FOCUS RESEARCH
Issue 8, Feb/Mar 10
Containing operating costs: the art of the possible? Fig.1 Is the trend towards cost containment gathering momentum?
One of the datacenter mantra of 2009 has been ‘doing more with less’, a refl ection not only of broader economic slowdown but of the considerable growth that has continued to underpin the sector.
Investment cycles over the past 24 months show very clearly a spiralling pattern of catering for IT growth followed by a period of re-prioritising towards effi ciency and cost reduction.
These recurring cycles play out in different ways across different markets and are now in fact occurring across shorter time periods. So in a forward scenario made up of a series of competitive forces what is the outlook for the costs associated with operations, fi nancing, resourcing and administration in the year just started?
Through 2009, cost estimates were obtained from almost 1000 owners and operators across 18 markets. Projections vary between 30% increase in operational costs into 2010 (Mexico) to projected declines in costs in both Toronto and Frankfurt. There are trends across markets but these are indistinct. The markets are arranged on fi g. 1 in the chronological order in which research was conducted through the year and, with one exception, double digit projections occur in September or before. The largest datacenter markets – New York, Paris, London, Frankfurt – all sit at the lower end of the projection spectrum although San Francisco breaks this pattern. Therefore there may be some trend towards containment over the course of the year and there is also a sketchy relationship between market size
and forward projections although in larger markets larger facility samples will more effectively conceal any outlying examples of unusually high increase or reduction.
On an organisation-by- organisation basis, around 45% see their operational costs as rising; a similar proportion anticipate their costs will remain about the same and 11% believe they will see a reduction in operating costs. (see fi g 2)
These cost expectations cut across markets. The lead in reducing operational costs appears to be taken by those organisations with most at stake – operating larger portfolios in terms of both space and racks and running to higher maximum kW/rack. There are a wider range of factors that appear to impact upon the direction of operating costs in the future. Firstly there are the plans that the organisation has for its own facilities development and the nature of the expansion that will contribute to cost growth.
The second most important factor is power vulnerability which in the context of the markets provides an indication of the extent to which costs will be subject to external drivers. There is also strong correlation with concern about labour availability and with the adoption of monitoring and management technologies.
Thus the drive towards cost containment appears currently fragmented. Those markets which have the lower forward projections appear to have seen effi ciency gains contribute to the bottom line.
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Fig.2 Almost half of owners and operators expect to see increasing operational costs
Operational costs will fall Operational costs will rise Operational costs will stay the same
"The second most important factor is power vulnerability which in the context of the markets provides an indication of the extent to which costs may be subject to external drivers"
Bespoke research & analysis solutions: David Carter
david.carter@
datacenterdynamics.com: +34 608 661 159
Publications: Chris Lambert
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datacenterdynamics.com: +44 (0) 207 426 7834
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