The data center is dying? Not really

Today, despite the greater adoption and growth of cloud computing, many businesses still require on-premises data centers.

Some studies suggest that rumors of the demise of the data center are greatly exaggerated, others suggest that enterprise IT spending is growing across the board, and research firms predict that the financial services industry will truly explode.

Market research firm IHS Markit surveyed IT managers at 151 North American organizations and found that most said the number of physical servers in their data centers will at least double in 2019.

“Last year’s survey respondents indicated that enterprise data centers would continue to grow, which was confirmed and affirmed by the respondents to this survey. Many enterprises are transforming their on-premises data centers into cloud architectures, making the enterprise data center a good complement to building multi-cloud,” wrote Clifford Grossner, senior research director for IHS Markit’s cloud data center research practice.

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In addition to the doubling of the number of physical servers in data centers in 2019, survey respondents said that by 2019, 73% of servers are expected to run hypervisors or containers, up from 70% today.

Regarding the main reasons for such investments, 75% of respondents said security and application performance, and 71% said scalability. The study found that 53% of respondents plan to increase their investment in software-defined storage, 52% in NAS, and 42% in SSD hard drives. In addition, there are switches, routers, security appliances, load balancers and WAN optimization devices.

IHS noted that new technologies such as artificial intelligence and containers are gaining momentum, while traditional data center applications such as Microsoft Office (22%), collaboration tools such as email, SharePoint and unified communications (18%), and general-purpose IT applications (30%) are still in use.

The second survey comes from SNS Telecom & IT, a market research firm based in Dubai, UAE. It attributes the growth of big data and various types of unstructured data to the financial services industry's investment in IT equipment.

“As this big data construct expands to include streaming and archived data as well as sensor information and transactions, the financial industry continues to steadily embrace big data analytics for high-frequency trading, fraud detection, and a growing number of consumer-facing applications,” the survey report authors said.

This has prompted banks, insurers, credit card and payment processing providers, and other financial services companies to invest $9 billion in big data technologies in 2018, and SNS predicts that these investments will grow at a compound annual growth rate of 17%, reaching $14 billion by 2021.

The research report suggests that the banking and other financial services market will see faster adoption of cloud-based platforms, particularly hybrid cloud implementations, to avoid scalability issues associated with on-premises data centers.

This is why most businesses adopt cloud computing. Businesses can spin up a virtual machine in 20 minutes without having to buy and run new hardware, let alone its delivery and installation.

But financial services companies have been somewhat conservative in their adoption of the cloud due to a lack of trust in its security and data protection, and with good reason. Financial services companies are among the most targeted by cyberattacks, but now it seems they feel safer running their operations in the cloud.

SNS also said that big data technologies play a key role in promoting the creation and success of innovative fintech startups, especially in the areas of online lending, alternative insurance and remittances.