No captionNew Zealand is a relatively early adopter of cloud services but the significant capital expenditure savings from using third-party data centres, coupled with the Government’s policies to adopt Infrastructure-as-a-Service (IaaS) has provided strong stimulus, particularly in the corporate sector and SME market.Whilst the corporate sector has increased use of data intensive applications such as data mining and data analytics, consumer segments have increased consumption of videos, social networks, mobile data and gaming. These factors have resulted in a need for increased amounts of data storage and computing capacity in New Zealand’s datacentres, reports Frost Sullivan.The research firm says the New Zealand datacentre services market grew 16.4 per cent over 2013, and last year totalled $118 million. A growth of 18 per cent in data centre service revenues is predicted for 2015 with managed hosting recording stronger growth than co-location which will ease with the increased migration to cloud services, according to Frost Sullivan’s new report, New Zealand Data Centre Services Market 2015.The report forecasts the local market to reach $272 million by 2020. Strong growth of virtual private cloud services will see managed hosting growth outpacing that of co-location. Phil Harpur, , for Frost Sullivan, says after the Christchurch earthquake, there has been increased concern over the impact of external events on businessoperations. This resulted in a growing demand for disaster recovery and business continuity services.Phil Harpur, senior research manager, Australia New Zealand ICT practice, Frost SullivanDigital media organisations were among the first category to migrate to public clouds and will be a key driver of growth within data centres over the next five years, as services such as online video and gaming become more popular.Phl Harpur, Frost Sullivan“Multiple, connected, multi-tenanted datacentres are the most effective and cost efficient way of providing these services,” says Harpur. To achieve higher economies of scale, a model of fewer, larger, centralised data centres is ideal. However, this is very difficult to achieve in New Zealand due to the relatively small size of the local market, he states.Larger IT services providers, such as IBM, are looking to consolidate their data centre footprint across both Australia and New Zealand into smaller numbers. of larger, newer and more efficient data centres in centralised locations, often through leasing arrangements with specialist third party providers.” “As New Zealand data centre customers adopt cloud services for a growing portion of their overall IT service needs, they migrate from co-location services and managed hosting to cloud services, with some companies migrating from on-premise IT systems directly to private cloud services, negating the need for core datacentre services.”The report notes datacentre services are in high demand from the telco/IT services sector as cloud providers and IT service providers grow their cloud service offerings. High growth in data traffic over the last few years has also seen the internet/media industry displaying robust growth in use of datacentre services. Digital media organisations were among the first category to migrate to public clouds and will be a key driver of growth within data centres over the next five years, as services such as online video and online gaming become more popular.The education sector has likewise increased adoption of outsourced data centre services, although a relatively slow adopter of cloud services compared to some overseas markets, says Harpur. Most New Zealand educational institutions still have a significant proportion of their IT systems on-premise, though a few of them, such as the Christchurch Polytechnic Institute of Technology have adopted the cloud relatively fast. The report points out several challenges for data centre providers.Securing sites in CBD locations (where property prices are at a premium and continue to rise; especially in Auckland), and gaining access to sufficient power is increasingly challenging. New Zealand’s relatively small market size and the lack of suitable locations to build additional capacity exacerbate this issue making it increasingly difficult for data centre owners to plan for additional capacity, the report states. Send news tips and comments to divina_paredes@idg.co.nzFollow Divina Paredes on Twitter: @divinapFollow CIO New Zealand on Twitter:@cio_nzSign up for CIO newsletters for regular updates on CIO news, views and events.Join us on Facebook. Related content brandpost Sponsored by Rocket Software Why data virtualization is critical for business success Data is your most valuable resource—but only if you can access it fast enough to address present challenges. Data virtualization is the key. By Milan Shetti, CEO of Rocket Software Nov 28, 2023 4 mins Digital Transformation brandpost Sponsored by Rocket Software The hybrid approach: Get the best of both mainframe and cloud Cloud computing and modernization often go hand in hand, but that doesn’t mean the mainframe should be left behind. A hybrid approach offers the most value, enabling businesses to get the best of both worlds. By Milan Shetti, CEO Rocket Software Nov 28, 2023 4 mins Digital Transformation brandpost Sponsored by Rimini Street Dear Oracle Cloud…I need my own space Access results from a recent Rimini Street survey about why enterprises are rethinking their Oracle relationship and cloud strategy. By Tanya O'Hara Nov 28, 2023 5 mins Cloud Computing brandpost Sponsored by Rimini Street How to evolve IT systems into innovation engines Today’s IT leaders are more than eager to modernize with best-fit cloud solutions that drive innovation and rapid business impact, but they need to do so with ROI-based solutions. By Tanya O'Hara Nov 28, 2023 4 mins IT Leadership Podcasts Videos Resources Events SUBSCRIBE TO OUR NEWSLETTER From our editors straight to your inbox Get started by entering your email address below. Please enter a valid email address Subscribe