What 2016 holds for Asia’s data centre market

• Continuing shift to distributed, interconnection-centric infrastructure
• Singapore to continue its reign as region’s leading data centre hub

DATA centres have long been evolving from their original role as simple data warehouses, and today play a crucial multi-faceted role, delivering entire IT ecosystems to increase business value.
 
As the data centre market continues to evolve, we peek into our crystal ball and share predictions for the industry in 2016.
 
CSPs to continue fuelling growth
 
Over the past 16 months, we have seen a shift in the types of organisations driving data centre demand; moving from multinational corporations, IT solution providers, large telecommunications players and financial service institutions, to cloud service providers.
 
The growth in demand from these providers has been fuelled by the shift to hybrid cloud models by many enterprises, as well as the outsourcing of latency-critical, non-sensitive servers and applications to the cloud.
 
The financial services industry, which was initially the slowest to adopt cloud solutions, is now taking the lead, with some companies in the industry outsourcing 100% of their IT infrastructure.
 
The rise of bundled managed services is putting smaller, niche cloud service providers and pure storage vendors at a disadvantage, with many likely to lose market share to larger providers that can offer a full suite of services.
 
As a result, we can likely expect more mergers and acquisitions within the industry in the next year to support this consolidation of IT services.
 
The value of interconnectivity
 

 
Interconnectivity will take centrestage in 2016 as enterprises become increasingly interdependent and explore opportunities to collaborate in real-time to build offer new products or services.
 
Ubiquitous user access and a host of external business and IT suppliers means enterprises are having to manage multiple points of engagement with more end-users and business partners than ever before.
 
The demand currently placed on existing IT architectures will quickly become overwhelming and cause a shift towards distributed, interconnected infrastructure.
 
According to our Enterprise of the Future report, there is a rapidly accelerating global demand for interconnection.
 
The survey revealed there is significant momentum behind the adoption of interconnection-dependent IT strategies by enterprises seeking to drive revenue growth, and the data centres of tomorrow will need to support this increasing demand for interconnection.
 
Singapore set to maintain lead
 
According to Structure Research, revenue in the Singapore commercial data centre market amounted to approximately US$1 billion in 2014 and is predicted to grow by 20% by 2016. The city-state currently accounts for about 50% of South-East Asia’s data centre capacity.
 
While there is, and will certainly continue to be, demand in other countries in the region, larger scale deployments are concentrated in Singapore.
 
It is natural for Malaysia, Indonesia and Thailand to leverage their landmass advantage to vie for a bigger piece of the pie. However, simply having ample space, and a stable supply of power, is no longer enough to give a country an edge in the market.
 
Singapore’s trump card lies in its ability to provide both data centre providers and users with heightened connectivity.
 
The establishment of submarine cable systems has proven to be a pivotal factor in determining Singapore’s pole position in the region. The city benefits from 15 submarine cable systems able to provide high-bandwidth capacity, especially important to businesses operating in industries that demand network-rich infrastructure, such as finance.
 
These cables also give customers scalable, low-cost and low-latency connectivity – a desirable advantage for multinational companies and startups with global expansion plans.
 
As a result, a multitude of companies are flocking to Singapore and even choosing to headquarter their businesses here.
 
This in turn has given rise to several financial clusters springing up in Singapore, further propelling the need for efficient cloud services.
 
The heightened digital traffic that passes through Singapore’s data centres allows for an interconnected ecosystem where enterprises and business partners can enjoy world-class network and cloud services.
 
The year ahead
 
In essence, the data centre sector has been part of a sea change over the years, and 2016 looks set to be no different.
 
Cloud service providers are set to further propel the growth of data centres as they continue to meet rising demand for managed services and hybrid cloud.
 
Interconnectivity will take centrestage as more enterprises wake up to the benefits of adopting distributed, interconnection-centric infrastructure.
 
Last but not least, Singapore is expected to continue its reign as the leading data centre hub in the region, thanks to its ability to offer enhanced interconnectivity and world-class services.
 
Clement Goh is managing director, South-East Asia, at Equinix.
 
Related Stories:
 
Four data centre models emerging: Emerson
 
5 data centre trends for 2016, according to Emerson Network Power
 
The secret behind Singapore’s data centre success
 
Five data centre trends to watch
 
 
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