When a large paints manufacturer wanted to install a robust mail messaging
system, it had two options at its disposal–the first, to host its applications
on its own servers; and the second, to go in for a shared data center. With the
first option involving considerable up-front investment, the company decided to
go in for the shared data center option. The company, Asian Paints. And its
choice–it hosted its mail and Web server at the Sify data center.
According to a definition forwarded by IBM, "The philosophy behind an
information technology shared data center is to leverage on the technology
competencies of one organizational unit to deliver services across the
enterprise. Simply stated, a shared services environment is one in which a
single organization provides an end-to-end set of IT services to the entire
enterprise or to multiple enterprises. In the most traditional sense, a
mainframe data center is often a shared services environment that delivers
host-processing functions to all units of the firm."
The Data Center Edge | |
An enterprise can reduce IT costs by up to six times by hosting applications in data centers | |
Organizations can focus on core business | |
The threat of technological obsolescence is done away with | |
Even the outsourcing of traditional servers to data centers can lead to savings on man-count needed, and these can man distributed multi-city office locations–50% YOY savings |
2005: $100-million potential
A Frost & Sullivan study estimates the Indian data center market to
touch $100 million by 2005. Another study conducted by IDC says the data center
market in the APAC region will reach $3.3 billion in the same period. Given the
upbeat projections, vendors are putting up state-of-the-art data centers, in
which enterprises can host all their apps.
Satyam Web Hosting president J Avinash says: "The concept translates
into a old debate–outsourcing infrastructure, versus building it. For
instance, the data center market in the US over has grown by over 475% in the
past two years. This is an indicator of the popularity of the shared data center
model, as also the potential it holds out for the future."
Looking at the history of shared data centers, the primary driver for growth
has been the total cost of ownership (TCO). For instance when enterprises bought
IT, they automated core processes. As business grew, however, managing data
became difficult. Only on a priority basis, they planned and automated
sub-functionalities. In time, their IT infrastructure got choked and became
redundant with excess data. Since building or expanding the IT infrastructure
costs more, outsourcing the same in the form a data center is seen as a value
proposition.
Increasingly, Indian enterprises are using data centers to host applications
like B2B, B2C and even bigger ones like ERP and CRM. According to Avinash,
"Enterprises typically host their application, database and Web servers in
shared data centers, and look for features like scalable bandwidth, 24x7 support
and a guaranteed failsafe presence round the clock. Enterprises are also
evincing interest in availing of other services like systems administration,
database management, security and network management services." The
verticals which offer the highest potential for shared data centers are banking,
financial services and insurance (BFSI), government, FMCG and media, he adds.
Slow starters
Despite the potential, shared data centers in an Indian context have been
slow to take off. This is mainly due to the cautious approach taken by
enterprises in parting with mission-critical data to an external service
provider. But with advancements in technology in the fields of authentication
and security, data centers have become more reliable and secure. However,
analysts suggest that the enterprise has to do a lot in terms of pre-emptive
demand analysis before going in for the shared option. For instance, they should
map out the pros and cons of migrating existing data to a data center–and the
subsequent changes it will bring from a cultural and organizational viewpoint.
Another major issue to be tackled beforehand is a service level agreements (SLA).
Here, the company’s core area of operation should synchronize with the
applications hosted in the data center and the center must have sufficient
expandability so as accommodate future demands.
Says Deepak Bhosale of Asian Paints’ communications and networking group,
"Different enterprises have different approaches in adopting these
services. Those that have an IT setup are cautious. At the moment, therefore,
companies are experimenting with some non-mission-critical applications–once
they reach a comfort level with those, they might consider moving large amounts
of mission-critical data to external centers. "However, companies which
have tight IT budgets but deal with large quantities of data, should opt for
shared data centers at the soonest," he opines.
Notwithstanding the cautious approach, the concept of shared data centers
looks appealing.
Benefits
IT vendors, meanwhile, remain bullish on the growth of shared data centers.
Sify, for instance, believes that many enterprises will jump onto the bandwagon
as managing critical data becomes difficult. The reason it has not picked up in
India is due to the absence of quality data centers.
According to Avinash, "The Indian market was starved of world-class data
center. As a result, IT user companies were either compelled to choose
infrastructure overseas or to build it in-house. With the development in
communications and networking, the concept is fast picking up in India. For
instance, we have commissioned the country’s first Level 3 data center,
Satyamhosting, at the Vashi Infotech Park, in Navi Mumbai."
With the inherent complexities involved in a shared data center, enterprises
have to clearly understand the benefits of these services. A data center might
be a driver for cost savings, bring in the competitive edge, or e-enable the
processes. As an industry analyst puts it, "The decision to pursue a shared
service strategy is ultimately a business one. For such a strategy to be
fulfilled successfully, business units and IT functions should work in tandem to
create a successful data center paradigm."
G Shrikanth in Chennai