The State of the Software-Defined Data Center Market

The software-defined data center market remains an area of significant growth in both the U.S. and abroad. According to Markets and Markets Research, the market will expand to more than $96.6 billion by 2023. Such growth reflects a compound annual growth rate of 23.6% between 2018 and 2023. The sudden surge in growth derives from the value added through software-defined data centers, ranging from increased flexibility to streamlined infrastructure management. As more companies adopt software-defined technology, growth will continue and may supersede projections. Of course, additional segment analysis within the expected growth reveals much more about the state of the market.

Growth Within the Software-Defined Data Center Market.

Growth within the software-defined data center market is not surprising. The use of software-defined services forms a crucial building block for organizational IT advancement. Despite the advantages offered by software-defined data centers, complexities remain, and these complexities require the use of services beyond a traditional IT team’s resource, because of this many are turning to as-a-service providers for help.

Services surrounding software-defined data centers will wax in conjunction with growth in the market. Such changes will drive more businesses to adopt software-defined infrastructure, speeding adoption rates and pushing the boundaries of expected growth.

North America retains the largest market share of the software-defined market. However, growth within the Asia Pacific (APAC) market will achieve the highest CAGR by 2023. APAC’s strong growth resides within the emerging markets and increased industrialization of the region. Rapid developments in basic IT infrastructure within the APAC region will further increase the need for more power, resources and accountability in IT management. It creates a self-propagating cycle, driving continued investment in software-defined data centers and ongoing development.

What’s Driving Increased Adoption of Software-Defined Data Centers?

The reasons for the adoption of software-defined data centers allude to greater control and management of both software and hardware. As a cost-effective solution, software-defined networking centralizes control and configuration. Streamlined infrastructure management contributes to dynamic, manageable and flexible solutions to meet the ongoing revolution of business’s IT needs. The trend exists in all industries. According to a white paper published by Computer World, up to 13% of servers purchased in the next year will be for the use of software-defined data centers for managing predictive analytics, machine learning and artificial intelligence. However, firms may not realize the extent of challenges that arise in using legacy platforms and managing the modern IT infrastructure.

Staying competitive requires an agile, flexible IT infrastructure. While the use of virtual environments enables flexible infrastructure, they retain a degree of rigidity, especially when the virtualization is limited to a single process.

For example, virtual storage without the use of virtual networking increases risk and opportunities for lost efficiency.

Although companies have embraced virtualization of infrastructure, the right blend of on-premise and software-defined data centers can open the door to lost opportunities. Meanwhile, current data center consolidation trends suggests that solutions within the existing, traditional infrastructure exist. Unfortunately, consolidation still leads to rigidity and lost efficiency in managing data.

These factors push more businesses to adopt innovative IT infrastructures, including software-defined data centers and hyper-converged architecture (like HPE SimpliVity Hyperconverged Infrastructure or Nutanix Hyperconverged Infrastructure Platforms). The key to success lies within virtual servers, storage and networking, as well as the resources to call any defined server at will, enabling automation. In a sense, it all goes back to the use of a software-defined system, and like all IT needs, hardware is necessary. So, what should businesses do now?

That is a loaded question. Businesses must not throw out their existing hardware. They should upgrade machines and equipment as necessary, but at the same time, users should take steps to prepare for a software-defined future.

Consider this: While 95% of businesses see the use of software-defined data centers as crucial to long-term IT strategies, only 27% have taken steps to prepare for implementation. The software-defined data center of today transforms migration into a single process. It reduces the time necessary to deploy, process and maintain IT infrastructure, as well as creates a pathway toward a cohesive virtual environment.

The simplest way to achieve this feat lies in leveraging an application programming interface (API) to unify virtual environments. Layering software capabilities via an API further increases the level of centralization, and through shared resources and management within software-defined data centers, all users realize increased utilization and reduced downtime.

How Managed Services Will Continue to Shape the Market.

Enterprise technology decision-makers express immense demand for IT automation, and there is only so much a business can achieve internally without advanced coding and infrastructure management processes. As with all advancements, modern technology streamlines, read “simplifies,” operations. This forms the basis for digital transformation, and it empowers a new level of technology for use in retail, supply chain management, financial markets, healthcare and more. The role of a traditional, on-premises data center has changed, and as enterprise workloads have grown in complexity, simply rearranging internal operations to account for changes is not enough to succeed.

Gartner noted that 10% of enterprises closed traditional, on-premises data centers by the end of 2018, says ZD Net. By 2025, a mere two years after the studied period, up to 80% of all enterprises will rely on cloud data centers. By 2021, experts predict cloud-based computing, including hybrid cloud solutions and traditional data center environments, to perform 94% of workloads.

Migrating to a software-defined data center will not be an easy task, creating the grand irony and confusion within the state of the market. Digital transformation implies a simplification of actions, but for companies operating outdated, traditional data centers, migration may simply seem out of reach. Legacy systems continue to handle a bulk of operations, and others seek to rely on exclusively dedicated enterprise solutions, such as AWS, Google Cloud, HPE or Microsoft Azure. To maintain strategic value, companies must modernize infrastructure, and software-defined data centers to provide the pathway toward advancement.

The path begins with hybrid cloud solutions. Automated migration and immediate provisioning within software-defined data centers eradicate the traditional burdens of data migration. Using advanced APIs, IT professionals connect existing systems to software-defined platforms with the press of a button. Meanwhile, IT-as-a-Service specialty services, ranging from disaster recovery as a service to infrastructure as a service, will provide the tools and resources needed to enable a seamless migration.

Summary: Expect Renewed Interest and Strong Growth in the Software-Defined Data Center Market.

Businesses must keep the advancement of data centers in mind. The days of traditional, on-premises data centers are obsolescent. The modern data center relies on software and hardware, creating virtualization, software-defined networking capabilities, software-defined storage and automated infrastructure management. Through its ease of use, businesses can adjust to changing infrastructure needs, automatically adjust to underlying changes in the physical hardware world, enable scalability, reduce total cost of ownership and even lower labor costs.

Speaking of labor costs, improved infrastructure management through software-defined data centers will drive a surge in IT staff productivity. Such gains contribute to the return on investment (ROI) for software-defined data centers. As more companies opt to put such technologies to work, the market will see resounding growth. The growth will build on itself, encouraging more businesses to take advantage of software-defined capabilities and eliminate the risks of traditional, on-premises data centers.

Reach out to the experts at Comport today to get started on your software defined data center journey!


Author: Bill Flatley, Field CTO for Healthcare

Bill is responsible for technical strategies and recommendations for Comport’s Healthcare clients. His extensive experience includes four healthcare systems in leadership roles supporting Clinical Applications, Digital Health, and Office of the CIO as the primary liaison between IT and the business.

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