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The engine room of digitalization

April 26 2019 Marten Bütow

We’ve become used to digitalization. We chat, play games, search for restaurants in unfamiliar cities, book travel, buy necessary and unnecessary things, and work on the move. Any number of things could be added to the list. And of course, we assume that our PC or smartphone is the center of the universe. That’s probably another interpretation of customer centricity.

The cloud as the backbone of digitalization

What we are missing here is that in a world where we’re accessing more and more services on the move and on demand, these services are increasingly coming from the cloud. And “the cloud” is ultimately just a network of data centers where value is created for our digital world. Cisco has calculated that workloads in the data centers are actually increasing continuously all over the world. Between 2016 and 2021 alone they are set to grow 2.3 times. And since the cloud doesn’t work without the internet, network traffic in the data centers will also grow. Three times as much (up to 20.6 zettabytes* per year). Data volumes stored in the data centers also show a parallel increase – by 4.6 times (1.3 ZB per year).

No cloud without data centers

Welcome to the engine room of digitalization. It’s obvious that these volumes cannot be covered with the existing capacities. There is therefore a great appetite for more data center space. Even in Europe, data centers are considered good investments – compared with Old Masters. Why? Real estate analysts expect that the demand for data center space will increase by 18 percent between 2018 and 2020 alone. The reason is that more and more service providers want to offer their services in the cloud. And this requires data center capacity – either indirectly via the cloud infrastructure operators or on the part of providers who prefer to offer their service on their in-house servers.

The cloud service providers’ dilemma

If as a service provider I use a hyperscaler or a smaller (regional) infrastructure operator, I save myself the trouble of setting up my own data center and get the infrastructure operation as a complete service. This variant is attractive to many service providers. They avoid all the tedious tasks up to the operating system level. Everything above that level is up to them. But they don’t have much influence on what happens “down below.” They cannot take part in decisions, for example on the development of APIs or the termination of services. They must ensure that they develop their service as independently as possible from special infrastructure or platform services (because otherwise they will rapidly fall into the famous “vendor lock-in” trap).

An in-house data center promises complete independence and the ability to design whatever is possible in terms of hardware and space. But on the other hand, it also means that I have to provide resources for the permanent management of the infrastructure. Quite apart from the fact that an in-house data center also requires a certain amount of investment. One thing is certain – the digitalization engine room must still be situated somewhere – and my service has to run on one server or other. Otherwise I just can’t be found on the web. And I won’t be part of digitalization.

Colocation – the alternative?

Colocation is the compromise between the two. Almost complete design flexibility on the one hand and freedom from investment and infrastructure services on the other. And above all: available quickly. To complete the picture: the real estate analysts mentioned above see a particularly high demand for colocation data centers especially in Germany. At the moment they make up around a third of the data center space in Germany. By 2020, this figure is expected to be 40 percent.

The situation in Germany

Even though the data centers in Germany are on average very modern, there are only a few mega data centers: 48,000 of them are smaller than 100 m². Roughly as big as our apartment. But the pulse of digitization is also beating in these data centers. However, synergies are easier to achieve in large data centers. That’s why I advise in favor of a large data center if you want to take advantage of colocation. There you’ll get better service levels, for example, round-the-clock monitoring and service, even at weekends and on public holidays, certified processes, an experienced operating team, and an excellent level of security. All included in the charge. And you can give your colleagues free weekends without them having to be on stand-by. That should have a positive effect on the working environment. Then they’ll be able to explore digitalization from the other side instead. As users.

About the author

Marten Bütow

Solution Sales Manager, T-Systems International

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