Datacenters were once exclusively the domain of select tech players. Today as large enterprises have moved beyond these complexities, datacenters have entered a more mass arena. “Every small businessman wants to have a datacenter today, and we are often asked for quotes. The size of the datacenter might be really small, but they want to own one,” says Amit Rastogi, a Ranchi-based solution provider.

While large enterprises continue to generate opportunities with their upgrade demands, SMEs are just waking up to the datacenter culture. The small and medium sized enterprises are now embracing these technologies faster than ever before, bringing good news for partners.

The datacenter market in India is growing apace and some vendors believe it is expected to double in the next 5 years. The rising stress on physical infrastructure and growth has also fueled the industry.

Smrutiranjan Das, Product Manager– Racks, Emerson India confirms, “We think the market for datacenters in India is mostly third party, followed by corporate datacenters. The datacenter space in India is currently in its growth phase. The per- rack density in India is currently between 5-7 KW and this is expected to rise to 12 KW over the next three years. Also, an increased focus in the areas of cooling, power and other monitoring solutions for future datacenters is in focus.”

Rajeev Krishnaswamy, Director, Infobahn technology concurs, “The big datacenters are already set up by the large enterprises in the Indian market. But there are plenty of opportunities in the SME market segment.”

Compliance is one of the key driving factors compelling customers to start a datacenter. The clauses of the Indian IT Act stipulate maintaining records for seven years and messages for five years. Also, most customers prefer to have ISO certification done which also requires a transparent record base, which is another vital trigger in promoting datacenters. And last but not least; company growth demands better technological support for the organization with money being available in the market.

Shaishav Singh, CEO of Dotcad, who is also an HP partner, agrees with his peers. At the same time, he points out, “The current demand for datacenters is coming from the SME market. In reality, the SME’s are still waking up to the importance of the datacenter. The challenge with SME datacenters does not lie with the technology but with convincing the customer. The challenges are not as formidable compared to the complexities of large datacenters.”

Symantec’s ‘State of the Data Center’ study reflects interesting trends in the market.  The study found that mid-sized enterprises (2,000 to 9,999 employees) are more likely to adopt cutting-edge technologies such as cloud computing, de-duplication, replication, storage virtualization, and continuous data protection than small or large enterprises, to reduce IT costs and manage increasing complexity.  Further, mid-sized enterprise datacenters show more activity, with more IT managers predicting major changes to the datacenter and new applications in 2010.  Mid-sized enterprises also place a higher importance on staffing and training than their small or large enterprise counterparts.

A large number of partners still believe that even if there is a market of SME customers for them, the key challenge is convincing the customer. For them, the setting up of the datacenter is easy, but making customers accept the datacenter concept is still a time-consuming exercise. Some also narrate experiences where the customer is still unclear about the difference between a server room and datacenter.

Rastogi explains, “The giant-sized datacenter can still be afforded only by large enterprises and the government. The humongous infrastructure demands a lot of investment and mid-size businesses do not believe in investing and spending that kind of money on IT. At the same time, that doesn’t create a hurdle in actually having a datacenter. Perhaps owning one is a luxury, but actually getting a third party hosting it for him solves all his problems.”

Gurprit Gulati, Director of Momentum–Infocare, also shares the same opinion. He narrates his own experience saying, “The bigger opportunities are with the mid –sized organizations which are now in the processes of setting up their own datacenters. It is not very challenging to set up their datacenter as per their own specific needs, but it is challenging to convince them that they need a datacenter.”

Mid-sized enterprises are more aggressive and pioneering than either small or large enterprises.  They are adopting new technology initiatives such as cloud computing, replication, and de-duplication at 10-15 % higher rates than small or large enterprises.

Large enterprises do provide some place for the partners, but at the same time it is the SMEs that are getting ahead in the game. Storage and data backup applications are some of the components that are in demand. But at the same time, it is the customer with some basic understanding of technology who demands a datacenter. For instance, the demand is from the customers who already have an ERP running on the server. L Partheeban, Director– Ecaps explains, “When we go to a customer, they already have a couple of servers for their main applications and intend to deploy more for storage. So it’s very rare for a company to start off owning a datacenter.”

Most partners believe that setting up a datacenter for any SME does not pose much of a challenge. But again, there are some who believe otherwise. Deepak Dhar, Director, Industry Standard Servers, Hewlett Packard India Sales says, “The challenges for setting up the datacenter would remain the same irrespective of the size of the datacenter. And the reason is that the components and applications that are to be deployed remain the same.”

At the same time, even if the SMEs are grabbing all the focus and attention, large enterprises are still not out of the race. The upgrading cycle does generate a steady demand of components, given that the lifecycle of the technology is around three years.  The partners believe there are different reasons for the demand of components from the large enterprises.

Partheeban points out, “It is the large enterprises who want to deploy the latest technologies as they can afford it while the smaller companies have to wait till their ROI is through.”

Nareshchandra Singh, Principal Research Analyst with Gartner, notes, “The opportunities with large enterprises still exist as the need to upgrade is inevitable. The need to use the latest technology forces enterprises to evaluate adopting it. Partners can definitely be positive about some business coming from this segment of the market.”

But some of them have a contrary opinion. Singh from Dotcad believes, “Not many enterprises like to hamper their current datacenter setup. In fact, they want to keep it running as it is for longer periods of time. It is only when the storage demands surge, that the customers adds it to the setup.”

New facility components are expensive, but the real problem is in integrating new products in an existing building and with existing components. Companies  focus on the technical problems of integrating new facility components into an existing building, as well as evaluating whether it’s possible to keep the datacenter in action while the renovation is being carried out.

Krishnaswamy says, “No customer agrees readily to upgrade. More than the refresh cycles, it is the return on the investment of the company that is the priority.  But the other crucial factor that generates and drives the demand is when their growth and expansion brings in addition of more storage and applications.”

For varied reasons, partners feel that there is still some demand generated by the large enterprises.

Components & Issues

Components - The Gold Mine

Logically, any one who knows the basics believes that storage is one component which would have continual demand. But there are a few surprises. While storage is definitely in demand, so is the application of consolidation and virtualization along with power-efficiency tools.

Gulati asserts, “Storage and virtualization are more in-demand components of the datacenter. But at the same time, there aren’t many players in access management and power management.

The demand is increasing for storage as ever growing amounts of data have to be maintained for the organization for compliance and internal requirements. Partheeban says, “Storage is something that is consistently in demand.”

The well-informed customer today wants smart options. Virtualization is also one of the most sought after technology today, but it comes with its own baggage. Partners agree that almost every customer inquires about virtualization technology but very few adopt it. There are multiple reasons for the slow adoption rate, but overall partners believe that if the issues are resolved, virtualization will be more than just a buzzword. Krishnaswamy points out, “Yes, there is a lot of demand on the storage and virtualization front as the demand for consolidation on storage and server. But at the same time, not everyone is vying for the consolidation. In fact, I have been observing it is only those who have hardware beyond refresh cycles who opt for the virtualization as most customers are wary of tampering with their setups.”

Also there is a belief amongst partners that other components such as compute, storage, cooling and power still have a healthy demand. He adds, “Today we do have a steady demand on components other than storage such as compute, cooling and power and of course networking. Also, all those in the application business have to keep updating the latest versions and more modules in case of an ERP system.”

The upgrading of the systems is inevitable such as an addition of a module in CRM or an upgrade of the version. This definitely brings in some more value added business with healthy margins.

Even Singh agrees that there is a lot to be done for virtualization. He says, “Consolidation and virtualization is indeed building some traction in the market. But the small catch is that although a lot has been talked about in the market, there are very few customers to date who have adopted virtualization.”

On the other hand, there has been a steep rise in customers wanting to set up their disaster recovery sites. Partheeban feels, “Storage, data backup applications are components that have seen a regular demand from the customers. But today, there is a huge emphasis on the DR site building by the customers.”

Cisco sees a market transition as a result of virtualization. “Virtualization architectures today are very much “assembly required” islands/silos where the burden of system integration is on the customer, increasing costs and deployment times while decreasing efficiency. Cisco sees a market opportunity to eliminate the manual integration in favor of an integrated architecture that breaks down the silos between compute, storage, virtualization, and network platforms,” says Sumit Makhija, National Sales Manager- Data Centre, Cisco India and SAARC

Rastogi who has a customer base from D-class town begs to differ, “We have customers who insists on virtualization upfront. The reason being they want to maximize the investment they make in the systems.”

Lack Of Skilled Manpower

One of the reasons people are hesitant to adopt virtualization is the lack of availability of skilled manpower. The complex technology still does not have adequate numbers of trained manpower.

Krishnaswamy says, “The availability of a qualified administrator is an extremely difficult challenge. Today, there is a severe crunch of well-trained engineers in the industry. This is one of the main reasons the customer is inhibited in adopting complex technologies such as virtualization.”

The non-availability of manpower has always been a challenge for this industry.

Partheeban echoes the same sentiment. He says, “Currently, there are very few customers who actually adopt virtualization even though that’s what they need the most. The simple reason is the lack of technical expertise available in market to manage such complex systems.”

The dearth of the expertise directly affects the cost of maintaining the systems. The lack of human resources translates directly into more expensive hiring.

Dhar strongly believes there is a reliable solution to this problem the industry is facing.  He explains, “We now believe that automation of systems can bail partners and customers out of this perennial quagmire. We are now insisting customers go for automation tools that reduce their dependency on manpower.”

To reinstate his point, he cites an example where they had quoted a price for automation and the customer happily took it. He cites, “We had suggested that the customer pay ‘X’ amount for an automation tool and he readily accepted it. The reason was that the manpower inventory was equivalent to the automation package.”

Manpower shortage is a critical issue for both partners as well as the customers. The partners cannot deliver what they promised while customers hesitate to adopt new complex technology.

People still form the single largest cost element for most data centers, sometimes as much as 40 % of overall costs. One of the vital highlights of Symantec’s study was that staffing and budgets remains tight with half of all enterprises reporting they are somewhat/extremely understaffed.  Finding budget and qualified applicants are the biggest recruiting issues.  Nearly 79% of enterprises have the same or more job requisitions open this year.

Opportunity & Roadblocks

Real Opportunity

Despite all the challenges on the ground level, the partners are optimistic about the growth story of the datacenter. There is plenty of scope for setting up the datacenters itself. The physical infrastructure offers plenty of scope for the partners. The architectural shift taking place in the datacenter marks an IT market transition that will allow us, together with our channel partners, to drive the benefits of virtualization to an entirely new level. Further, as storage, network and virtualisation platforms continue to converge, architectures will blend and merge, creating technology disruption, but enabling business challenges the customer will face to be solved in new innovative ways.

Unified Computing is an architectural opportunity, requiring partners to have more than technology, product or even solutions expertise. To capture the Unified Computing opportunity, Cisco believes the market requires a new breed of Unified Computing VAR – combining Compute, Virtualization, Networking, Storage and Service practices into a single, integrated data center practice.

Partners are a key element in penetrating and reaching this untapped segment. The consistent growth of infrastructure and economy along with IT and telecom industry on the whole has resulted in ample opportunities for partners in the current business scenario. “The integrated solution for datacenter business is one of the key contributors in business; which was catered to by SIs across India. Emerson has provided partners a solution which is called OptimizeIT. a one point solution in which a rack is positioned as a datacenter in a rack solution,” says Das.

Currently there is no single point of contact for the customers while syncing the various technologies and components of the datacenters. Singh firmly believes, “There is a huge unexplored opportunity where partners can be a single point of contact for all the vendors for the customers. This will not only help them maintain customer relations but will also serve as good business model.”

Gulati who also sees this as an opportunity believes that this concept of a single point of contact would definitely help align business growth more positively making margins healthy. There is also a belief amongst partners that this would also help them in cutting down reduce the problems they face while setting up the datacenter.

Some of the largest datacenters today offer healthy prospects in the management and monitoring of datacenters. Access control in a datacenter is still a nascent technology which could work wonders if used at the right time.

All those who aspire and dream big have a chance to strike gold if they can play their cards right. Large customers with huge datacenter capacities have to choose from four or five large partners. There exists a huge gap between large and small customers. If the partners use their financial resources smartly, the next couple of years will see the emergence of new players in the market.

Gulati points out, “As far as huge datacenters are concerned, there are barely four to five players. But in the coming couple of years, we feel there will be an emergence of new players. Partners are gearing up to own their datacenters. The only hurdle could be quality of bandwidth. There will be immense chances for the partners.”

Singh also reiterates there not many mature players in that segment. Datacenter hosting is currently dominated by barely a few players. He agrees, “That market is definitely addressable and partners can think of scaling and encashing that prospect.”

Roadblocks

The datacenters in India need to address the energy efficiency issues right from start since power and cooling contribute to 48% of the energy bill cost — a global trend. Indian DCs need to focus on adoption of an adaptive architecture for Low TCO, Flexibility in operations and Scalability of solutions and processes.

The energy, space and technology problems currently facing datacenter managers are set to worsen in 2010, according to Gartner. “Energy costs are the fastest-rising cost element in the datacenter portfolio, and yet datacenter managers are still not paying sufficient attention to the process of measuring, monitoring and modeling energy use in data centers,” said Rakesh Kumar, research vice-president at Gartner.

Partners agree that energy management can be effective only through advanced monitoring, modeling and measuring techniques and processes. Metrics form the bedrock for internal costs and efficiency programs. IT firms should make this area a high priority, which will be essential for the adoption of new technologies and adherence to government policies.

Also while scaling up to a bigger level, partners require adequate support from the vendor and infrastructure in the country.  The analyst at Gartner points to the immediate improvement in the availability of the basic infrastructure of power and space in the Indian region. The downside of which hurts, partners even today, the long term call doesn’t seem to be pleasant for the Indian market. He adds that the already unstable political situation marred by terrorism in certain regions could be the reason why datacenters are moving out of the country. It is probably too early to cement the possibility, but given the progress one cannot ignore competitive countries.

Partners agree completely and are focusing on plugging the loopholes so that datacenter opportunities do not just remain on the white boards but see the light of day.