7 Oct, 2020
Data center infrastructure spending will bounce back in 2021 and beyond, Gartner predicts
Cloud

COVID-19 caused a 10% dip in worldwide data center investment, but a 6% increase should come in 2021, and growth will continue through 2024.

IT Technician with a Laptop Computer and Black Male Engineer Colleague are Talking in Data Center while Walking Next to Server Racks. Running Diagnostics or Doing Maintenance Work.

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Gartner predicts that end user data center infrastructure spending worldwide will increase 6% to $200 billion in 2021, after a pandemic-driven decline in 2020.

COVID-19 was responsible for putting a hold on 60% of planned construction projects in 2020, Gartner said, which was directly tied to a 10.3% dip in data center spending. 

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“The priority for most companies in 2020 is keeping the lights on, so data center growth is generally being pushed back until the market enters the recovery period,” said Gartner senior researcher Naveen Mishra. 

Mishra added that so-called hyperscalers, massive data centers that are designed to expand rapidly and host cloud services, are unlikely to slow down because of increased investment in public cloud services due to the pandemic. It’s the rest of the enterprise having to hit pause. 

SEE: COVID-19 workplace policy (TechRepublic Premium)

The 6% growth Gartner is predicting for 2021 still won’t bring data center infrastructure spending back to where it was before the pandemic: In 2019, there was $210 billion spent worldwide, 2020 is predicted to cap out at $188 billion. The rebound in 2021 will only bring the total to a predicted $200 billion, still $10 billion short of 2019’s high.

Despite 2021 not returning the market to the levels seen in 2019, Gartner still expects continued positive growth through 2024, though it didn’t give specific numbers. 

“Much of the reduced demand in 2020 is expected to return in 2021 when staff can physically be onsite. For now, all data center infrastructure segments will be subject to cost containment measures and enterprise buyers are expected to extend life cycles of installed equipment,” said Mishra.

If a physical return to the office is the key component of increased data center spending, then it’s possible even that 6% bump may be impeded: Dr. Anthony Fauci recently said that life may not return to normal, including the continuation of social distancing and mask wearing, until late 2021.

SEE: Big data’s role in COVID-19 (free PDF) (TechRepublic)

“I don’t think people are going to be able to get rid of the masks and not worry about social distancing and avoiding crowds until we get into the third quarter or fourth quarter of 2021,” Fauci said at an event in Maryland.

Regardless of growth rates, Gartner has three recommendations for data center managers looking to recover their infrastructure growth opportunities:

  • Get the CFO and head of procurement together to work on cost optimization in the data center, such as renegotiating IT contracts, streamlining cloud costs, and consolidating IT teams.
  • Craft a playbook to help leaders understand the impact COVID-19 has had on your industry, along with short and medium-term actions you can take to counter those effects.
  • Invest in a new go-to-market strategy aimed at using digital natives to drive innovation, including hybrid IT and use-based pricing for infrastructure needs.

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