Why Data Centers Are Becoming Strategic

datacenterBy Michael Hickins
Data- and technology-driven organizations like Goldman Sachs are particularly vulnerable to the pace of technological change, because the huge investments they make today could cripple them tomorrow. Whatever competitive advantage they may have earned today can be swept away in the next tide of change, particularly if their hardware investments prevent them from reacting in an agile manner. That’s why Don Duet, the global co-chief operating officer of Goldman’s technology division, is building modular data centers that depend more on software than hardware, so that his team can react to “the pace of technological change,” he said during a phone conversation Monday.

Granted, data centers can seem “stale,” as Duet himself says, but routers and other networking equipment form the backbone that allow managers to run analytics programs and derive intelligence more quickly; they also help CIOs support data streaming to the myriad devices employees are bringing into the workplace. This is especially crucial for a company like Goldman, which operates in an industry where milliseconds can represent a competitive advantage. For the CIO of such an enterprise, data centers are an increasingly strategic consideration.

Rainier Ehrhardt/Getty Images    

An employee walks past servers in one of four server rooms at the new Facebook Data Center in Forest City, N.C.

Historically, data centers have been viewed as significant cost centers, notably because of the power and cooling required for operation, and because once they’re built, they’re built. Whatever capacity this once-every-10-years capital expenditure was planned to support–that’s what you get. That forces CIOs to make difficult decisions about whether to spend more on infrastructure capacity, or accept that they might not be able to support the next wave of technological innovation–regardless of the competitive advantage it may confer.

That’s the context in which Duet is implementing modular, software-driven data centers. “As we continue to scale up investment in technology, the ability to drive down [infrastructure] costs becomes more and more important,” Duet tells CIO Journal.

Duet has begun testing a combination of outsourced data centers and in-house data centers running an operating system from IO that gives his team increased visibility of the infrastructure’s performance, and allows him to implement data centers that he can scale up or down as his business requires. The technology also allows his team to provide greater networking bandwidth during peak times (such as trading hours) and reduce power (and thus costs) during off hours.

Gartner analyst Mark Fabbi says that the networking space is starting to see “a fair bit of innovation.” More specifically, software-based networking services are replacing the need to pay for “bigger iron”–in other words, bigger, more energy-consuming, ever-more-powerful hardware.

According to Fabbi, financial services firms–not just GS–are “leading in terms of some of this newer deployment.” So it behooves Duet to get on the stick, because as is the case with innovative technology, if you’ve heard about it, chances are the competition has, too.


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