Companies Intend to Purchase More On-Premise Data Center Equipment

16 Jul 2018 by Technology

Even as cloud giants continue enjoying strong growth, enterprise hardware equipment manufacturers still have the opportunity to make lots of money.

IHS Markit conducted a survey on 151 companies in North America each with its own data center; about what they planned to spend on in the immediate and short-term. The survey results show that most of them want to double the number of servers by 2019.

In addition to servers, these companies expect to purchase more storage devices, routers, switches, load balancers and wide area network (WAN) optimization appliances.

Additionally, the surveyed said that they would spend more money on the virtual versions of equipment like virtual load balancers, virtual security appliances, network virtualization software and virtual WAN optimization appliances.

Last Year’s Survey Shows that Companies Expected a Data Center Growth Phase

In a similar survey conducted last year, the companies that responded signaled that an enterprise data center growth phase was near, and this recent survey by IHS Markit confirmed this to be true.

This appears to contradict the growth that cloud service providers like Microsoft Azure and Amazon Web Services have reported every quarter. Why? Because if enterprises increasingly rely on the public cloud, then their on-premise data center spending should be declining.

With the migration toward a modern, digital-based way of doing things, most companies believe that hybrid infrastructure, in which modern on-premise equipment are combined with the public cloud is the most effective.

Infrastructural Enhancement is the Reason Behind the Additional Investment

The reason why most of the IHS Markit survey respondents plan to invest more money is to enhance security, scalability, and performance. Network virtualization, speed, and automated VM are also a high priority.

Most investments in on-premise data centers are to upgrade security performance and scalability (

Another finding from the survey is that new technologies like artificial intelligence (AI) were incorporated into applications. The result is a greater adoption of microservices and Linux containers. However, a large percentage of on-premise data center capacity still contains enterprise software.  

These include collaboration tools like SharePoint and email, 30% general-purpose IT apps, 22% productivity apps like Microsoft Office, and 18% unified communications.

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