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 2013 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...
The true cost of lubrication: Three keys to consider when evaluating oils; Plant Engineering Lubrication Guide; 11 ways to protect bearing assets; Is lubrication part of your KPIs?
Contract maintenance: 5 ways to keep things humming while keeping an eye on costs; Pneumatic systems; Energy monitoring; The sixth 'S' is safety
Transport your data: Supply chain information critical to operational excellence; High-voltage faults; Portable cooling; Safety automation isn't automatic
Case Study Database

Case Study Database

Get more exposure for your case study by uploading it to the Plant Engineering case study database, where end-users can identify relevant solutions and explore what the experts are doing to effectively implement a variety of technology and productivity related projects.

These case studies provide examples of how knowledgeable solution providers have used technology, processes and people to create effective and successful implementations in real-world situations. Case studies can be completed by filling out a simple online form where you can outline the project title, abstract, and full story in 1500 words or less; upload photos, videos and a logo.

Click here to visit the Case Study Database and upload your case study.

Maintaining low data center PUE; Using eco mode in UPS systems; Commissioning electrical and power systems; Exploring dc power distribution alternatives
Synchronizing industrial Ethernet networks; Selecting protocol conversion gateways; Integrating HMIs with PLCs and PACs
Why manufacturers need to see energy in a different light: Current approaches to energy management yield quick savings, but leave plant managers searching for ways of improving on those early gains.

Annual Salary Survey

Participate in the 2013 Salary Survey

In a year when manufacturing continued to lead the economic rebound, it makes sense that plant manager bonuses rebounded. Plant Engineering’s annual Salary Survey shows both wages and bonuses rose in 2012 after a retreat the year before.

Average salary across all job titles for plant floor management rose 3.5% to $95,446, and bonus compensation jumped to $15,162, a 4.2% increase from the 2010 level and double the 2011 total, which showed a sharp drop in bonus.

2012 Salary Survey Analysis

2012 Salary Survey Results

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.