State Of The Data Center 2008 - "Do More With Less" Mandate Remains While Server Virtualization Has Not Peaked

January 14, 2009

By Jerome M Wendt DCIG LLC

Right now the economy may be sick but if the recent results of Symantec's annual State of the Data Center survey are any indication, enterprise IT budgets look surprisingly healthy for 2009. 84% of enterprise companies with 5,000 or more employees responded that they plan to keep their current IT budgets intact and a full 50% plan to increase them to 2009. Adding to the validity of the report, Symantec's research was performed by a third party firm (Applied Research) that spoke to1600 enterprise companies (5000 employees or more) in 21 countries.

But before looking at some of the results of this survey, it is first important to point out that Symantec changed a couple of the conditions in terms of how it did this year's survey from years past. First, it used a new firm to conduct the study (Applied Research instead of Ziff-Davis) who did phone interviews instead of conducting one-on-one interviews as previous surveys did. This was done so the survey could reach more individuals and be more statistically relevant. Second, this survey included more responses from VPs and SVPs in enterprise organizations whereas past surveys reached more mid-level managers in these organizations.

One of the first things that struck me about the results of this survey was that it was conducted in late September and early October in 2008. Since these individuals were responding just as the global economic meltdown was reaching critical mass, I was initially concerned that the responses of these individuals would be different if they were asked the same questions now.

Marty Ward, Symantec's Director of Product Marketing for its Data Protection Group, had similar concerns. Therefore Symantec followed up with a number of the interviewees to verify that the comments and responses they provided in September and October were still valid in December. He said that after the follow-up, people's answers were still on target and that Symantec was still comfortable with the results of the survey. This is further supported by conclusions that other analyst firms are reaching. Forrester still saw growth in US tech spending in 2009 though it cut its forecast from 6.1 to 1.6% while IDC anticipates tech spending to hold steady in 2009.

At a high level, here is how Symantec's survey broke down:

50% expect a budget increase

34% expect their budget to stay the same

16% expect a budget decrease

But the relatively healthy data center budgets were not the only interesting aspect of Symantec's survey. It also uncovered some other interesting aspects about the state of the data center today and what enterprise data center executives are thinking:

Enterprises are still asking their data centers to do more with less. While this is nothing new, the fact that enterprises are keeping IT budgets the same and 50% are increasing them in 2009 indicates that organizations recognize that IT operations are still critical even in a down economy.

Data centers are staying keenly focused on the fundamentals of IT. Right now there are a lot of new technologies in IT in general and data protection specifically. But this survey revealed that 64% of enterprises are making sure that their bases are covered by increasing their budgets for core components of what they need to keep their data centers functional by spending on initiatives that support compliance, disaster recovery, governance and security.

US enterprises are still not comfortable with outsourcing. There is a major disconnect between what enterprises in the rest of the world is doing and what the US is doing. The survey revealed that only 45% of US respondents said they are comfortable outsourcing some of their data center operations while 65% of international respondents said they are already comfortable doing so. Since this survey focused so heavily on enterprises, this is not a major surprise. "While most of the Enterprise outsourcing today is through onsite managed services, we expect the SaaS model of hosted backups to gain momentum as improvements in network bandwidth enable the enormous amounts of data in the Enterprise to be backed up over the wire," says Ward.

Virtualization has not peaked. A year ago Symantec was starting to wonder if virtualization was starting to reach a peak as server utilization rates were running about 65%. This year, however, those same rates dropped to 53%. This indicates that virtualization still has legs and that enterprises will continue to realize further benefits by consolidating more of their servers.

Storage utilization declined in 2008. This number is a bit surprising because with all of the focus the last few years on driving up storage utilization rates to cut costs, utilization actually dropped in 2008. Again, in discussing this with Ward, we thought 2008 was a bit of ramp up year and that enterprises were purchasing the capacity they needed now in anticipation of deploying new applications that would consume that excess capacity. By way of example, to increase storage utilization rates in data protection, the survey revealed that 70% of enterprises have data deduplication initiatives, 72% have CDP initiatives and 71% have replication initiatives. These will all lead to organizations consuming much of this excess storage capacity in 2009.

I have to admit, it's been more than just a little discouraging the last few months covering all of the negative news in the economy so it's encouraging to see that not every sector is suffering and that there is some light at the end of the tunnel. If anything, Symantec's State of the Data Center report suggests that data centers may be one of the primary drivers behind a forthcoming recovery as enterprises continue to invest in their data centers and use this time to drive new efficiencies in their data center as well as provide new value to the enterprise as a whole.

SOURCE: DCIG LLC

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