet exchange sites where networks are concentrated is no longer scalable. In the US there are about 10 buildings often referred to as “carrier hotels” and a similar dynamic exists globally.

Carrier hotels provide a service that comes with a cost, geographic limitations and business risk at a time when businesses are trying to get their content to more customers on a national and global scale. As digitization continues to drive space, power and connectivity needs, carrier hotels are increasingly unable to meet those requirements and are, in fact, introducing cost and risk to the equation.

The networks nested in the carrier hotels are a business requirement for the digitized Enterprise but the lack of scalable space and power available in these buildings introduces the paradox – do you go to the network or does it come to you?

Seeking a Risk-Adjusted Connectivity Ecosystem

QTS has been successfully developing a second option that has the industry taking notice. Since we can serve space and power requirements of any size we are in an ideal position to work with the networks to deploy in our facilities and meet the data where it resides, thus reducing the cost and risk of gaining access to required networks that Enterprises need to serve customers.

As requirements and costs escalate, Enterprises are recognizing the need to diversify and de-risk their connectivity solution/ecosystem. This is echoed by the hyperscalers who are investing billions each quarter on constructing data centers that house tens of thousands of servers and hardware alongside millions of virtual machines all relying on 100% Internet uptime. They are acutely aware of the limitations and dependency on Internet exchange points that are vital to their success.

Enterprises are looking for data center partners with a similar long view of scalable space, power, and sophisticated connectivity ecosystems all available in the same building that is becoming increasingly similar to today’s hyperscale strategy and purchasing model.

And as data center investments increase, they become more visible to stakeholders and the selection of a data center provider becomes a much more scrutinized process. Today, a data center needs to demonstrate it can enable a pristine experience from content to end user in a constantly scaling environment.

This article was submitted by Sean Baillie, Executive Vice President, Connectivity at QTS Data Centers. QTS Realty Trust, Inc. (NYSE: QTS) is a leading provider of data center solutions across a diverse footprint spanning more than 6 million square feet of owned mega scale data center space within North America and Europe. Through its software-defined technology platform, QTS is able to deliver secure, compliant infrastructure solutions, robust connectivity and premium customer service to leading hyperscale technology companies, enterprises, and government entities.

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Tagged With: Colocation, digital transformation, QTS

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