Exclusive: 7 in 10 businesses use 2 to 5 colocation providers marking the birth of the hybrid data centre era
Facilities uptime, security and cost top the number one priorities when selecting a provider as knowing target customers becomes key for operators’ success.
Businesses worldwide have abandoned their solo-data centre infrastructure roadmaps as 66% of businesses use between two to five colocation providers, with an additional 2% using six or more operators.
Only 32% are reportedly using one colocation provider, according to Schneider Electric’s “Customer Insight: Future-proofing your colocation business” report commissioned to 451 Research.
Within the 66% category, the large majority (37%) of the 454 respondents in the US, Europe, China and Australia, said they use two colocation providers.
21% use three, 6% use four and 2% are currently deploying their businesses data assets across five colocation providers.
In the report, it reads: “The competitive pressures on colocation providers are building on a number of fronts. Our study shows that customers favour a multi-supplier approach but that their loyalty – or perhaps lock-in – to their primary provider is very strong: 92% of respondents indicated that they intend to renew their contract with their primary colocation provider.
“Colocation companies need to be positioned as the primary provider, not a number two or three.
“Customers typically have many options for colocation. Our study shows that most (68%) use multiple suppliers. Nearly half have been with their primary supplier for three years or longer.”
Most colocation companies retain customers for several years
Respondents were also asked about the average amount of years they stick with their primary colocation provider, with nearly half (47%) using their primary operator for three to four years.
The number of businesses changing colocation providers in less than one year after signing up to their services is minimal at 2%, however, nearly a quarter (23%) admit to only stay with the provider for one to two years.
Nevertheless, a large portion (28%) of organisations stays with their providers for at least five years to a decade.
451 Research said: “All are competing, to an increasing degree, with the expanded offerings and falling prices of public cloud services. Most of the colocation customers in our study said that they plan to increase their use of public cloud – as a portion of their overall data centre space – during the next two years.
“During this time, they also plan to retain their existing portion of colocation capacity. This suggests that colocation demand will hold steady in the short term – and that incremental capacity needs will be met by public cloud (and not colocation).”
The report also looks at users data centre space usage, with 39% saying their hosting space is either owned by the company or part of the organisation’s corporate facilities. This is expected to decrease to 34% over the next 24 months.
22% of today’s data centre space is used for public cloud hosting purposes, a percentage set to go up to 27 by the end of 2019.
Lastly, 39% of respondents said their data centre space corresponds to leased space and/or services from a colocation provider. According to those surveyed, the figure is projected to remain unchanged over the next two years.
When asked about the different factors they look at when selecting a colocation services provider, 50% said 24/7 security of the facility is paramount. This was followed by costs (45%) and a track record of facility uptime.
Edge computing to continue hybrid data centre trend
As for edge computing architectures, 38% of respondents said they will be using a mix of their own, private data centres and colo data centres.
This is followed by 26% who will mostly use colocation providers’ data centres and 15% who will mostly outsource to a network operator and/or an infrastructure third party, such as a telecommunications operator.
Researchers said: “Organisations will continue to adopt colocation services, but as one option among many. For at least the next several years, they will also want private hosted cloud, colocation and some on-premises equipment, and will make use of services for advice and migration and to help manage various elements.
“In this rapidly changing IT world, successful colocation providers will extend their influence among customers by mitigating risk, reducing costs, and offering greater flexibility and value-add services.
“Colocation providers will have a competitive advantage as long as they know their target customers and understand their capacity and service requirements. This will enable them to transform from being just a provider of ‘power and pipes’ to being a trusted capacity partner.”
They also said that prospects now regularly seek data centre providers that can offer high redundancy levels, metered power and streamlined contracts, with data centre operators that can be agile enough to add space and power very quickly will also have an advantage.
They added: “More customers are seeking IT and interconnectivity services from their colocation provider in addition to just leased space. This is a trend that will continue; successful colocation providers will move up the IT or networking stack, or both.”