DATA CENTER AUTOMATION MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2024-2031)

Market Size and Trends

The data center automation market is estimated to be valued at US$ 10.29 Bn in 2024 and is expected to reach US$ 33.83 Bn by 2031, growing at a compound annual growth rate (CAGR) of 18.5% from 2024 to 2031.

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The market is expected to witness significant growth during the forecast period. With growing dependence on IT infrastructure across industries, the need for optimized data center performance is increasing. Enterprises are automating various tasks, such as operating systems installation, software distribution, provisioning, orchestration, and others, to improve the productivity of IT staff and ensure compliance. Various technological advancements including Artificial Intelligence (AI), machine learning, and analytics are aiding automated problem detection, resolution, and infrastructure management. Key market players are offering comprehensive solutions to assist businesses in streamlining data center operations and reducing costs. Convergence of IT and operational technology is further expected to drive new deployments of data center automation solutions in the upcoming years.

Market Concentration and Competitive Landscape

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The ever-growing demand for data center resources coupled with rising operational costs have compelled organizations to focus on optimizing their existing infrastructure and improving efficiencies. Manual processes for provisioning, patching, and upgrading systems have become tedious and inefficient to handle the scale and complexity of modern data centers. Data center administrators are struggling to keep pace with the frequent change requests while ensuring compliance, security, and reliability of operations. This has heightened the need for automated workflows that can standardize routine tasks, remove human errors and deliver resources on-demand in a self-service manner. Automation brings greater agility to quickly deploy testing/development environments or scale capacity during spikes in workload. It allows workloads to be placed optimally on servers based on real-time utilization levels, improving overall data center productivity. Further, automated solutions facilitate remote monitoring and management of geographically dispersed data centers from a centralized console. This centralized oversight enables better capacity planning and energy management across sites. As data centers expand in size with more distributed architectures, automation becomes indispensable to reduce operating costs through streamlined provisioning, higher infrastructure utilization, and reduced mean time to resolution of issues.

Market Driver- Growing Threat of Cyber Attacks and Need for Security Compliance

As digital transformations accelerate, cyber risks have intensified manifold with threats attempting to exploit any vulnerability. While data centers hold sensitive business and customer information, securing them manually from constant attacks is nearly impossible. Traditional perimeter-based defenses are proving inadequate against evolving threats. Any human errors or oversight can potentially compromise security. This growing threat landscape has reinforced the need for strong security postures within data centers through automated means. Automation enables security policies to be applied consistently at scale throughout the IT lifecycle from development to production. It facilitates centralized security monitoring and compliance auditing of all systems. Moreover, automation assists in applying security patches faster and automating threat response drills. This takes the load off security teams and strengthens overall security defenses. Various industry compliances like HIPAA, PCI DSS also mandate thorough access controls and activity logging which automation ensures seamlessly. It helps enforce least privilege access and multi-factor authentication. As attacks sophisticate, automation becomes mission-critical for maintaining security compliance, reducing risk exposure and ensuring business continuity within data center environments.

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The biggest challenge currently facing the data center automation market is the need to effectively integrate new technologies with existing legacy systems. As data centers look to automate more processes, they are confronted with the difficulty of integrating cutting-edge automation tools and software with older infrastructure and systems that were not designed for extensive integration. Achieving seamless interoperability between new and old within these complex environments can be an obstacle to deploying comprehensive automation strategies.

Market Opportunities: Expanding Horizons for Automation Solutions in Modern Data Centers

The growing complexity and scale of modern data centers is creating significant opportunities for providers of automation solutions. As IT infrastructures expand in size and functionality to meet rising data demands, there is a heightened need to automate more processes to efficiently manage these sprawling environments. The drive to reduce operating costs and human errors is increasing the demand for automated tools that can help data centers handle complex operations with improved reliability.

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The on-premises segment within the deployment category contributes the highest proportion of 54.3% I 2024 to the overall data center automation market. This dominance can be attributed to the reluctance in fully adopting public cloud-based infrastructure for mission-critical tasks in data centers. Many organizations prefer to retain direct physical control and governance over systems performing functions as important as automation, which coordinates activities across hardware, applications, networks and other operational components. Installing automation solutions and services on-premises guarantees organizations proprietorship over sensitive data, full compliance with internal security and regulatory protocols, and no dependence on a third party cloud provider's uptime assurances. Handling automation locally using dedicated on-site resources also provides latency advantages, as public clouds may experience occasional performance lags due to geographical distances. The criticality of real-time data center functions like capacity provisioning, power/cooling management and malfunction detection makes many operators wary of potential glitches during off-premise deployment. Additionally, capex model of on-premises deployment suits larger organizations with capacity to invest upfront, versus the ongoing opex of public clouds. Overall, retaining physical ownership of their automation systems rather than outsourcing to clouds has worked better for most data centers due to concerns around control, compliance, latency, and financial preferences.

Insights By Component- Hands-on approach drives solution's dominance

The solution segment within the component category contributes the largest share of 63.8% in 2024 to the overall data center automation market. This is primarily due to solutions being the most hands-on component that allows for customized implementation and management of automation processes. Offering a mix of both software and hardware tools, solutions provide customers the flexibility to design automation infrastructure based on their unique technical and operational requirements. Configurable solutions can be developed in-house as well as incorporated from third party vendors, giving customers complete control over selecting the right features and functionalities. This tailored design approach addresses the rapidly evolving needs of modern data centers more effectively than off-the-shelf Services alone. Additionally, having control over automation Solutions empowers customers to roll out new capabilities on their timeline as their business needs change. Rather than being restricted by a service provider's release cycle, the flexibility of solutions places data center managers in the driver's seat of their automation strategy. Their direct involvement also facilitates better oversight and troubleshooting of operations. The Do It Yourself (DIY) nature of solutions makes automation customized to an organization's specific data environment, workflows, and security protocols - yielding optimal performance and efficiency gains that larger service providers have difficulty matching. Overall, solutions' hands-on development model has resonated the most with data center operators seeking customizability and direct management of their automation infrastructure.

Insights By Enterprise- Vertical experience aids large enterprises' lead position in the enterprise category

Within the enterprise category of the data center automation market, large enterprises hold the highest market share of 67.8% in 2024. This is because extensive in-house experience enables them to maximize value from automation. Large enterprise data centers are usually spread nationwide or globally, operating hundreds or thousands of physical and virtual servers as the IT backbone for massive operations. With such immense scale comes years of accrued institutional knowledge about utility-style computing. Leveraging this vertical-specific familiarity, large enterprises can design customized automation frameworks to systematically tackle intricacies of their infrastructures. Their domain expertise illuminates use cases often overlooked by small enterprises unfamiliar with such complexities. Established change management structures within large enterprises also facilitate the organization-wide adoption of new automation capabilities on a level small settings cannot replicate. Significant capex allows sophisticated tools and integrations beyond the budgets of Smaller players. Large enterprises likewise employ dedicated automation specialists with skills rarely found among generalist administrators of smaller networks. Overall, scale-bred specialization and resources confer distinct advantages for large enterprises to maximize automation's full utilities across every tier of their infrastructure. This specialized capability maintains their lead over smaller enterprises still mastering fundamental automation use.

Regional Insights

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North America has established itself as the dominant region with 48.9% 9n 2024 in the global data center automation market. The U.S. accounts for the largest share within the region owing to the strong presence of leading global technology companies such as Microsoft, IBM, Amazon, and Google. These companies are continuously focusing on optimizing their extensive internal data center networks through automation to reduce costs and improve efficiency. Additionally, the early adoption of advanced technologies along with high IT expenditure has propelled the demand for data center automation systems in North America.

Another key factor for North America's dominant position is the presence of major automation vendors in the region. Companies like Cisco, VMware, Schneider Electric, Intel, and Dell EMC have their global headquarters located in the U.S., allowing for better coordination with customers and strengthening their supply chain network within the region. The region also benefits from consistent investments by automation vendors to cater to the increasing R&D needs of tech giants. This collaboration between end-users and vendors has accelerated the penetration of data center automation solutions across all application sectors.

The Asia Pacific region currently exhibits the fastest growth rate and is emerging as a lucrative market for data center automation. The rapid digital transformation in major Asia Pacific countries has significantly increased the requirement for data storage and management. Countries like India, China, Japan, and Australia are witnessing exponential growth in data center infrastructure investment to support their expanding digital economies. This is fueling the implementation of automation systems that help optimize resource utilization and improve agility within data centers. Furthermore, growing international business operations and outsourcing trends have augmented the need for highly scalable and efficient data centers in Asia Pacific.

Market Report Scope

Key Developments

• In March 2023, Digital Realty is a leading global provider of data center, colocation, and interconnection solutions. unveiled a robotic dog for regular inspections. According to the company, this robot carries out about nine inspections per day, following a schedule controlled through the Anymal API. During its two-hour mission, it checks approximately 70 components, gathering visual, thermal, and acoustic data. Once it finishes its mission, the robot automatically goes back to its charging station for recharging.
• In October 2022, Cisco is a multinational technology conglomerate headquartered in San Jose, California. invested in building a specialized infrastructure for Webex in India to speed up the adoption of Webex. This investment included setting up a new data center and obtaining the necessary regulatory approvals.
• In 2022, ABB is a multinational corporation headquartered in Zurich, Switzerland. partnered with ATS Global, a company that offers smart digital transformation solutions, to expand its presence in the data center automation market. Both companies will work together to pool resources, test potential collaborations, and enhance the benefits for ABB Ability data center customers, thereby growing their businesses.
• In 2022, Kyndryl, a provider of IT infrastructure services, along with Microsoft Corporation is a multinational technology company headquartered in Redmond, Washington, and Dell Technologies is a multinational technology company headquartered in Round Rock, Texas, USA., announced the introduction of a hybrid cloud solution. This solution is designed to assist customers across mainframes, data centers, and remote environments.

*Definition: The data center automation market offers solutions and services that help automate workflows and processes within data centers to improve efficiency and reduce operating costs. These solutions provide automated controls for areas like server provisioning, infrastructure management, backup and disaster recovery processes, change management, and power and cooling management. Data center automation helps enterprises improve data center operations through virtualization, workload scheduling, and placement, remote monitoring and control, predictive analytics, and self-service provisioning of server, storage and networking resources as needed.

Market Segmentation

•  Deployment Insights (Revenue, US$ BN, 2019 - 2031)
  • On-Premises
  • Cloud
•  Component Insights (Revenue, US$ BN, 2019 - 2031)
  • Solution
  • Services
•  Enterprise Insights (Revenue, US$ BN, 2019 - 2031)
  • Large Size Enterprises
  • Small and Medium Sized Enterprises (SMEs)
•  Application Insights (Revenue, US$ BN, 2019 - 2031)
  • BFSI
  • Colocation
  • Energy
  • Government
  • Healthcare
  • Manufacturing
  • IT & Telecom
  • Others
• Regional Insights (Revenue, US$ BN, 2019 - 2031)
  • North America
    • U.S.
    • Canada
  • Latin America
    • Brazil
    • Argentina
    • Mexico
    • Rest of Latin America
  • Europe
    • Germany
    • U.K.
    • France
    • Italy
    • Russia
    • Rest of Europe
  • Asia Pacific
    • China
    • India
    • Japan
    • Australia
    • South Korea
    • ASEAN
    • Rest of Asia Pacific
  • Middle East & Africa
    • GCC Countries
    • South Africa
    • Rest of Middle East & Africa
• Key Players Insights
  • Cisco Systems Inc.
  • ABB Limited
  • Oracle Corporation
  • Microsoft Corporation
  • BMC Software
  • ServiceNow
  • Citrix Systems, Inc
  • Hewlett Packard Enterprise Development LP
  • FUJITSU
  • VMWare
  • Others