Over the past few weeks, the problems with the EU aside, I’ve been reading and hearing about a number of positive signs that will affect the economy in 2012. I believe that this directly relates to the IT and Data Center environment.
Earlier this month on December 9, it was reported that the unemployment rate dropped in November to 8.6%, the lowest level since March 2009. Though trouble still lurks in this area (and this doesn’t really take into account that there continue to be 315,000 Americans that have completely stopped looking for a job), just the fact that more jobs are being created and the jobless rate is dropping is good news. There may also some increase in employment due to seasonal activity for the holidays.
Between October and November payrolls increased by about 220,000 workers. ADP, Inc. and Macroeconomic Advisors noted that private businesses added 206,000 jobs in November and that was the biggest gain since December 2010. This was almost twice the monthly average increase in hiring since May 2011.
Let’s face it: our economy is built on consumerism. If people don’t spend money to buy goods and services, the economy stagnates quickly. This year’s Thanksgiving numbers, including Black Friday sales, increased by 16.7% year-over-year. This trend started early, too. Year-over-year sales were up 3.6% during the week of November 12 and up 3.8% during the week of November 19.
Home Sale Increases
The National Association of Realtors’ index of pending home sales that reflects purchase and sale agreements signed for resales that haven’t yet gone to settlement increased by 10.4% this past October. That hasn’t happened since November 2010. Also, a recent Thompson-Reuters’ survey of economists released just before the actual numbers were released, speculated that the increase would only be 1.5%. Yesterday (Tuesday, December 20, 2011), as the result of partially positive economic data on the housing sector, the stock market was further buoyed. The Dow Jones Industrial average was up about 2.9%. Furthermore, US housing starts in November hit their highest level since April 2010 based on an increase between November and October of 9.3%.
The Federal Reserve’s Beige Book, an anecdotal report summarizing economic activity, noted an increase in 11 out of the 12 reporting regions since the previous report that was released October 19, 2011.
As mentioned above in the section on Home Sales, the stock market was up yesterday and contributing to that was that commodity prices rose across the board on temporary hopeful economic news in Europe. The rally came after days of uneven prices for commodities because of concerns related to the European Debt Crisis and its effect on oil demand. Oil prices rose 3.4%, gold rose 1.3%, copper rose nearly 2% and wheat increased 1.3%. Commodities also benefitted from a weaker dollar, since commodities are traded in dollars, which makes them a better bargain for traders using other currencies.
IT Trends for 2012
Throughout this entire Great Recession, enterprises have endeavored to do more with less. That really means reducing employment and automating as much as possible. At least at the initial stages, automation implementation requires more IT workers. Over time, even after the economy recovers, and recover it will, there will likely be fewer jobs than prior to 2008. Automation and IT have taken over as enablers of core business growth. This will continue to drive the need for more data center space despite continued adoption of cloud and hybrid-cloud IT configurations.
According to the most recently published information from 451 Group and its wholly-owned subsidiaries, Tier1 Research and ChangeWave Research, virtualization is quickly becoming the norm for many production workloads. Even though most business that have virtualization initiatives in place, adoption has been a meager 37%. However, based on the sample survey, currently 65% of development and test programming is virtualized, Web Servers are 55% virtualized, Application Servers are 51% virtualized, Custom-built Applications are 44% virtualized and even ERP is 35% virtualized. This trend is increasing. Over the 15 month period between July 2010 and October 2011, those who responded in the survey illustrated that Public Cloud adoption had jumped from 11% to 22%. Furthermore, security is no longer the number one concern of those considering a migration. Rather, it’s the complexity of the migration that is now creating the reticence to change.
In addition to Cloud-Adoption driving the market, carbon pricing, air quality standards (manifested as generator retrofits) and increased auditing standards will also be important factors in the decision matrix related to relocations and new developments. All of this will fuel new development, expansion and new business. At least that’s what I’m hoping for…Wishing you Happy Holidays, a prosperous and healthy 2012.