Data center budgets to stay course in 2009?
The global economy didn't start getting bad in September, but it did start getting worse. That said, if you believe a set of surveys done by AFCOM - an association of data center professionals that collectively represents over 4,400 data centers - failing banks and various bailouts have not made the situation much worse than it already was for data centers. Not that the situation was necessarily good, mind you.
Back in May, AFCOM did a survey of its user base to see what was cooking in 2008 and what might be in store for 2009. A study based on the survey, which had 300 respondents, was presented in October at an AFCOM conference, right smack dab in the middle of the peak of the economic meltdown. What was true in May was not necessarily true in October. So in November, AFCOM reached out to the original survey respondents to see what impact the economic situation was having on data centers. While only 133 people responded this time around, only a slightly larger percentage of users say they have been asked to make cuts to their IT budget. (Pity all 300 didn't re-respond, which would give a consistent data set on which to try to do some analysis. But that's people for you).
Back in the May survey, some 36.9 per cent of CIOs and data center facilities managers told AFCOM that they had been asked to make cuts to their 2008 budgets since they had been approved. Looking ahead to 2009, 18.8 per cent said they expected to decrease their IT budgets (which includes the facilities budgets), 43 per cent said they expected an increase (because sometimes you have to spend even if you don't want to), and 38.2 per cent said they would have a steady budget. Enter the economic meltdown in September. Now, 37.9 per cent of those 133 who were originally polled back in May say that they have been asked to make changes to their budgets, while 62.1 per cent have not been asked to change anything.
This is mixing and matching data in a way that can be confusing and perhaps lead to some wrong conclusions. We can't tell the original state of the 2009 budget at each survey respondent back in May and how it changed by the time the second survey was done. For all we know, those with budgets that were slated to increase are being asked to make cuts, or maybe those making cuts are being asked to make deeper cuts. Or maybe it was those who said they were holding steady are now being asked to make cuts. (You can't tell. All AFCOM asked was if the budget had changed).
So the two surveys give an apples-to-applesauce comparison. That said, in the follow-up survey, CIOs and facilities managers all seem to indicate that they were being asked to make their budget changes downward, since the average change in the IT budget across the 50 shops out of 133 making changes to their budget was a 15.2 per cent cut.
Among those making cuts to the 2009 budget, 30 per cent said they were making cuts to travel, 23.3 per cent said training and education would take a hit, and 14.3 per cent said they would be making cuts to their personnel. Some 16.5 per cent said that facilities equipment - cooling, power distribution, UPSes, and such - would see cuts, and 21.1 per cent said IT gear - servers, storage, and software - would be cut. The managers surveyed know that they will see employee turnover and unhappy employees who remain, and that they are going to have to curb compensation increases and the acquisition of new tech too.
So what are CIOs expecting to spend money on? Server virtualization. And not software as a service or cloud computing, it would seem.
Of the 133 data centers polled in the second survey, 86.2 per cent said that they would increase their use of virtualization to reduce the need for physical servers, but only 12.6 per cent said they would be using hosted applications, SaaS-style, instead of doing these apps in house. CIOs also expect to boost their use of video conferencing to cut their travel budgets.
On the vaguer "cloud computing" question, 22.7 per cent of those participating in the second AFCOM survey said they would increase their spending on cloud IT. Of the majority of CIOs who did not expect to spend more on cloud IT in 2009, nearly half said it was simply not applicable to their data center strategy, with others citing security, reliability, cost, and a lack of confidence in service providers as reasons why they were not planning on cloud IT. ®
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