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AFCOM: Data Center Management:
Data Centers Find Innovative Response to Current Economic Challenges

  Column published in DM Review Magazine
August 2003 Issue
  By Jill Eckhaus

According to the latest report from AFCOM's Data Center Institute, the enterprise data center community is responding to current economic challenges with a variety of innovative approaches that include true alignment of information technology (IT) with business requirements, asset consolidations, improved budget accountability and enhanced security.

The study revealed that data centers managed to pinpoint the fine line between technology-driven robust spending and progress-stifling austerity. According to the report, there is a strong emphasis on showing a rapid return on investment (ROI) for any expenditure. As a general rule, expenditures that can't demonstrate a significant ROI within two business quarters are not made.

Thorough accounting seems to be the order of the day: The ongoing financial pressures on IT managers to adhere to strict budgetary guidelines are causing many of them to implement detailed monthly and quarterly financial reporting. The report shows that market leaders are gaining greater control over their expense categories by requiring any variances to be explained by the responsible manager.

Enterprise data centers continue to invest in IT infrastructure, but only in direct support of the underlying business. Leading IT organizations are using this period of economic uncertainty as an opportunity to create the tightest possible integration with the business and to achieve true alignment of IT with business requirements.

On the whole, it proved to be rather difficult to throw data centers off-track with economic uncertainties - they have long-term projects they are reluctant to sacrifice. In the midst of the 2001 economic downturn when most organizations were frantically cutting budgets and downsizing, most data centers (67 percent) kept or increased their budgets, in many cases by 16 to 25 percent, although 6- to 15-percent increases were more common. Industry-watchers would have expected this situation to change as the recession developed. Indeed, some adjustments took place, but the trend continued throughout 2001 and into 2002 when the majority of the organizations surveyed hiked their budgets.

Another consistent practice uncovered involves finding and eliminating duplication of resources, including data center consolidations, server consolidations, storage consolidations through storage area network (SAN) implementations and ongoing reviews of installed software. Leading IT organizations appear to have embraced e-business as a fundamental part of getting closer to customers and reducing costs. Key areas addressed include self-service employee systems, online billing and online customer access solutions.

Data centers have been perceived as a rather conservative environment, wary of new ways brought about by e-business. Recent findings have radically changed these perceptions. Data center managers applied their practical, no-nonsense approach to hot innovations and adopted what really worked. Most data centers (74 percent, per the report) developed a business strategy and kept investing in e-business systems when dot-coms were cutting technology spending. For example, in Q1 of 2001, 36 percent of the surveyed centers increased their budgets specifically to implement e-business programs. The trend continued throughout the year and even the September 11 terrorist attacks failed to affect it significantly. More than 27 percent of the data centers studied in Q3 of 2001 were still planning to implement e-business/e-commerce solutions. The trend continued into the last year, with 39.2 percent of data centers planning to implement e-business solutions.

The study revealed that data centers are becoming the primary keepers of their organizations' electronic defenses. Enterprise data centers' information security budgets have been consistently growing over the last five years, with 20 percent of organizations showing significant increases.

Data centers servicing "traditional," pre-Internet era industries appear to be making the most investment to overcome cyber security challenges. For example, 21 percent of manufacturing organizations report that they are spending more than $1 million on security. Other industries spending $1 million-plus are transportation/utilities (17 percent), insurance/real estate and financial/accounting (13 percent each), followed by banking, data processing services and federal government (8 percent each).

The Data Center Institute's findings consistently prove that enterprise data centers' reputation as a stronghold of IT conservatism is largely exaggerated. The enterprise data center industry is showing remarkable resilience, adaptability and readiness to take on sophisticated new challenges. Their intrinsic realism and practical grounding are helping them to rapidly adopt new technologies and apply them in the most efficient way possible. The data center's traditional role as a support function has become a thing of the past. Data centers have quickly become core elements that ensure their organizations' stability, security, growth and prosperity.


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Jill Eckhaus, president of AFCOM, is responsible for the worldwide activities of the organization including membership, publications, marketing, sales, conferences and trade shows. Eckhaus has been with AFCOM for more than 10 years. Prior to becoming president, she was AFCOM's executive vice president, in charge of the organization's day-to-day activities. In this position, she also headed AFCOM's Strategic Partner Program and was instrumental in the creation of AFCOM's Data Center Institute. Eckhaus may be reached at jeckhaus@afcom.com.

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