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Overall IT Spending Rises as Datacenter Budgets Drop

Two recently released surveys show that datacenter managers say they don't expect a budget increase for the year, while overall IT spending is on the rise.

One study, released by AFCOM at its Data Center World conference in Las Vegas, found that 37 percent of datacenter managers will increase their budgets this year, down from 43 percent 18 months ago. Despite the decline, only 18 percent are lowering their budgets, with the remainder indicating spending will remain flat.

Overall, AFCOM said the outlook for those managing large enterprise datacenters is promising. "Despite the economy, datacenters are spending money," said Jill Yaoz, AFCOM's CEO, speaking on a teleconference to disclose the results of the study. "We found that to be interesting because if you look at the economy, a lot of organizations aren't spending money and in fact they are cutting budgets."

Of the 37 percent that are increasing their budgets, 41 percent are doing so by 6 to 10 percent, while 16 percent are increasing their budgets by more than 20 percent year-over-year. AFCOM, a trade group composed of 4,000 datacenter managers, conducted the survey in December, in which 358 CIOs and high-level IT directors responded.

Meanwhile, overall tech spending appears to be on the rise. Forrester Research on Friday upped its forecast for IT spending this year from 7.4 percent in January to 8 percent, with a 10.3 percent boost projected for next year, up from the 9.3 percent forecast earlier. Despite high energy costs, supply chain disruptions in Japan and government layoffs, "U.S. economic growth still looks solid," said Forrester analyst Andrew Bartels in a blog post.

With Accenture and Oracle raising their forecasts, the broader market for IT services and goods is looking stronger than earlier indications suggested, according to Bartels. "I think we will see other vendors re-setting their own bars for their revenue growth in 2011 to higher levels," Bartels noted.

AFCOM's Yaoz said in an e-mail that there are a number of factors contributing to the fact that most budgets are either flat or down in large datacenters.

"The things contributing to keeping many datacenters flat and not having to spend more in their budgets has been the savings datacenter managers have brought through taking advantage of newer technologies such as more cost-efficient cooling equipment, more power-efficient servers, the increased use of virtualization (lowering power and server acquisition costs), embracing the cloud in increasing numbers and the trend over the last few years towards datacenter consolidation," she said.

Among other findings in the AFCOM report:

  • One third of managers have eliminated at least one mainframe over the past three while nearly three-quarters have increased the amount of servers in their datacenters;

  • Nearly half are either in the process or planning to expand their datacenters, while 44.2 percent are already occupying more space than they did three years ago;

  • 36 percent have implemented some form of cloud computing, up from 15 percent a year ago. Another 35 percent are seriously considering cloud computing;

  • More than 15 percent of datacenters have no plan for backup and recovery;

  • Half have no plan to replace equipment damaged following a disaster;

  • Two-thirds have no policy to address cyber crime;

  • 8.7 percent have no disaster recovery or business interruption plan;

  • More than half monitor server utilization, cooling efficiencies and power-usage effectiveness (PUE), while 27 percent have received energy-efficiency incentive rebates.

Yaoz was particularly concerned about the lack of disaster recovery and business continuity planning. "Disaster recovery plans are simply not up to par," she said. "This to me is something we've got to deal with in this industry. It's something we need to overcome because if you look at all the disasters that have happened recently, you see that it could happen to you. You need to be prepared."

Tom Roberts, manager of datacenter facility management at Trinity Information Services and an AFCOM board member, said many datacenter managers are in denial of the risks they face. "You don't see it happening to you until it happens to you," he said.

Even those that have disaster recovery plans need to revisit them, Yaoz said. "If you haven't updated it for five years you're going to be in trouble because you do have a wider base of customers on the Internet. You have wireless applications. There's so much more data out there."

About the Author

Jeffrey Schwartz is editor of Redmond magazine and also covers cloud computing for Virtualization Review's Cloud Report. In addition, he writes the Channeling the Cloud column for Redmond Channel Partner. Follow him on Twitter @JeffreySchwartz.

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