Data centre offshoring set to rise

DATA CENTRE OFFSHORING TO DRAMATICALLY RISE IN NEXT FIVE YEARS

IBC - 31 January 2007

40% of organisations are risking their corporate information by having their data centres located nearby.

Nearly two thirds (64 per cent) of the UK's biggest companies will offshore their data centres to other nations in the next five years, according to new research conducted by Vanson Bourne for independent IT consultancy, the DMW Group.

Despite nearly a quarter of organisations currently offshoring an aspect of their data centre, the remainder continue to house their data centres in the UK where land and resources are expensive.  Furthermore, 40 per cent of the organisations surveyed are not following best practice by housing their data centres within a 25 mile radius of major staff locations.  In the event of a major event, businesses who co-locate IT and business staff risk having to deal with a staffing crisis at the same time as trying to recover their IT.

David Elwen, director at DMW, said: "Data centre outsourcing is a growing market but there has been reluctance in the past to see the benefit of it. Firms are considering relocating their data centres to spread risk and some are realising that by moving their data centres to other nations, particularly emerging countries in Eastern Europe and India, they can make large savings in terms of cost and resources. This research seems to show that the majority of IT managers believe that the trend is inevitable, but it is not a straight-forward process and it is vital that they make the right choices for their organisation and plan carefully for what would be a major change to a key service."

Nearly half (43 per cent) of organisations hadn't already offshored through fear of the technical complexity of doing so. While over a third (36 per cent) of IT managers cited employment issues and resources as a key barrier.   Data security and regulatory issues were also major concerns.  However, if competitive pressures dictated it over a quarter (28 per cent) would consider offshoring in the short term.

Interviews were conducted with fifty IT managers and IT directors in some of the UK largest retail, financial services, pharmaceuticals, manufacturing and energy companies, analysed their data centre strategy and perceptions of offshoring.

Perceptions of offshoring differed greatly across industry sectors, with the more cost-sensitive sectors such as retail being the most enthusiastic.  All retail companies questioned said they were looking to offshore at some point in the future, while over two thirds of financial institutions (67 per cent) surveyed said they would not be offshoring at all. The majority of pharmaceuticals were planning to offshore, and 75% of the energy sector and 67% of manufacturing firms would consider offshoring in the next three to five years.