Dive Brief:
- Most organizations favor hybrid IT strategies that combine private and public cloud with colocation data center deployments, according to a CoreSite report published Tuesday. The data center provider and American Tower subsidiary commissioned research firm Foundry to survey 300 IT leaders for its fifth annual State of the Data Center report.
- Hybrid models have gained greater enterprise traction in the last three years, CoreSite found. Three in five organizations surveyed this year already maintain a hybrid environment, compared to 58% in 2023 and 55% in 2022.
- The increase in hybrid adoption reflects a tension between two enterprise imperatives. CIOs want to rein in IT spending without sacrificing scalability and connectivity as compute-hungry generative AI technologies and ongoing digital transformation drive up infrastructure needs, according to the report.
Dive Insight:
Competing IT priorities are helping write a new chapter for hybrid solutions, as CIOs seek out the optimal environments for specific workloads. Applications with variable compute needs benefit from the buy-as-you-go provisioning of public cloud, while those with less fluctuation run more efficiently on-prem.
“Cloud is still growing very aggressively,” Dennis Hahn, principal analyst at Omdia, said. “People are just using it more wisely, being more purposeful in their placement of applications, because they understand the benefits and some of the disadvantages of cloud.”
Colocation facilities occupy a middle ground, where CIOs can direct high-density workloads without letting compute bills get out of hand. More than 2 in 5 respondents said they deploy generative AI tools, including chatbots and virtual assistants, in off-prem data centers. Nine in 10 have plans to move generative AI applications to colocation environments rather than public cloud.
“You don't have to own and operate a data center to be operating a private cloud or a private AI cloud,” Dell SVP of AI Strategy Matt Baker told CIO Dive in April. “If facilities aren’t your forte, you can run your AI in a colocation facility.”
Cost was the prime driver of colocation adoption for ERP systems and automation tools. Cloud connectivity was another reason CIOs turned to private data centers to augment on-prem storage and backup capacity.
But multicloud interoperability remains a challenge. Fewer than one-third of respondents said their current colocation provider has adequate integrations with more than one public cloud provider.
CIOs looking for private data center space are contending with an additioinal complication — a capacity crunch in many major markets.
Despite an ongoing building boom led by AWS and Microsoft, rental fees for colocation space in North America increased 20% year over year during the first three months of 2024, according to CBRE research. The price spike reflected a dearth of availability, as vacancy rates dropped to the low single digits in heavy usage regions like Chicago, Northern Virginia and the Pacific Northwest.
CoreSite and its parent company are building out, too. American Tower broke ground on the first of its edge data centers, located in Raleigh, North Carolina, in June. CoreSite received approval to build its third New York-region facility and a three-building campus to serve the Denver area in December.
Disclosure: CIO Dive and Omdia are both owned by Informa. Omdia has no influence over CIO Dive’s coverage.
