The massive growth in cloud computing in recent times is clearly changing the data hosting paradigm. Virtualization has helped enormously, by almost becoming a standard within the market. This trend has not only heavily affected the financial sector, but also the telecommunications industry, commerce and government.
According to data from IDC, Cloud Computing is still not very visible, despite its impact on the server market, especially among non-mission critical workloads. Profits from this segment have fallen every year (by 13.0% in 2018, compared to 2017 and 2016). Nevertheless, these declines are still small numbers, so they do not indicate a plunge.
Mr. Matías Fuentes, IT Services Analyst for IDC Chile, said “New workloads are affected, so too are application developments and infrastructures that companies implement to address seasonality.” He explained “For example, when the retail sector is faced with high demand days such as Mother’s Day, at Christmas or on CyberDays, or when the educational sector faces registration processes.”
Mr. Javier Romano, Regional Technology Director at SONDA, says that the main issue has been procurement, which is moving from CAPEX to OPEX. “This means that in many private, dedicated, shared or public cloud cases an “as a Service” (aaS) model is used.”
He mentioned that while there are still some companies that acquire servers (Capex) for financial reasons, the vast majority prefer to consume them “as a service” (Opex). “IT organizations have decided to take advantage of cloud computing benefits to ensure a suitable, timely response to their business requirements.”
Advantages such as flexibility, versatility, scalability and cost optimization require organizations to change how they manage computing platforms. Without proper control, some customers have found “surprises” when they begin to use an “aaS” model. Mr. Romano said “Success depends on how these are managed, as various tools and services can be used to implement such models, without losing control of budgets and generally controlling resources.”
Virtualization and hyper-convergence
Server virtualization is widespread across the country. It is a common feature within companies, and has facilitated migration to the cloud, since it is easier to migrate virtualized servers.
Mr. Fuentes said “The cloud computing trend increases by 33.8% each year. Similarly, hyper-convergence grew at 35% in 2019, mainly because data that used to be stored on external disks is now being stored using these technologies, given the efficiency of IT processes.”
Mr. Romano believes that virtualization is now the industry standard, since there are very few circumstances where the use of dedicated physical servers can be justified. “This was facilitated by virtualization systems becoming easier to manage and the flexibility of multiple environments that extend the capabilities of physical computers, in fact they can now even manage hybrid (private and public) clouds.”
Hyper-convergence provides a simplified administration and management model for many sizes of organization, which results in lower operational costs. Mr. Romano said “Large-scale organizations use SDX platforms (Software Defined Everything), but they physically separate the computing, storage and network layers.” He adds “Hyper-convergence provides new options, but organizations should analyze the context and make a suitable decision in each case.”
Functions and segments
Today’s servers are used for various purposes, which include storage, e-mails and software. However, Mr. Fuentes confirmed that not all functions are equally important. “There are a small number of companies that use servers for e-mail services, with a large number of companies hosting their messages in the cloud.”
Far more servers are purchased for other functions, for example for ERP or core financial systems used by the financial industry, to ensure top service performance and availability.
Mr. Romano explained that “The use case depends on the requirements of the software that will run on that server, to comply with quality assurance standards or performance issues, but in most cases it makes sense when the investment in the complete stack is analyzed.” He added “In many cases the software is more onerous than the hardware. In fact dedicated servers can be used to optimize licensing for some software developers. Essentially, we have seen more costs constraints applied to physical machines than specific workload requirements.”
Acquiring servers in Chile spans all productive sectors. However, it is far more critical for some industries. Mr. Fuentes reports that “Close to 12,000 physical servers were acquired in 2018. 30% were acquired for the financial sector, which has very specific security requirements. The telecommunications industry, commerce and the government are also very important.”
Mr. Romano added that it is usually medium to large sized companies that acquire servers. “Private or public cloud services are normally acquired in the SME segment, as they can remain efficient, regardless of whether their business increases or decreases. Organizations with scarce resources need this flexibility.”
According to the experts, technology will continue to evolve and the density of computing and storage on each rack will continually increase. However, customers are becoming less concerned with the characteristics of physical servers, and base their decisions on the overall package performance, which encompasses hardware, software, support and management services. Mr. Romano said that “Although competitive differentiation has always been achieved by relying on an experienced and capable IT services company, the wide range of options available means that not only are considerations other than price becoming critical, but also how these solutions ensure that applications will function optimally, including being able to change them. Therefore, we believe that a partner that truly can support the complete stack is essential.”
He believes that if equipment is designed to process only one workload, probably the differentiator will be the price. “However, if that server must be integrated into other functions and provide internal or external critical services, then other important factors that are going to take precedence over price.” He said “Energy efficiency is an important issue for large server procurements, for example data centers, but the difference is not material for small server procurements.”
Mr. Romano concludes by affirming that the specifications must match the requirements of the workloads and applications running on that equipment, which will occupy an increasingly smaller physical space, will be more energy efficient and have greater density. “Selecting a housing/hosting provider that can deliver increasing efficiency is vital to the total value of the transaction. A customer acquiring servers must have good local support. The quality of after-sales services is vital when making a decision.”
Published in: Channel News