Datacenter Strategies, Part 2: Consolidation, Convergence and Cloud

Author(s):
Alexander Tabb
Date:
September 30, 2014
Research Type:
Focus Note
Executive Summary

“Datacenter Strategies Part 2: Consolidation, Convergence and Cloud” is the second note in a two-part series that looks at datacenters within the institutional capital markets. In the first note, “Capital Markets Datacenter Topology: Velvet Rope and the Bone Yard,” we examined which datacenters are on the shortlist of premier capital markets hot spots, what that concentration means for trading businesses, and what it signals for the broader datacenter business. In part 2, we look at the shifting landscape of datacenter management and what market participants should be thinking about as they move forward with their datacenter strategies.

Everyone recognizes that market cycles are an unpleasant fact of life; however, recent foundational changes within the capital markets have little to do with cyclical changes and more to do with an underlying shift in how The Street operates in today’s landscape. Shifts in market dynamics and increased governance and compliance requirements have increased costs, compressed margins and negatively affected profitability at most major financial institutions. With expectations of slower growth and less predictability going forward, firms are reassessing their underlying computing assumptions and are looking to lower their cost structures.

The technology spending boom has ended, and the economics of building and operating traditional datacenters are also undergoing a secular change. The industry is rife with excess computing capacity, driving down utilization rates in facilities with high operating costs and depreciation schedules. Firms are evolving datacenter strategies toward a more consolidated approach, with converged, software-defined architectures to enable faster, more agile service provisioning and capacity elasticity. This new strategic focus extends to outsourced infrastructure and services, which continue to become more economically viable amid a cloud price war, as well as more secure and compliant, particularly for secondary and tertiary data.

TABB Group believes this trend in datacenter investment represents a rudimentary shift in the industry, as firms leverage newer datacenter architectures and technologies to enable reduced costs, improved efficiency, greater security and lower risks. The competitive landscape is also shifting away from speed and capacity and toward cost and efficiency advantages. This TABB Group report examines the trends in datacenter strategy and the technologies that underscore the need for IT teams at financial services organizations to evolve from managing infrastructure to managing data and computing resources. For all the emphasis on cost and efficiency, datacenter strategy is also about data management, with the ultimate goal to extract more value from the organization’s data to improve decision outcomes and competitiveness amid unprecedented change in capital markets.

In this TABB Group Vision Note, “Datacenter Strategies, Part 2: Consolidation, Convergence and Cloud,” we look at the emerging datacenter management trends within the industry, identifying what key metrics, technologies and methodologies innovative firms in the institutional capital markets are using to keep their operations lean and their technology on the cutting edge.

Areas of Interest
  • FinTech
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