Data Center Spending Shake-Up

Survey shows private clouds and server virtualization are driving a shift toward data centers as an operating expense 

Cloud and virtualization are changing the way CIOs look at their data centers and, more importantly, how they spend on them.

The CIO Data Center Strategies Survey, which polled 416 CIOs, indicates that data center spending is holding steady at about 25 percent of IT budgets on average, but it will gradually shift from a capital expenditure (capex) to an operational expenditure (opex). This is suggested by the finding that CIOs think server virtualization (49 percent) and private clouds (34 percent) will have the largest impact on their data centers over the next two years. The shift toward data center spending as an operating expense will likely be a gradual one: CIOs expect opex spending to go up 7 percent over the next two years while capex spending will decrease by 5 percent.

Barr Snyderwine, CIO of Hargrove, an event and trade show company, says his core data center is currently a capital expense and accounts for around 20 percent of his IT budget. He expects it to become slightly more of an operating expense as he explores bringing some customer websites to the cloud. His data center is becoming a higher priority. “We have more content than ever,” he says.

Sixty-five percent of those surveyed agree with Snyderwine, saying their data centers will become significantly more important in the next two years. Furthermore, 52 percent of CIOs said they are very confident that they are making the right data center investment decisions to support their strategy.

Fifty-eight percent of respondents said they operate their own data centers and 43 percent increasingly view them as a strategic asset, compared to 32 percent who see them as tactical and 20 percent who think they’re transformational.

John Panicker, CIO of Texas Gulf Bank, says data centers are a popular topic at his company’s management and board meetings. “The strategic plans of the organization are dynamic,” he says. “And the data centers will play a wider role in the growth of the company and revenue.”

Copyright © 2011 IDG Communications, Inc.

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