How 2024 GenAI investment will transform data centers

Companies are quickly adopting generative AI, and with this, the focus has shifted toward hybrid cloud environments, which spans from data center services on and off premises.

We often need a spark of motivation to help us break free from our routines and transform ourselves in a manner that is overdue. For many, that spark comes in the form of a new year with a focus on new resolutions. But for IT organizations, that motivation will come in the form of generative AI and an associated need for new infrastructure and investment to support generative AI initiatives.

According to recent research from TechTarget's Enterprise Strategy Group (ESG), "Navigating the Evolving AI Infrastructure Landscape," 92% of data administrators and other IT professionals involved with internal AI initiatives expect to have generative AI in production within 2024. Generative AI investment will be pervasive across organizations this year. This investment will likely fuel further investments because organizations often achieve success with their AI initiatives quickly. In the same study, ESG found that 72% of organizations see value from their AI initiatives within the first three months.

Given how quickly organizations are finding success with AI, we can expect additional organizations with new generative AI projects to quickly see success with those projects. Once again, that success will tend to spur further investment.

Generative AI investment won't be limited to the public cloud. In the AI research cited above, ESG found that 30% of organizations expect to deploy AI infrastructures primarily in hybrid cloud environments -- spanning both on- and off-premises locations. As a result, 2024 will be a year in which organizations apply the necessary attention and focus to modernize their on-premises infrastructure, management tools and operations to maximize the value of their generative AI initiatives, along with the rest of their digital operations.

Since most technology vendors offer tools to help accelerate generative AI projects, investments will be the spark that organizations need to continue their modernization journeys. Along these lines, I'm making three predictions about on-premises infrastructure for 2024.

1. Expect a 50% or more uptick in adoption of on-premises as a service in 2024

Our research has shown that on-premises data center options as a service -- where a service provider owns the hardware and handles installation, maintenance, networking and other aspects of running a data center -- transform an organization's ability to accelerate its operations and reduce its total cost of ownership for on-premises infrastructure.

Despite these advantages, adoption is hampered by internal accounting requirements and budget restrictions. In this way, organizations have allowed their own internal bureaucracies to waste money and hinder internal digital initiatives. Generative AI is the initiative with enough priority and visibility to enable organizations to be more receptive to options for on-premises as a service and their ability to simplify design and accelerate deployment. Multiple options for on-premises as a service that can accelerate generative AI projecting are in the market already. Examples include services from Dell Technologies Apex and HPE GreenLake.

2. Cross-cloud consistency will become table stakes in 2024

Hybrid cloud is the standard operating model for the foreseeable future. According to another recent ESG study, "Multi-cloud Application Deployment and Delivery Decision Making," 98% of organizations have applications with individual components distributed across multiple cloud locations on and off premises.

Distributed applications come with increased layers of complexity, however. This complexity is only growing. With generative AI initiatives encouraging organizations to evaluate their extended data environments spanning multiple locations, decision-makers will focus investment on tools and technologies that can deliver a consistent experience across on- and off-premises environments.

Data and infrastructure management tools and practices need to be consistent. Products include options from VMware, Nutanix and RedHat. In addition, Dell Technologies Apex Cloud Platforms can deliver a Microsoft Azure, VMware or Red Hat experience on-premises as a service. For storage, Hitachi Vantara recently announced VSP One, a product designed to provide cross-cloud storage consistency.

3. On-premises modernization will focus on hyper-consolidation in 2024

Until recently, the ever-present concern among IT organizations was how to keep pace with the rapid growth of data. Now, innovative storage technology has become so grand that keeping pace with data growth is less of a concern for the typical organization. Simultaneously, challenges with managing and placing that data, and simplifying and automating associated data services are becoming a larger issue. In other words, simplicity has become a higher priority than scalability for the typical organization.

With organizations already motivated by their generative AI initiatives to invest in low latency, modern storage environments, I expect those architecture investigations to expand deployment decisions to support a wider range of applications beyond AI. 

Recent innovations, such as those from Pure Storage with its FlashArray//E series, and NetApp with its AFF C-series, are helping drive down the cost of supporting widescale consolidation efforts. While those technologies are not targeted specifically at AI workloads, I expect that to begin as storage modernization initiatives to support generative AI uncover opportunities for larger-scale consolidation. The adoption to all-flash will increase across all workloads, not just AI. 

Focus on the data center

Over the past several years, the focus of data and applications has been the public cloud. For 2024, I predict that the widespread interest in generative AI will turn people's attention back to the data center. There has been tremendous innovation in on-premises infrastructure offerings over the past few years. I expect generative AI to be the catalyst that encourages organizations to reevaluate their modernization approaches to maximize the value of their data moving forward.

Scott Sinclair is a Practice Director at TechTarget's Enterprise Strategy Group who has a proven track record in the storage industry. Scott uses his understanding and experience investigating new technologies and designing business strategies for Fortune 500 technology companies to solve problems for his clients.

Enterprise Strategy Group is a division of TechTarget. Its analysts have business relationships with technology vendors.

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