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The market for data center services (DPC) grew in 2022 and continues to grow in 2023 due to increased demand for cloud services and rental of racks in data centers. Experts point out that sanctions and a shortage of equipment, primarily engineering, have prompted many companies to abandon the idea of creating their own infrastructure. Demand remains high despite the rising cost of data center services.

What are the reasons for the market growth

Over the past year, the domestic market of data center services, which includes cloud services for the provision of virtual computing power (cloud), leasing of server platforms in the data center (bare metal) or space in the data center for its servers (colocation), grew by 28.1% to 89.1 billion rubles, Vedomosti wrote" with reference to the analysts of the consulting agency iKS-Consulting.

At the same time, in the structure of the Russian data centers market, clouds accounted for 55% in monetary terms, analysts say. The cloud market grew faster in 2022 than the entire data center market – by 42%. In 2023, according to forecasts of iKS-Consulting, it may grow by another 30-40%.

"The biggest growth in 2022 was in cloud services. This is due to the fact that the direction was greatly underestimated in previous years," explains Alexey Zabrodin, Technical Director of Rostelecom Data Center. – Large Russian companies used to be quite conservative and acted in stages: first they rented places in data centers for their own equipment, then they tried to rent server equipment and only after that they began to completely switch to the cloud." According to him, this was due to the fact that customers were afraid to immediately completely outsource such an important infrastructure for business.

But in 2022, the situation changed: state organizations began to move very actively from their own IT infrastructure to cloud services that could quickly provide them with the necessary capacity and level of protection, says Alexey Zabrodin. According to him, this contrasts strongly with the cautious approach of the commercial sector, which is in no hurry to use cloud services of data centers. Banks and retail companies are already actively using clouds from commercial companies, says Ilya Khala, CEO of the 3data data center network.

Sanctions as a point of growth

One of the main reasons for the increased interest in data center services in 2022 were sanctions and the departure of foreign suppliers, which caused serious difficulties with the purchase of equipment, without which the company's own IT infrastructure cannot work, the heads of IT departments of large companies that migrated to the cloud in 2022-2023, interviewed by Vedomosti&, note.

"Until 2022, our vendors did verification, specifications, worked through distributors, partners. The warehouses were all located in Russia, so everything was transparent with the purchases of hardware," says the director of the IT department at a large financial company, who wished to remain anonymous. – Now any sole proprietor importing equipment by parallel import can participate in the tender and win it. At the same time, there are no guarantees that it will be new, and not restored (used. – "Vedomosti&") equipment". His colleague from the field of e-commerce notes that in the absence of technical support from Western vendors, difficulties with the purchase of hardware and spare parts, it is much more logical to shift the worries about creating a physical IT infrastructure to a cloud provider, renting virtual machines from him.

Data center market participants point out that now the greatest difficulties arise with engineering equipment for IT infrastructure - power supply, cooling systems, etc. "Few such equipment is produced in Russia, so it is necessary to build interaction with alternative foreign manufacturers for its purchase, and this is difficult," says Alexey Zabrodin. The demand for rental of stand-up seats in data centers has grown and will continue to grow, he expects. At the same time, servers are produced in Russia, although they are more expensive than foreign ones, the expert adds.

Ilya Khala notes that recently customers are increasingly demanding both cloud services and services for placing their equipment in data centers. This is necessary when part of the company's processes take place using virtual computing power, and part – using physical servers. "If they used to choose one thing, now most customers need both, and it is desirable that all this be available in a single management window," the expert points out.

The departure of foreign cloud players, according to Oleg Lyubimov, CEO of Selectel, did not lead to a redistribution of the market and was not as significant an event as in other segments of the IT industry. The reason is that until 2022 there was a high level of localization of information in the country: about 70% of all Russian data was located inside the country, and if we talk about personal data, then 100%, he notes.

Now the growth of the cloud services market is primarily due to the transition from physical servers to virtual ones, Alexey Zabrodin agrees.

Capacities is in short supply today

The growth of the cloud services market depends primarily on the growth of data center capacities: in 2023, they increased by 21% to 70,300 rack locations. The leader today is Rostelecom-Data Center, which has more than 21,000 racks and occupies a third of the market (according to iKS-Consulting). Notable players are also IXcellerate, DataPro, 3 data, Selected, etc. However, with growing demand, there is still not enough capacity, research shows. Thus, analysts of iKS-Consulting and 3 data calculated that the domestic data center market in 2022 it has increased by only 3,000 new racks, which is about 6% of the racks in operation. In previous years, more than 4000-5000 racks were introduced annually, the study notes.

"The capacity of data centers cannot be enough, because demand and consumption are growing at an accelerated pace, – Alexey Zabrodin points out. "The construction of a data center is a long–term occupation, and the introduction of new sites to the market is not a quick process." Oleg Lyubimov adds that the cost of building a data center in 2023 has increased at least 1.5 times. "This is due to the fact that some suppliers have left the market, other players have come instead, who are guided by the prices of European vendors," Oleg Lyubimov notes.

The rise in the cost of construction is almost always also a problem of attracting financing. "Data centers are built on borrowed funds, and with a long-term investment window, because construction takes a lot of time, and a large data center is not filled instantly," explains Alexey Zabrodin. According to him, the return on investment in such construction takes more than five years. The situation is also complicated by the fact that many data center construction projects were put on pause last year, he added.

Ilya Khalaf noted that some actively growing customers sometimes order twice as much cloud capacity as their current needs, fearing a potential shortage in the future.

A shortage always gives rise to an increase in prices – this is what happened with data center services. According to expert estimates, prices have increased by about 30% over the past 12 months. "Due to the high cost of construction, new data centers are already offering higher prices for all their services, and they will continue to grow," predicts Alexey Zabrodin.

However, the increase in the cost of clouds and other data center services will not scare away consumers, experts are sure. A joint study of Cloud and Trust Technologies, conducted at the end of 2022, showed that more than a third of data center customers intend to increase their consumption of cloud resources within a year, and a fifth of respondents choose the cloud, since it still costs less than their own infrastructure even with the rise in price. In the course of the study, more than 650 heads of IT and business divisions were interviewed, more than 50 in-depth interviews with representatives of the largest companies were conducted.

Not a step without protection

Cyber-attacks that hit the country in 2022 also had a significant impact on the market. According to a study by Rostelecom-Solar, in 2022 experts identified 21.5 million web attacks with a high degree of criticality, the longest was about 2000 hours, the most powerful was 760 Gbit/s. The growing threat has prompted data centers to reconsider their views on security. "The approach of data centers and cloud providers as a whole has changed: a few years ago, for companies renting virtual servers, protection from cyber threats was at best an additional paid option, at worst a problem that had to be dealt with independently," comments Danila, commercial director of Servicepipe, a company specializing in DDoS protection. Chezhin. "Now a secure cloud is an unshakable industry standard."

"The consumption of information security services has increased, and the consumption of cloud infrastructure without these services has practically stopped," notes Alexey Zabrodin. "No one is ordering insecure cloud infrastructures anymore."

According to Ilya Khala, customers are now interested not only in basic security, which allows them to resist DDoS attacks. As additional services, they request protection at the L7 level (attacks at the application level, which are more difficult to counteract. – "Vedomosti&"), ensuring cybersecurity during the migration of services, etc. According to him, the demand for such services has increased several times over the past 12 months.

According to Danila Chezhin, cloud providers and data centers enter into partnerships with vendors of protection against Internet attacks, implement information security products as related services under the partner scheme and receive additional commission income.

"Customers simply do not have enough funds and expertise to build serious layered cloud protection on their own. These are high–tech systems that a large cloud operator can create and maintain," says Alexey Zabrodin.

Source: https://www.vedomosti.ru/partner/articles/2023/10/06/998889-rinok-tsodov-naraschivaet