Friday, 09 October 2020 11:56

Australian data centre infrastructure spending to return to growth in 2021, says analyst

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Australian data centre infrastructure spending to return to growth in 2021, says analyst Pixabay

Australian data centre infrastructure spending is forecast to return to growth of 6.5% in 2021, despite an estimated decline of 10.4% for this year due to restricted cash flow during the pandemic.

The positive outook for next year comes with Australian organisations forecast to spend $3 billion on data centre infrastructure in 2021, according to the latest global infrastructure spending report from research firm Gartner.

Gartner says that global spending on data centre infrastructure is projected to reach US$200 billion in 2021 - an increase of 6% from 2020.

“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.”

Gartner cautions 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 - while 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,” Mishra said.

“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.” 

Gartner lists three actions “to recover” data centre infrastructure opportunities. advising data centre infrastructure providers that they should seek to prioritise a select set of existing and new customers, specifically recommending:

  1. Training the organisation’s sales force to engage with the chief financial officer (CFO) and chief procurement officer on a set of cost optimisation initiatives such as renegotiating IT contracts, optimising cloud costs, and consolidating IT.
  2. 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.
  3. 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.

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