North America outsources 16% of data center load; Europe lags

The portion of the information technology (IT) load outsourced to wholesale and retail data centers in North America stood at 16.3% at the end of 2012.

09/10/2013


IHS Inc.The portion of the information technology (IT) load outsourced to wholesale and retail data centers in North America stood at 16.3% at the end of 2012 according to a recently released report by IMS Research, now part of IHS Inc.

The new IHS report, which covers the wholesale and retail data center—or colocation—industries, found that outsourcing was more than twice as prevalent in North America compared to Europe. It also projects that the share of outsourced data centers will continue to grow during the next five years.

“IT outsourcing is growing for several reasons,” according Jason dePreaux, an associate director for data center and critical infrastructure at IHS. “First, data centers are increasingly expensive to build and maintain. For many organizations, outsourcing allows companies to shift from having capital-intensive data-center builds to more predicable operating expenses. Second, wholesale and retail data centers are often built with energy-efficient designs and equipment that might not be feasible in smaller in-house facilities. Finally, projecting future capacity is difficult as IT technology evolves and requirements change. Outsourcing provides added flexibility to evolving demand.”

While the fundamental drivers for outsourcing are strong, dePreaux cautions that risks still abound.

“Overcapacity is a major worry for colocation vendors,” he noted. “Excess stock can drive prices down. We are seeing build-outs being done in smaller chunks to more closely match supply with demand.”

Other risks include commoditization as more vendors enter the industry and the ever-present threat of outages, which can seriously damage momentum toward outsourcing.

One reason North America leads in data-center outsourcing over Europe is because of the preponderance of vendors with both wholesale and colocation offers located in North America. The tax-advantaged status of being a real estate investment trust (REIT) in the United States means data center REITs can avoid paying corporate taxes by distributing profits to investors.

IHS forecasts that more than 1.3 GW of leased IT capacity will be added during the next five years between North America and Europe.

“While the wholesale and retail data center industry continues to mature, it has just scratched the surface of the available market,” dePreaux commented.



No comments
The Top Plant program honors outstanding manufacturing facilities in North America. View the 2015 Top Plant.
The Product of the Year program recognizes products newly released in the manufacturing industries.
The Engineering Leaders Under 40 program identifies and gives recognition to young engineers who...
Strategic outsourcing delivers efficiency; Sleeve bearing clearance; Causes of water hammer; Improve air quality; Maintenance safety; GAMS preview
World-class maintenance: The three keys to success - Deploy people, process and technology; 2016 Lubrication Guide; Why hydraulic systems get hot
Your leaks start here: Take a disciplined approach with your hydraulic system; U.S. presence at Hannover Messe a rousing success
Flexible offshore fire protection; Big Data's impact on operations; Bridging the skills gap; Identifying security risks
The digital oilfield: Utilizing Big Data can yield big savings; Virtualization a real solution; Tracking SIS performance
Getting to the bottom of subsea repairs: Older pipelines need more attention, and operators need a repair strategy; OTC preview; Offshore production difficult - and crucial
Applying network redundancy; Overcoming loop tuning challenges; PID control and networks
Putting COPS into context; Designing medium-voltage electrical systems; Planning and designing resilient, efficient data centers; The nine steps of designing generator fuel systems
Package boilers; Natural gas infrared heating; Thermal treasure; Standby generation; Natural gas supports green efforts

Annual Salary Survey

Before the calendar turned, 2016 already had the makings of a pivotal year for manufacturing, and for the world.

There were the big events for the year, including the United States as Partner Country at Hannover Messe in April and the 2016 International Manufacturing Technology Show in Chicago in September. There's also the matter of the U.S. presidential elections in November, which promise to shape policy in manufacturing for years to come.

But the year started with global economic turmoil, as a slowdown in Chinese manufacturing triggered a worldwide stock hiccup that sent values plummeting. The continued plunge in world oil prices has resulted in a slowdown in exploration and, by extension, the manufacture of exploration equipment.

Read more: 2015 Salary Survey

Maintenance and reliability tips and best practices from the maintenance and reliability coaches at Allied Reliability Group.
The One Voice for Manufacturing blog reports on federal public policy issues impacting the manufacturing sector. One Voice is a joint effort by the National Tooling and Machining...
The Society for Maintenance and Reliability Professionals an organization devoted...
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.
Maintenance is not optional in manufacturing. It’s a profit center, driving productivity and uptime while reducing overall repair costs.
The Lachance on CMMS blog is about current maintenance topics. Blogger Paul Lachance is president and chief technology officer for Smartware Group.
This article collection contains several articles on the vital role that compressed air plays in manufacturing plants.
This article collection contains several articles on the Industrial Internet of Things (IIoT) and how it is transforming manufacturing.
This article collection contains several articles on strategic maintenance and understanding all the parts of your plant.
click me