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Boston Irvine Louisville San Francisco
2008 COLOCATION
INDUSTRY TRENDS REPORTCreated From 2008 Colocation Client Survey Results
TABLE OF CONTENTS
2008 Colocation Industry Trends Survey
The Survey Page 3
The Participants Page 4
Participant Company Growth Page 5
Why Companies Colocate Page 6
Expected ROI Page 7
Distance Page 8
Disaster Recovery Pages 9 and 10
Virtualization Pages 11 and 12
Green Page 13
Choosing Providers Page 14
Value of Colocation Services Pages 15 and 16
Who is Hosting.com Page 18
Additional Information Page 19
THE SURVEY
2008 Colocation Industry Trends Survey
Hosting.com proactively engages with clients and prospects to effectively understand their business goals to build solutions that are both client relevant and applicable. A core component of Hosting.com’sclient engagement strategy is the use of surveying tools.
The 2008 Colocation Industry Trends Survey was sent to colocationclients of Hosting.com and other colocation providers throughout the world.
The Colocation Industry Trends Survey was launched on August 7, 2008 and respondents had until September 5, 2008 to respond.
The survey was conducted and hosted electronically. The survey asked approximately 30 questions and took between 6 and 10 minutes to complete.
In sharing the results, Hosting.com will provide general demographic information about respondents and the companies they represent; however, Hosting.com will not reveal the specific identity of any respondent or company.
THE PARTICIPANTS
2008 Colocation Industry Trends Survey
212 Respondents
IT and Business Decision MakersOver 20% were CEOs and Business Owners
Industries Included : Financial Services, Retail, Social Networking, Healthcare, Manufacturing, IT Service Providers, Marketing and Advertising, Non Profits, City Governments, etc.
Number of employees ranged from 2 to over 100,00031% had 10-99 employees8% had over 1,000
Revenues ranged from <$1M to >$100B
RESPONDENT EXPECTED COMPANY GROWTH
2008 Colocation Industry Trends Survey
Lead Generation44% ; < 20% of Company’s Lead Generation is Web-Driven10% ; 81%-100% Company’s Lead Generation Web-Driven
24-Month Revenue Growth11% Forecasted Revenue Growth of 100% or Greater 40% Forecasted 5%-20% Growth
Web Presence56% Expected Company’s Web Presence to Grow 25% or More Over the Next 24 Months16% Weren’t Sure
WHY COMPANIES CHOOSE TO COLOCATE
2008 Colocation Industry Trends Survey
67% - Improve Availability/Reliability49% - Improve Operational Efficiency/Performance45% - Reduce/Eliminate Costs 39% - Scalability (Exponential Growth) 36% - Risk Mitigation 19% - Compliancy/Regulatory Requirements
What factors most influenced your decision to colocate your data infrastructure?Multiple selections were allowed
Analysis: Improved performance, reliability and security at a lower cost dominated the responses of participants. Colocating allows companies to achieve the benefits of redundant layers of security, connectivity, and failover at a much lower cost than building their own data center.
DID WE MENTION REDUCED COSTS?
2008 Colocation Industry Trends Survey
69% of Respondents Expect a Return on Their Colocation Investment
• Of those, 24% Expect to See an ROI Within 6 Months• 40% in 12 months• 29% in 2 Years• 7% in 5 Years
Analysis: Brick and mortar investments, such as building a data center rarely have a measurable ROI. Capital expenses for colocating are significantly lower than building a datacenter. When colocating, companies may see an ROI in the form of increased uptime by using a more reliable solution, increased client retention due to a higher quality of experience, eliminated expenses to build a data center, etc.
Colocation providers should proactively consult with their clients to understand the clients’ objectives for colocating and to help them set achievable expectations with regards to cost savings and increased revenues. For most companies, a 6-month ROI will be hard to measure and achieve.
14% – LONG DISTANCE RELATIONSHIP OKAY
2008 Colocation Industry Trends Survey
What is the distance between your colocation facility and your office?
0-10 Miles
11-25 Miles
26-100 Miles
101-250 Miles
250+ Miles
36%19%
13%3%
14%
Distance Between Office and Colo Facility Analysis: The majority of companies
want their colocation facility to be within an hour’s drive of their offices. This reduces travel costs, allows companies more flexibility and control, and provides IT personnel peace of mind.
Smaller businesses may be willing to incur travel expenses to colocate in less expensive markets to reduce their total outlay.
60%<$10M
DISASTER – CAN WE RECOVER?
2008 Colocation Industry Trends Survey
If your servers were “down” for 24 hours or longer, the impact on your business would be catastrophic.
67%
24%
9%
Strongly Agree
Unsure
Strongly Disagree
Of the 67% that strongly agree –• 20% do not have a Disaster Recovery (DR) and Business Continuance Plan• 34% do not have a budget for DR and Business Continuance
DISASTER RECOVERY AND COLOCATION
2008 Colocation Industry Trends Survey
Does your company have a strategic plan to provide disaster recovery / business continuance in the case of an unforeseen emergency?
70% - YesOnly 46% of respondents have a budget for DR
Types of Disaster Recovery Used29% - Failover in a Different Geographic Area12% - Intra-datacenter Failover Readiness11% - High Availability and Failover in a
Virtualized Server Environment10% - Used All of the Above30% - Used Other DR Solutions or Unsure
Analysis: CEOs, CIOs, IT Directors and IT personnel agree that downtime often creates lost revenues. Subsequently, companies have adopted “DR Plans” but often fail to appropriate adequate funding to support those plans. Colocation providers that have geographically dispersed datacenters and provide virtualized solutions may close this gap for companies that state they have or need a DR plan and their ability to fund the plan.
VIRTUALLY UNCONVINCED
2008 Colocation Industry Trends Survey
Does your company use virtualization technologies internally?51% - Yes
Does your company use virtualization in its colocated data infrastructure?32% - Yes
56%16%
13%
15%
Virtualization Products Used
VMWare
Microsoft
Xen
Other
VIRTUALIZATION IMPACT
2008 Colocation Industry Trends Survey
To what extent do you believe virtualized solutions will reduce your current data center space requirements in the next 24 months?
8% Expect a 10% Reduction13% Expect a 25% reduction14% Expect a 50% reduction8% Expect a 75% reduction21% Expect No Reduction37% Were Unsure
Analysis: Increasingly, virtualization manufacturers and colocation providers target companies that colocate their infrastructure for virtualized solutions. Only 40% of respondents foresee virtualization having an impact on their datacenter space requirements, 21% expect no reduction and 37% are unsure. Two major obstacles remain for virtualization providers; one, many individuals must be convinced that virtualization can bring value (21%) and two, educating consumers that are unfamiliar with the benefits of virtualization (37%) is still necessary.
DOES “GREEN” MATTER?
2008 Colocation Industry Trends Survey
Does your colocation provider invest in green initiatives to reduce it’s carbon footprint?
29% Yes55% Unsure
Does a colocation provider’s green initiatives positively influence your decision to use them as a colocation provider?
46% Yes54% No
Analysis: It is estimated that data centers use 1.5% of all power consumed in the US. It is imperative that they take the lead in reducing their carbon footprint with high-efficiency servers, optimized power/cooling solutions, using alternative energy sources, green building practices, etc. The ability to positively impact 46% of your prospects and clients through green initiatives is significant. However, while colocation providers may see increased revenues and brand loyalty as a result of green initiatives, but neither should be a catalyst for adopting practices to reduce their carbon emissions.
HOW PROVIDERS ARE CHOSEN
2008 Colocation Industry Trends Survey
31% 32%
13% 7% 5% 5% 2%
78%
61%
44%37% 31%
21% 17%
Most Important When Choosing a Colocation Provider
Ranked #1 Ranked in Top 3
Rank these seven items, in order of importance, to your company when selecting a colocation provider
VALUE IN SERVICES?
2008 Colocation Industry Trends Survey
Respondents were asked to rate the value of service options that colocationproviders offered. They were rated between 1 and 10; 10 was the highest rating.
10 9 8 7 6 5 4 3 2 1
Remote Hands 24% 14% 16% 10% 5% 13% 3% 4% 3% 1%
Firewall Monitoring and Maintenance
12% 12% 21% 9% 8% 9% 5% 6% 7% 3%
Hot Swap 14% 9% 16% 17% 6% 12% 4% 6% 7% 2%
Hardware Monitoring 13% 9% 17% 12% 7% 15% 5% 8% 4% 4%
Application Monitoring 8% 6% 11% 10% 8% 17% 3% 6% 11% 4%
All Responses
(Data Explanation on Next Page)
SERVICES DATA TRANSLATED
2008 Colocation Industry Trends Survey
To simplify the value of offered services we categorized the responses as follows:
A 1, 2, or 3 Signifies Low Value Offering to Colocation ClientsA 4, 5, 6, or 7 Signifies Moderate Value Offering to Colocation ClientsA 8, 9, or 10 Signifies High Value to Colocation Offering Clients
21% 16% 15% 16% 8%
25%39% 39% 44% 53%
Low Value High Value
24% Rate a 10
ANALYSIS
2008 Colocation Industry Trends Survey
Bandwidth, Security and Redundancy are the three most important factors for most companies when choosing a colocation provider. These items are also the most cost prohibitive for companies building their own data centers. 100% of respondents listed a combination of two of these three items in their top three considerations.
In addition, colocation providers with multiple data centers can more easily provide cost effective solutions to provide higher levels of redundancy, geographic failover, and bandwidth routing optimization.
Increasingly, colocation clients and prospects are interested in managed services provided by colocation providers. This is a change from traditional colocation clients that did not want anyone to touch their infrastructure. Small and medium businesses choosing to colocate are looking to reduce costs and the management of the technology that allows them to accomplish their business objectives. Respondents rate “Remote Hands as a Service” as the most valuable service option offered by colocation providers.
WHO IS HOSTING.COM
2008 Colocation Industry Trends Survey
Hosting.com provides enterprise colocation, cloud computing, dedicated hosting, managed hosting, disaster recovery and business continuance services to a global customer base demanding a high level of security, reliability and responsiveness. Hosting.com monitors, manages, and enhances the web based platforms of Web 2.0 companies, software as a service providers (SaaS), content distribution networks (CDN), and medium to large enterprises whose web presence is crucial and high availability mandatory.
Hosting.com currently operates SAS 70 certified data centers in Louisville, Kentucky; Irvine, California; San Francisco, California; Boston, Massachusetts, and is currently expanding into Silicon Valley and Northern Virginia.
For more information, please visit www.Hosting.com or call the company at 800-446-7627
MORE ANALYSIS
2008 Colocation Industry Trends Survey
All questions and responses were not included in this survey. Omitted questions include questions on projected growth in power requirements, colocated data storage solution usage, when DR budgets are expected to be created, virtualization impacts over 12 and 36 months, etc.
If you would like to schedule a personalized, in-depth analysis of this information for your organization, please email AHollobaugh at Hosting.com to schedule an appointment.
Hosting.com will be coordinating webinars to share this information with interested parties in November. All individuals that download the e-book will be informed of theses dates.
Visit www.Hosting.com for more information about Colocation Services and Solutions provided by Hosting.com