With established businesses increasingly having to compete against technology-enabled new market entrants, enterprises can no longer afford to lag behind.
They must transform, or risk losing market share. Research commissioned by Telehouse, polling IT decision-makers from enterprise organisations across finance, private healthcare, logistics, manufacturing and retail, found almost all enterprises (96%) feel they are advanced or somewhat advanced in their IT maturity. Yet, sometimes perception differs from reality.
Just 15% say they are ahead of competitors and well-advanced and a third (34%) recognise they need to transform IT infrastructures or risk becoming less competitive, suggesting improvements are still needed.
Having a robust IT infrastructure strategy is critical in helping companies improve efficiency and maintain competitive advantage. Another study conducted by Telehouse found 91% of IT-decision makers are planning to make changes to their IT infrastructure following the pandemic, including increasing bandwidth/connectivity options, shifting more workloads to the cloud, increasing capacity in the data centre and transitioning from on-premise to colocation.
Indeed, data centres play a key role in the race to the connected future. Their main benefit is the on-demand access to network, cloud/SaaS and edge services ecosystems they provide, but the interconnection between different technologies in the data centre is growing in importance too.
Gartner predicts that by 2025, 85% of infrastructure strategies will integrate on–premises, colocation, cloud and edge delivery options, compared with 20% in 2020. Here, we look at the different kinds of connected technologies enterprises are adopting today and consider how the picture is likely to change as we move into the future.
Demand for colocation set to surge
On average, 40% of enterprise IT infrastructure is outsourced in colocation, but demand for colocation looks set to rise across all sectors. In five years’ time, the mean average percentage of IT infrastructure outsourced in colocation is anticipated to increase to 46%. There are also signs the pace of adoption is picking up.
The current research suggests a 6% increase in usage on average in just five years, suggesting a growing need for colocation. This could have been spurred by the pandemic as organisations increasingly realise the access, security and resilience benefits of not hosting infrastructure on-premises. Over the longer term, we anticipate adoption of colocation will increase further as the potential for applications around big data, 5G-fuelled networks and IOT rises.
Currently the leading driver of investment in colocation is flexibility (38%), with enterprises requiring the ability to scale services to support hybrid IT environments as required. As data volumes grow, enterprises increasingly want to expand and grow within existing sites. Across all sectors, the two biggest use cases for colocation are the adoption of new back-office business applications (38%) and 5G networks/connected technologies (36%).
Cloud demand and usage
Demand for cloud remains consistent across all sectors. On average, enterprises have put less than half (43%) of their IT infrastructure in the cloud. Hybrid and private cloud deployments are most dominant, followed by multi-cloud and finally public cloud. Low adoption of public cloud is indicative of ongoing concerns around security and data sovereignty, particularly prominent in heavily regulated financial sectors such as financial services.
Cloud adoption is projected to increase over the next five years, with respondents saying that 50% of their IT infrastructure needs to be in the cloud by 2026 on average. Perhaps surprisingly, the leading driver of investment in the cloud is security (34%), followed by the increase in e-commerce (32%). On average, the two biggest use cases cloud is enabling are business applications (36%) and 5G networks/connected technologies (35%), the latter of which is also a top use case for colocation, again supporting the demand for hybrid cloud and edge.
Edge computing on the rise
Edge strategies are already being deployed by most enterprises (68%), with 28% saying it will be very important to their organisation with the next five years. This is no surprise given the rise of 5G, AI and IoT, making it more important than ever for businesses to store, access and analyse exponential levels of data at record speeds.
The top drivers of investment in edge computing for enterprises are adoption of new technologies/devices (34%), competitor capability (30%) and digital transformation (30%). The top use cases differ per sector, however 5G networks/connected technologies, remote working and security are common. Despite high adoption rates of edge computing, enterprises are still facing challenges when using edge to advance IT maturity, including the cost of investment in edge connectivity (30%), and uncertainty over locations to collect data (28%).
Stepping into the connected future
While the race to the connected future is well underway, there is still some distance left to run. Although most organisations see themselves as advanced in IT maturity, the data shows more work still needs to be done to translate this perception into genuine competitiveness.
There is no one clear sector winning the race to the connected future. However, healthcare repeatedly rises to the fore throughout, while finance, a sector with high regulation and compliance requirements, appears slower to innovate.
The only exception is in edge computing, with finance leading the charge, alongside healthcare. Despite being around for many years, edge computing has only recently garnered interest from enterprises, the majority of which are taking the opportunity seriously by implementing a strategy.
Demand for edge is also likely to be driven by its convergence with other technologies, such as cloud and colocation, and is evidenced by the fact most enterprises opt for a mix of technologies. At the same time, data volumes are increasing and becoming a serious problem for enterprises, which will only accelerate the drive towards decentralised strategies like edge computing. Yet, even as the 5G edge demand is distributed around the country, this will still weigh heavily on the base infrastructure. Backbone fibre networks, carrier-centric data centres and international transatlantic routes will need to keep pace with the rate of change.
Despite indications that many organisations do not have a colocation strategy in place, the ability to access connected ecosystems will be critical in helping organisations to extend network reach, reduce latency and costs and improve performance, as user and infrastructure demands continue to grow.
Nearly all organisations are outsourcing some infrastructure in colocation already and this will only grow as growing numbers look to leverage the benefits of edge and hybrid cloud.
Certainly, the broader market indicators are good, with industry research indicating strong growth. According to a recent report published by Allied Market Research, the global data centre colocation market generated $46.08 billion in 2020, and is expected to garner $202.71 billion by 2030, witnessing a CAGR of 15.7% from 2021 to 2030.
More generally, as customer demand grows, the race to the connected future will accelerate. Providing connected and reliable experiences, unlocking and analysing data to inform decision-making and leveraging new technology to drive innovation will become increasingly important. And for enterprises, having an infrastructure partner, capable of providing the security, resilience, and low-latency connectivity required to drive IT maturity forward, will be critical to success.
