Digitalization Helping Colos Meet the Challenges of Technology

The colocation market is in something of a state of flux as increased demand for outsourced services is producing two effects: Firstly, the growing market size is now being addressed by increased competition. Secondly, the success of the market as it becomes more mature has made it more interesting for investors. As a consequence, consolidation at the top end is becoming common place.

The net effect is the market-driven dream – competition driving more choice and better pricing for customers who want to outsource part or all of their data center infrastructure. In this scenario, differentiation has become a key discriminator. As Theodore Levitt, a professor at Harvard Business School, once said, “Differentiation is one of the most important strategic and tactical activities in which companies must constantly engage.”

Sometimes choosing can be a simple thing, for example being part of the world’s largest data center operator holds an appeal for some decision makers. With all the assurance that a global brand might bring, it can be a low-risk choice which is unlikely to cause any raised eyebrows elsewhere in the hierarchy. That old “nobody got fired for buying IBM” chestnut.

At the same time, those with a different mind-set might want to align with something smaller and more focused – where they might, for instance, be a bigger fish in a smaller pond and feel the warm glow of a more tailored customer service. The market economy lets customers place their money on the runner which looks like the best bet.

Across the board, what’s interesting to me is how some of the more progressive service providers are starting to harness the advantages of digital transformation and IoT style approaches to build a more data-driven and service-focused customer proposition. Using information and dashboards built with DCIM applications, they have recognized the potential to develop greater levels of accountability and transparency with their customers.

Whether they choose to sell such services or provide them freely, being precise about the capacity that customers are utilizing, paying-for and have available both for new projects and future growth is an important step for a variety of reasons. Chiefly, they are key factors in building trust and establishing value. But they also help to differentiate those service providers, enabling a more “sticky” and strategic partnership with their customers.

End user companies which are actively leveraging digital transformation to bring new levels of creativity and disruption to their own markets will expect no less from the partnerships they build to help them move to the next level. And in that respect, colocation data centers must evolve from being simply places to house IT. By putting technology at the heart of service provision, colos are better placed to build stronger and more enduring relationships with their customers.

To learn more about DCIM solutions, please visit our data center operations site.

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