The latest AVANT 6-12 Report finds that colocation is a favorable option for meeting the demands of resource-intensive AI applications, ensuring security and compliance, and optimizing resources.
CHICAGO, August 7, 2024 – AVANT, a platform for IT decision-making and the nation’s premier Technology Services Distributor, released its Analytics 6-12 Report on Colocation and Cloud. The report examines the use of colocation and third-party data centers by organizations ranging from the Fortune 500 to small- and medium-sized businesses (SMBs) across various vertical markets, including technology, financial services, and healthcare. It also provides insights that Trusted Advisors can use to guide their customers in the procurement and deployment of these solutions.
“According to our data, those currently seeking colocation have 59% of their infrastructure on-premises while 16% is deployed in cloud services,” said Alex Danyluk, Managing Director, AVANT Analytics. “While cloud adoption continues to grow, colocation remains a better choice for many. We found 4 key trends impacting the colocation market dynamics and influencing migration of workloads into data centers.”
4 key trends are influencing the colocation marketplace:
- Repatriation: Customers are finding that some workloads, such as databases with low latency and high bandwidth needs, may be better suited in dedicated environments, causing customers to migrate back to on-premises and data canter environments.
- Post-COVID real estate trends: With changing employee working habits, customers are looking to get out of leases, which may require relocating IT infrastructure. Colocation is being explored as an opinion, as many of these legacy systems were not well-suited for cloud deployments.
- AI consumption of colocation and power: While the average customer seeking colocation services is not deploying AI, they are still impacted by the rapid consumption of available data center space and power needs of rapidly growing AI implementations. This is impacting the average colocation buyer’s availability and price for services.
- Changing cloud connectivity needs: We have seen a rollercoaster of direct connect colocation requests to AWS, Azure, and GCP over the last few years, peaking in 2021 with 42% requesting direct connects from colocation deployments to a low of 27% in 2024. At the same time customers uncertain of their needs climbed to 46% in 2024 from a low of 33% in 2021. Customers need more assistance than ever in deciding how to best implement their off-premises connectivity needs.
“To grow, businesses must have scalable IT infrastructure to navigate the evolving technology landscape,” said Chip Hoisington, AVANT Senior Director of Engineering and Practice Lead of Connectivity, Colocation, and Wireless. “A flexible tech stack enhances customer experience, optimizes resources, and embraces new solutions. Despite the growth of cloud services adoption, concerns over performance, security, and cost remain. AVANT and our Trusted Advisors see colocation services in third-party data centers as a way to tackle these challenges.”
The Colocation and Cloud 6-12 Report highlights both the opportunities and challenges associated with colocation and cloud services, offering a look into what the future of this technological landscape looks like for IT decision-makers. Customers report their top concerns when moving from on-premises environments include security, the ability to customize environments to meet their needs and preference for CAPEX vs OPEX. It also presents key strategies that Trusted Advisors can leverage to initiate conversations with their customers about updating their infrastructure or meeting important compliance guidelines.
One-third of organizations opting for colocation AVANT’s understanding of the patterns, behavior, and tendencies in the cloud infrastructure ecosystem comes from regularly surveying end users of various communications and infrastructure services through Interactive Quick Assessments (IQAs). For a deeper look into the colocation and cloud market in 2024 and beyond, AVANT utilized Structure Research, an independent research and consulting firm, to analyze IQA data from the five-year period spanning 2018 to 2023.
Philbert Shih, Managing Director of Structure Research, added, “The shift to the cloud is ongoing, but organizations still favor on-premises deployments due to the challenge of adapting applications to the cloud and, in some cases, organizational inertia. However, the need for flexibility and improved security against ransomware is pushing more enterprises towards a hybrid cloud approach, with colocation being a preferred option for nearly a third of organizations seeking off-premises solutions, pointing to increasing opportunities for Trusted Advisors within this space.”
The rise of AI leads to surging power requirements
Another trend impacting the colocation and cloud marketplace is the increasing use of AI-driven technologies, which is leading to greater demand for power and electricity. “Digital media companies are contributing to some of this demand,” said Hoisington. “Still, we are finding more mid-market companies transitioning to colocation facilities due to the increasing power demands, making power requirements in colocation and third-party data centers the ‘next big thing’ Trusted Advisors must watch for in the upcoming year.”
Resilience is key to business continuity
The rising power demands have raised concerns about potential service interruptions and the continuity of business operations. “We’ve seen utilities challenged to keep up with power demand in big cities, and moving forward, customers should plan for the potential of brownouts and power disruptions, especially in periods of peak demand such as summer heat waves,” said Hoisington. “To alleviate these concerns, mid-market and larger enterprises must have a second facility outside of a particular power grid for disaster recovery, and the Trusted Advisor is a powerful resource.”
When considering colocation service providers for IT needs, Trusted Advisors play an important role in guiding their customers in conducting thorough due diligence to ensure they select a provider that aligns with their specific requirements and objectives. The AVANT 6-12 Report on Colocation and Cloud offers a checklist for Trusted Advisors that encompasses critical factors, including power and cooling, sustainability, security, and compliance.
About the AVANT 6-12 Report
The AVANT 6-12 reports are designed to help IT decision-makers solve key business challenges they are facing in the next six to 12 months. To access the AVANT 6-12 Report on Colocation and Cloud, click here. Previous AVANT 6-12 reports are available here.
About AVANT
AVANT is a platform for IT decision-making and the nation’s premier distributor for next-generation technologies. AVANT provides unique value to its extensive network of Trusted Advisors with original research, channel sales assistance, training, and tools to guide decision-making around IT services that promote business growth. From complex cloud designs to global wide-area network deployments to the latest in security services, AVANT sets the industry standard in enabling its partners and clients to make intelligent, data-driven decisions about services, technology and cost-effective communications. For more information, visit www.goavant.net, or connect on Twitter and LinkedIn.
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Media Contact:
Suzanne Collier
WhiteFox PR (for AVANT)
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