Data centre refreshes drive IT contract renewals

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Data centre refreshes drive IT contract renewals

Sharp rise combats years of sluggishness.

Data centre refresh and infrastructure consolidation projects are expected to account for half of all $1 million-plus IT contracts up for renewal this year, according to analyst firm Ovum.

IT sourcing principal analyst Jens Butler told VIP Delegates at the Australian Data Centre Strategy Summit that 25 percent of all IT contracts up for renewal in 2012 were for data centre and infrastructure consolidation, which has doubled to 50 percent in 2013.

"In 2013, of the contracts that are due for renewal, 50 percent are for data centre or infrastructure consolidation," Butler said.

"That says an awful lot, and the discussions we're having [are] around consolidation, centralisation, getting control."

Butler told iTnews that 25 percent was "in line with tradition" both in Australia and globally.

He attributed the expected jump in contract renewals for data centre refreshes and infrastructure consolidation in 2013 to underinvestment in years prior. Between 2006 and 2010, such projects accounted for just 13 percent of all contracts up for renewal, almost half that of the average.

"Because we had half of the average [number of renewals] for data centre and infrastructure consolidation for four years running, there was a big pool of equipment that needed to be refreshed," Butler said.

"2013 is looking like the year of infrastructure investment".

Butler's figures are extrapolated from Ovum's contracts analytics database, which collects data on mostly publicly-announced IT contracts worth at least $1 million.

The database collects data around terms and conditions, who won a particular renewal contract, decision criteria, and other factors.

Butler noted Australia wasn't immune from IT budget constraints seen in other parts of the world, but nonethless painted Australia as a "lucky" country - or at least "in a slightly better position" than other countries.

He said the Ovum surveys pointed to some growth in IT budgets — "not huge but certainly a positive sentiment about budgets, and more excitingly [it is occurring] around the infrastructure space".

The Australian Data Centre Strategy Summit continues today. Follow #dcsummit on Twitter for the latest news from the conference.

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