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Data centre infrastructure spending still on the rise, despite setbacks

Australian data centre infrastructure spending is expected to grow at a rate of 6.5% in 2021, according to new data from Gartner.

According to the analysts, global spending on data centre infrastructure is projected to reach US$200 billion in 2021, an increase of 6% from 2020.

Despite a 10.3% decline in data centre spending in 2020 due to restricted cash flow during the COVID-19 pandemic, the data centre market is still expected to grow year-over-year through 2024.

In Australia, organisations are forecast to spend A$3 billion on data centre infrastructure in 2021, an increase of 6.5% following a 10.4% decline in 2020.

Gartner states that lockdowns from COVID-19 will prevent more than 60% of planned new facilities construction in 2020, which is why data centre infrastructure revenue will decline in 2020.

End-user spending is expected to grow in the single digits starting in 2021. With slow improvement in economic growth, data centre infrastructure providers should seek to prioritise a select set of existing and new customers, according to the analysts.

Specifically, Gartner recommends organisation’s train their sales force to engage with the chief financial officer (CFO) and chief procurement officer on a set of cost optimisation initiatives. This could include renegotiating IT contracts, optimising cloud costs, and consolidating IT.

In addition, Gartner states that organisations should craft an industry playbook that helps technology providers understand COVID-19’s impact on a range of different industries to then recommend short to midterm action items for the given providers by each industry.

Finally, organisations should invest in a new go-to-market model for digital natives to drive innovation, and build momentum around hybrid IT and consumption-based pricing to improve mind share with digital natives.

Gartner senior research director Naveen Mishra says, “The priority for most companies in 2020 is keeping the lights on, so data centre growth is generally being pushed back until the market enters the recovery period.

“Gartner expects larger enterprise data centres sites to hit pause temporarily and then resume expansion plans later this year or early next. However, hyperscalers will continue with their global expansion plans due to continued investments in public cloud.”

Mishra says, “Much of the reduced demand in 2020 is expected to return in 2021 when staff can physically be onsite.

“For now, all data centre infrastructure segments will be subject to cost containment measures and enterprise buyers are expected to extend life cycles of installed equipment.”