The 'challenging' state of the industry

This year’s Keysource State of the Industry Report, which gathers the views and insights from over 250 IT Directors in UK & Europe showed that decision makers in the sector are continuing to face a number of challenges. In last year’s survey we reported on investment in the sector as double that of the previous year and this year’s activity suggests a similar trend driven by continued digitalisation, IT transformation and data growth. Advances in technologies and their applications continue the demand for highly available and flexible hosting services.

The impact of this ongoing demand for the IT decision makers we surveyed is creating a range of competing issues including security, sustainability, supply chain and skills shortages. However, this is against a backdrop of other operational challenges, particularly as IT location has become more of a consideration in the last 12 months – an increase on last year. This is being driven by geographical or edge demand and a need to access cloud services. We have seen this at Keysource when working with our customers to undertake IT transformation we are often implementing hybrid hosting models to best flex with application and user requirements.

It is also worth noting that this is echoed by our respondents whose attitude to the cloud is changing with less than half (43%) continuing to adopt cloud first strategy and a quarter finding it difficult to use the cloud for everything. In our previous survey over 86% thought one solution could meet all of their needs so there is a realisation that one size does not fit all and whilst the cloud is still a game changer it is not utopia. Concerns were also raised about cloud capacity following Microsoft’s announcement in July that it is experiencing capacity shortages.

At Keysource we commonly see application latency limits determine requirements for cloud on-ramp or express route services driving location and, for global organisations with a distributed footprint, inter-site connectivity becomes a major influence providing an easy platform to provide service resilience. The cost of services, now heavily influenced by local power costs, is a key secondary driver.

However, according to our survey 78% of respondents believe that their existing investments are preventing IT transformation – a figure similar to last year suggesting little or no progress in this area. Are organisations failing to understand the money savings change could bring as they are focused on the investment and/or don’t want to admit they may have got it wrong? Or are they unaware of the options available to them?

It may be that in many cases this needs a complex business case which takes time to define dependencies and needs multiple stakeholders to navigate it. For example, given the high capital cost to build a data centre, where the asset is typically written down over a period of 10 years or more, writing off the value early, completely removing an asset from the books, can have an impact for the business and often introduces other considerations and other stakeholders.

For third party managed services or colocation contracts, having relatively long contract terms of 5 or 10 years hasn’t been uncommon. As such, any transformation will need to factor in how best to leverage these commitments or justify the return for implementing alternatives, whilst potentially paying the penalty of early termination.

In conclusion, we are operating in a world with a rapidly expanding social and economic consumption which relies on processing, data and transfer to be both secure and sustainable, alongside a skills shortage and severe supply chain issues. As an industry we are used to change and challenges but this might be our greatest one yet.