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It's twilight for small in-house data centers

Patrick Thibodeau | April 1, 2013
More workloads are shifting to service providers, with concern about skills playing a key role

Virtualization, cloud services and software-as-a-service (SaaS) is making it much easier to shift IT infrastructure operations to service providers, and that is exactly what many users are doing.

This trend is being felt the most at in-house data centers in small- to mid-size companies. These firms may be trying to shut down their data centers, or shift a major portion of their workloads to external providers.

Larger firms have been consolidating data centers for years, and even the federal government is shutting down hundreds of data centers in its consolidation push. But these big firms and institutions are optimizing their operations and holding on to them, even as they increase their use of SaaS and cloud services at the margins.

The trend at smaller data centers is a significant career issue. The best jobs may be at service providers with the potential for a career path, instead of at an in-house, small- to mid-size data center.

Hagen Wenzek, the CTO for IPG Mediabrands, is among those making the shift to service providers. He recently moved management of SQL servers and Sharepoint to Avanade, a manage services provider founded by Accenture and Microsoft.

"I can't hire enough experts willing to work for a media company," said Wenzek. IT infrastructure professionals would rather work for a technology company, he said.

Mediabrands' outsourcer improved the performance of technology and dramatically sped up report delivery, said Wenzek. He has shifted his staffing efforts to business analysts, who can work with the data and visualization tools. The analysts can see a career path at IPG, he said.

Wenzek's says his outsourcer is planning to move his servers out of the IPG data center to a third-party cloud environment. That's fine with him. It's up to the outsourcer to determine the best environment for delivering services and lowering costs, he said.

Service providers are growing dramatically. Of the new data center space being built in the U.S., service providers accounted for about 13% of it, but by 2017 they will be responsible for more than 30% of this new space, said Rick Villars, an analyst at IDC.

"Most of the rapid growth is in service providers," which includes hosting, co-location and things such as a Facebook buildout, said Villars.

The service provider growth can be seen in companies like Rackspace, which plans to hire 1,000 new employees over the next two years. It told investors in its 2012 annual report, released this month, that demand is growing, in part, because most smaller companies do not have the IT staff to manage their operations and do not want to spend capital on new equipment.

"We are definitely seeing a trend away from in-house data centers toward external data centers, external provisioning," said Gartner analyst Jon Hardcastle.


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