Technologies are evolving rapidly to efficiently manage larger band-width hungry applications. These include multi-core servers, server consolidation, high-density computing etc.

According to Gartner forecasts the total data center capacity in India will be almost 5.1 square million feet by 2012 growing at a CAGR of 31 percent. It is projected to be worth USD 5 billion (Rs. 25,000 crore) by 2010. Captive data centers will grow at a CAGR of 29 percent and hosted data centers will grow at 33 percent to reach 2.571 and 2.573 million square feet respectively. Data center penetration in medium enterprises has been around 33 percent as compared to 67 percent in large enterprises.

Market and Technology Trends

The market is seeing a major transformation in terms of vendor offerings. These now include basic parameters like design, facilities management, and other essentials that go into making a complete data center. Third-party data centers have shifted focus from plain hosting to more of solution oriented offerings. Demand from new adopters like media and entertainment; hospitality; retail; education; and government sectors is adding to the demand from traditional sources like banking, insurance, securities, BPOs, and manufacturing sectors.

On the technology side, some of the key trends are IP convergence, rise in popularity of blade servers, switches and clients, deployment of copper as well as fiber cables to ensure speeds of 10 GB and higher and the growing need for massive storage area networks. Technologies are evolving rapidly to efficiently manage larger band-width hungry applications. These include multi-core servers, server consolidation, high-density computing etc.

Sandeep Nair, MD, Emerson Network Power (India) Pvt. Ltd. elaborates, "Due to the current economic scenario, traditional data centers are forced to offer more services while reducing resource costs. Virtual data centers are a good practice for small and medium level players where the data center can be hosted effectively. If locations have adequate bandwidth this solution can work and save a lot for an organization. Virtualization brings in benefits like increased resource utilization, decreased power and cooling consumption, faster provisioning, higher availability, and savings in physical rack space requirements".

Pramod Agashe, Chief Operating Officer, APW President Systems says, "While racks and enclosures form the vital physical backbone of today's IT operations, data center managers are increasingly looking for more ‘intelligent solutions' to manage key resources like energy efficiency, space, and uptime in enterprises. This is driven by the increasing levels of complexity involved in deployment of IT solutions, with application software, middleware, and networking layers on top of high bandwidth systems communications, and often all these resources come from multiple vendors. So systems integration is the key focus area, and the data center manager is increasingly drawn to infrastructure solutions that are reliable and make it easy to implement and manage change".

Simon Robin, Head Business Development-Managed Hosting and Storage, Tata Communications says, "Cost reductions are spanning all aspects of data center solutions'capex, operational expenses, and manpower expenses. We see more and more customers looking at opex models with optimized resources".

Growth Drivers

Sanjay Virnave, President Sales, Tulip Telecom says, "There is great scope for the data center industry to grow phenomenally in India. I feel that in the coming years India will become a hub for data center hosting for nearby markets such as the Middle East, East Africa, and South East Asia. There is enough capacity and diversity of network connectivity to regions to allow applications to be managed out of India".

There has been a significant increase in storage demand in India. Increasing domestic requirements from sectors like financial institutions, telecom operators, manufacturing companies etc. is another important driver. The need to lower TCO, ensure future growth, reduce risk of downtime, maximize performance, and improve configuration ability etc. among enterprises is another very important factor that is driving the growth in this market.

Saji Thoppil, Practice Head, Platforms, Wipro Infotech says, "Data center transformations taken up in a top-down approach generally hit a stumbling block as a result of application and infrastructure dependencies. The virtualization technologies come as a useful aid and help the physical consolidation while still maintaining the transparency of physical infrastructure at application level. This bottom-up approach for consolidation through virtualization has been a big driver in the data center solution market".

As the businesses transform themselves to offer more online applications for extending customer reach, it is driving enterprises to ensure high availability of their applications in a secure environment, opting for a variety of communication access modes. This has stepped up the pedal for carrier independent hosting data center services and created a demand for managed hosting services. Also, bandwidth costs, which were holding back the growth, have dropped and this has placed India a placed at an advantageous position.

Major Players

Major names among third party hosted data center service providers are Reliance, Tata Communications, 3i Infotech, Tulip, CtrlS, Netmagic, Net4, TCS, Symantec, Sify, Bharti Airtel, Orange Business Services, HCL Technologies etc.

The major solution vendors are APC, ADC Krone, Wipro, Emerson, APW, Cisco, Delta, Avocent, Rittal, among others.

Slowdown

The industry experts have taken a balanced view of the overall impact of the slowdown on the market. Virnawe asserts, "There surely has been a ripple effect of the economic slowdown on the data center market. However, there have been no major setbacks till now. But as companies grow wiser towards their capital expenditure, we would see lesser traction in terms of new data centers being built frantically as they would otherwise be. But, companies are definitely not compromising on there operating plans, where data center definitely are at the center stage".

Sumit Mukhija, National Sales Manager-Data Center with Cisco adds, "Cisco, like all other large technology companies, is not immune to this fall in IT spends. IT investments especially in enterprise and IT/ ITES sector have been affected. However, as always, we view such market transitions as opportunities to invest aggressively and move into new market adjacencies, like what we have done with our recent Unified Computing System launch".

Agashe adds, "The slowdown has basically created postponement of purchase decisions and deferred projects. However, looking forward, these short term measures are likely to lead to a build-up or surge in demand for quick deployments in the next quarter, or earlier if the financial indicators of the economy start rebounding and customer confidence increases in parallel. On the positive side, the slowdown has increased focus on cost savings and increased business pressure to maintain performance and meet increasingly aggressive service-level agreements. These are also the factors driving many green strategies".

Tata Communications' Robin concurs, "Reduction in present spend on data centers due to virtualization and consolidation, rate revisions, increase in requirements for outsourced data centers, increase in requirements for Opex Hosting Solution, and increase in requirements for shared services are some of the fallouts of the current slump in the global economy".

Challenges

Basic issues like retention of technical operations staff, high upfront cost of setting up and operational costs involved in establishing captive data centers are driving companies toward third party data centers. The biggest challenge is power. Erratic and insufficient power supply is an increasing menace with players looking at options to bring down the costs. Availability of space is another major challenge companies are facing. Security concerns and data retention worries, need for power and cooling solutions, floor space, staffing, etc. are other equally limiting factors. Managing huge amount of data while securing them against leakage is critical to the success of a data center. High IT management costs, demand for high availability and disaster recovery, rising real-estate costs are other major challenges being faced by the industry.

Nair adds, "Organizations primarily are skeptical about increase in investment. They tend to ignore the long term benefit they can reap by implementing energy efficient solutions. Also most of the data center and businesses are uncertain and do not know how big will the future requirement be, the biggest challenge that we face while designing a green data center is capacity planning".

"When data center resources are connected over an intelligent, unified network fabric, things that were previously invisible become visible. As customers scale virtualization, they begin to see its inherent complexities. Policies, management, security, processes, platform ‘islands' still exist for virtual machines just as they did for physical machines, except that now the level of scale has increased by another order of magnitude. In today's data center infrastructure, compute, virtualization, network, and even communications resources are separate islands, and each island has a different perspective on virtualization", says Sumit Mukhija

"Certain policies or regulatory issues that are affecting the growth of the market the heavy duties on IT equipment and data center infrastructure elements and the need to ensure physical security of IT Infrastructure. Internationally, data portability laws are one key concern area", adds Robin

Future

APW's Pramod Agashe says, "Looking at the future, data center managers in India are increasingly concerned about issues such as cloud computing that would create a whole new paradigm, where the entire load of central computing resources would be outsourced. This would mean a fundamental change in the way our customers manage their IT function. It would also mean a shift in the concentration of data center business, as more such facilities take on the cloud model".

Deepak Sharma-Director(Sales)-Uninterrupted Power Solutions Business, Delta Energy Systems says, "In coming years the companies would deploy most efficient technologies with respect to energy consumption and also that help them in right size the infrastructure. The data centers of the future would also exhibit a high degree of agility in adapting to newer IT technologies. Further, power/heat density of future IT equipment is another major concern that the companies needed to address".

Thoppji says, "We are going to see some of the global tends effecting many decisions here. Standardization of the physical infrastructure around server, Storage and network of data center is going to have a big mind share, x86 based systems particularly the new Intel Nehalem is going to drive large scale optimization, modular high density data centers in various readymade forms are expected to make inroads into enterprise. Green data centers giving a PUE (power usage effectiveness) of close to 1.6, while it lingers above 3.0 in most Indian data centers, will be another major trend besides the adoption of public and private enterprise clouds".