Despite 10 per cent spending decline in 2020, the data centre market will rebound over the next four years.
End-user spending on global data centre infrastructure is projected to reach US$200 billion in 2021, an increase of six per cent from 2020, according to the latest forecast from Gartner. Despite a 10.3 per cent decline in data centre spending in 2020 due to restricted cash flow during the pandemic, the data centre market is still expected to grow year-over-year through 2024.
“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,” said Naveen Mishra, senior research director at Gartner. “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.”
Lockdowns from COVID-19 will prevent more than 60 per cent of planned new facilities construction in 2020, which is why data centre infrastructure revenue will decline 10.3 per cent in 2020. End-user spending is expected to grow in the single digits starting in 2021.
“Much of the reduced demand in 2020 is expected to return in 2021 when staff can physically be onsite,” said Mishra. “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.”
With slow improvement in economic growth, data centre infrastructure general managers should seek to prioritise a select set of existing and new customers. Specifically, Gartner recommends:
Training the organisation’s sales force to engage with the chief financial officer (CFO) and chief procurement officer on a set of cost optimization initiatives such as renegotiating IT contracts, optimising cloud costs, and consolidating IT.
Crafting 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.
Investing in a new go-to-market model for digital natives to drive innovation. Build momentum around hybrid IT and consumption-based pricing to improve mind share with digital natives.