What do Virtualization and Cloud executives think about 2011?  Find out in this VMblog.com series exclusive.

2011 Predictions - More Clouds, More Colocation

With Gartner estimating the cloud services market to reach $150.1 billion by 2013, there's no question that the cloud is in everyone's forecast. But as the cloud computing industry continues to grow, so does the myth that it will close to eliminate the need for hardware.  However, as the number of companies adopting the cloud rises, the need for businesses to house their supporting cloud infrastructure in secure and reliable environments will be stronger than ever.

To address this, more and more businesses are realizing the benefits of colocating their hardware to a carrier-neutral data center to keep their cloud offerings viable and ensure that their needs for connectivity, reliability, security, scalability and supportive infrastructure are met. According to BroadGroup, as much as 35 percent of enterprise data center space will be outsourced by 2015, illustrating just how many companies are choosing to house their infrastructure in third-party facilities.

The reason so many companies are colocating to such data centers is partly due to the ideal environment they present for cloud services. Carrier-neutral data centers provide the opportunity to scale to match fluctuating demand, as well as the power, connectivity and secure processes needed to ensure reliable performance and continuous availability. Thus, colocating within such an environment allows companies to meet those unique needs, while keeping costs down for what would otherwise be an extremely expensive resource to run in-house.

And just how expensive? The CapEx and OpEx for the data center build alone can easily reach $25 million. And these costs can easily skyrocket, which is something Google knows all too well, as the company recently disclosed it had accumulated $476 million in capital expenditures due to IT infrastructure investments.

Such high costs are a key reason so many companies are moving to third-party data centers, as outsourcing their infrastructure enables them to move from exorbitant CapEx to only OpEx. When looking at storage, networking and processing costs, very large data centers can lower costs by five to seven times, according to a recent University of California study.  These cost-saving benefits result from the large economies of scale that colocated data centers present through shared resources, which leads to less spend on expensive resources like electricity, network bandwidth, operations, and in some cases software and hardware. Given these savings, it's not surprising that cost is a very strong driver behind the growth of colocation.

In addition to dramatic reductions in costs, another attractive benefit that colocation presents is the opportunity within some carrier-neutral facilities to be part of super-connected cloud communities. These cloud communities, usually comprised of a variety of service providers, CDNs, carriers and ISPs, independent software vendors, and enterprises, enable participants to interconnect and provide an array of revenue and partnership opportunities. With these data center participants quickly and easily accessible under one roof, such communities also provide them with access to a marketplace of service ideal for cost-effective development, launch and management of successful cloud-based services for both enterprises and cloud service providers. 

As the cloud computing industry shows no signs of stopping, an increasing number of companies will colocate to third-party data centers to ensure their needs of connectivity, reliability, security, scalability, and infrastructure are met.  In addition to meeting these demands, companies will also realize the other benefits colocation presents, such as cloud communities, significant cost-savings, and large economies of scale.  With no doubt that that the number of companies adopting a cloud computing environment is increasing, colocation will surely be in the forecast side-by-side supporting this trend.

About the Author

Kevin Dean, Senior Vice President Marketing and Chief Marketing Officer, Interxion, is responsible for Interxion's pan-European marketing and business development strategy and implementation.