As more organizations in India strive through the digital transformation to improve delivery capacity and adopt new business models, a slew of trends towards third-party data centers, hybrid cloud, hyper-convergence, data center modernization, and green technologies are compelling them to rethink the core of their IT infrastructure
As per Gartner, the data center infrastructure hardware enterprise spending in India is estimated at $2.7 billion in 2018. While hardware spending is set to grow moderately, enterprise spending on data center infrastructure software has reached $3.6 billion in 2018, a 10 percent year-over-year increase.
According to the current growth rate estimation, India’s share in the global and APAC data center markets could go up to 4.5 percent and 12 percent, respectively. Cross-border investment into the data center market stems from investments from a bouquet of MNCs, including cloud giants like Microsoft, Google, IBM, Amazon, and Alibaba; Japanese firm NTT Communications into Netmagic; and Singaporean investors like Ascendas.
“Data centers are now evolving to take advantage of virtualization, support private cloud, and offer IT-as-a-service to accomplish IT projects faster and more effectively,” shares Rishu Sharma, Cloud and AI Practice Lead, IDC.
Big shift to outsourced data centers
There is a big shift from captive data centers to third-party data centers, primarily driven by the BFSI, media and retail segments. The logistical challenges of 24/7 reliable power, ever increasing real estate costs, and land availability are the key drivers for the growth of 3rd party data centers. “In fact, PSUs which traditionally had access to reliable industrial power and prime industrial land are converting their facilities to offer data center services – such facilities are emerging as the preferred data center choice by PSU units and PSU banks,” shares Rakesh Kumar Singh, Datacenter Tech Lead, Juniper Networks India.
Initially, captive data centers had a dominant share of the market but are gradually ceding ground to third-party service providers. As per market estimates, third-party data centers currently account for roughly 40 percent share, compared to 20 percent five years ago. Third-party data centers are increasingly consolidating their position through steps in technology and value-added services.
Santhosh Rao, Senior Director, Gartner, predicts that on-premise server and storage spending is declining marginally as a result of migration towards third-party data centers and public cloud.
“We are witnessing most of the small and mid-market organizations migrating towards third-party data centers and public cloud,” confirms, AL Srinath, CEO, Shell Networks and Solutions.
He further adds that there is a huge influx of global public cloud service providers in India and all these cloud providers are using the existing 3rd party data centers rather than building on their own.
Hybrid is the way to go
Most organizations today have a cloud-first strategy, and hybrid cloud has emerged as a new standard for data centers in the organizations – small or large. With greater flexibility and better data deployment options, Indian enterprises are increasingly intensifying their reliance on a hybrid cloud setup.
Enterprises have begun to recognize that all data is not going to be stored on-premise, and there is a need for the right data management infrastructure to help customers manage their data and workloads on multiple cloud services or in a hybrid environment. “The future lies in hybrid cloud adoption; enabling organizations to tie together on-premises data center, private and public cloud resources, and workloads,” states Rajeev Mehta, Director, Zest Systems.
“It won’t be surprising if in just one year almost all companies will be embracing hybrid cloud workloads in some form or other. Fundamentally, hybrid cloud defines how people or organizations will deploy the cloud, whether public or private to best cater to their business requirements,” claims Makarand Joshi, Area Vice President & Country Head, India Subcontinent, Citrix.
In addition, the availability of hyperscale data centers such as Amazon Web Services and Microsoft Azure in India, as well as local providers ramping up to provide public cloud services, have become compelling reasons for Indian organizations to move toward infrastructure as a service (IaaS).
Another notable trend is an increase in the number of migrations of on-premise office suites to software-as-a-service-based offerings, such as Google G suite and Microsoft Office 365. Indian businesses are estimated to have spent close to $275 million on cloud office suites in 2018, a 37 percent increase year over year.
Hyper-convergence for better ROI
Inside the data center market, hyper-converged infrastructure systems (HCIS) is witnessing highest rate of adoption due to benefits like software-defined approach and higher scalability. HCIS, therefore, is naturally suited to be the underlying infrastructure for SDDC technologies. Notably, many of the cloud automation and VDI solutions are being implemented on HCIS.
As per Gartner, approximately 30 percent of the global storage array capacity installed in enterprise data centers will be deployed on software-defined storage (SDS) or HCIS architectures based on x86 hardware systems by 2019, up from less than 5 percent in 2016.
Further, 20 percent of mission-critical applications currently deployed on 3-tier IT infrastructure will transition to HCIS by 2020.
“Today’s data centers are not capable to scale as per business demands due to traditional 3-tier architecture which is acting as a barrier. Increased acceptance of software-defined everything is pushing the adoption of HCIS like never before,” asserts Dileep Nadimpalli, Research Manager, IDC India.
Supports, Ramanujam Komanduri, Regional Director, Marketing & Services, NetApp India, “HCI and multi-cloud solutions enable IT department to freely move workloads between multiple cloud environments, while still providing end-to-end policy and control that allows them to operate these environments as a single cloud. Looking at the success of HCI adoption, we see a large number of enterprises will prefer this fully pre-integrated HCI stack over the traditional discrete network, compute and store environments.”
In fact, HCIS brings the same design constructs used by the large cloud providers and fundamentally transforms how IT and services are deployed. Silos within the data centers can be eliminated and specialized skills are not required to deploy and manage different aspects of the data center.
“We have seen all kinds of workloads moving to HCIS – from mission-critical applications, big data applications, messaging to collaboration. In fact, over 50 percent of workloads which are getting deployed on Nutanix HCIS fall under the business-critical category,” affirms Prabu Rambadran, Director, Engineering, Nutanix.
Data center modernization
Experts are pointing towards huge opportunity around data center refresh as the data centers established 3-5 years ago or those which were holding back their investments, are now opening up for a tech refresh. Trends around cloud, analytics as well as the need for high availability of applications, are necessitating the tech refresh.
Gartner predicts that by 2020, more than 30 percent of data centers that fail to implement AI and machine learning will cease to be operationally and economically viable. This implicates that AI would emerge as an intrinsic component of a company’s modern data center.
“In fact, high-density applications like SAP HANA, deep learning, and AI are necessitating data center refresh. In addition, e-governance and smart city applications will compel state and central governments to expand their data center capacities as the current capacity is not going to last beyond 2019,” shares Srinath of Shell.
In terms of data center infrastructure hardware spending, end-user spending on networking equipment has grown in 2018 as organizations modernize their local area network (LAN) and wide area network (WAN) infrastructure to support digital business needs, as per Gartner.
Most vendors admit that the transition in data center networking towards 40G/100G is happening on a fast pace. “With multiple VMs being hosted on a single server, server-to-server data interchange is much higher. This has prompted server vendors to start shipping 10G NICs inside servers, while the backplane is moving to 10G and 40G,” explains Rajiv Kumar, Managing Director, Proactive Data Systems.
He adds that customers who were holding back investments in early 2018 are now spending on upgrading their data center networking.
Moreover, traction is data center storage is driven by technologies like flash and software-defined storage. “In fact, all-flash arrays have become a big trend with technologies like dynamic auto-tiering and data de-duplication. Customers are recognizing that flash offers 10 times the performance of HDD and saves up to 90 percent on power and cooling,” says Gurpreet Singh, Director, Arrow PC Network.
All flash array deployments are driven by performance needs and are typically deployed for demanding workloads in data centers like database and OLTP. The all-flash array adoption will continue to grow replacing traditional SCSI based storage and we see all-flash array growth of over 50 percent for CY2018, informs Ranganath Sadasiva, Director, Enterprise, IDC.
Flash not only makes a data center faster or cost-efficient but also reduces its density by decreasing the storage footprint. It also leads to a significant drop in power usage and subsequent cooling, adds Komanduri of NetApp.
Further, almost 40 percent of the storage projects now involve software-defined storage solutions as customers want rapid provisioning and easy manageability, states Prarthana Gupta, CEO, Cache Technologies.
In addition, the data center compute refresh is led by the transition towards HCIS.
Data center localization: a real game-changer
Although the wave in digitization has seen new heights in IT, it also brings with it rampant cyber security issues which is one of the main considerations for CIOs. The government’s draft National Digital Communications Policy in 2018 said that data sovereignty is a top mission for the country. The report called for the government by 2022 to establish a comprehensive data protection regime for digital communications that safeguard the privacy, autonomy, and choice of individuals and facilitates India’s effective participation in the global digital economy.
If the draft report and its various recommendations become law in India, it would have significant effects on public cloud providers like Microsoft, Google, Amazon, and Alibaba, all of whom have cloud operations in the country. In order to comply with the regulations, they would almost certainly have to expend significant resources to build additional data centers locally, and also enforce data governance mechanisms to ensure that data doesn’t flow from a domestic to a foreign data center accidentally or programmatically.
In fact, most organizations will need to set up their data centers in India to cut latency and take care of the regulatory requirements. This trend is already being seen with organizations such as IBM, AWS, and Netmagic which have established local data centers in India.
Further, availability of needed real estate and competitive governmental policies are helping global players like Alibaba, Microsoft, Google, and Amazon open data centers on the Indian grounds. The local players, having an advantage over global players in terms of knowing the market conditions well, are also leaving no stones unturned with innovative offerings and solutions on advanced technologies. For instance, CtrlS is offering services on Asia’s largest tier-4 data center, NxtGen is aiming for transformational services with DevCloud, machine learning (ML) and artificial intelligence (AI), and ESDS providing smart city solutions and AI services and a lot more.
For partners, the data center localization is emerging as a huge opportunity. “The opportunity is huge as many of our MNC customers with data centers located outside of the country are now seriously contemplating setting up the data center locally. For us, it’s an opportunity worth over $3 million,” discloses Singh of Arrow.
Green to stay ahead of the curve
In the past decade, customer focus on energy efficiency has made the data center industry a real frontrunner in adopting energy efficient measures. It is widely agreed that data centers consume a huge amount of energy, hence necessitating adoption of renewable energy sources.
Prominent global firms like Apple have met their goal of 100 percent green energy use in data centers five years ago. While this concept has already established a solid ground in other countries, it is slowly gaining popularity in India as well. In India, energy storage solutions are being fine-tuned with the government’s push towards more renewable and green energy concepts such as free cooling and waste recycling.
Data centers are now working towards lesser energy consumption and reducing their energy footprint. Subsequently, data centers are now working towards achieving better efficiency, newer cooling techniques and improved power usage effectiveness (PUE).
“The new data centers are very focused on energy efficiency. They are trying to build the data centers which are based on the lowest possible PuE (Power Utilisation Efficiency). PuE was a word which was very foreign few years back for the Indian industry, however now PuE has become not only a buzzword but a key parameter for building data centers,” informs Srinath of Shell.