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The Impact of the Internet of Things on Data

Centers
Published: 27 February 2014

Analyst(s): Fabrizio Biscotti, Joe Skorupa, Ruggero Contu, Bettina Tratz-Ryan, Errol Rasit, Andrew Lerner,
Anthony Kros, Jie Zhang

As the Internet of Things generates billions of data points that need to be

stored, processed and analyzed, vendors competing in the data center
hardware, software and service markets need to address this phenomenon
with precise product, sales and marketing strategies.

Impacts

Processing large quantities of IoT data in real time will increase as a proportion of workloads of
data centers, leaving providers facing new security, capacity and analytics challenges.

The magnitude of network connections and data associated with the IoT will accelerate a
distributed data center management approach that calls for providers to offer efficient system
management platforms.

The rapid growth of data will force data center vendors to include IoT-aware infrastructure and
capacity management platforms in their product offerings.

Recommendations
Recommendations for vendors in the data center market:

Understand that security will have to be integrated as part of the IoT package. Partner with
industry device and platform manufacturers to be successful in this emerging marketplace.

Develop data center operations management applications that enable a complex, distributed
hardware and software environment to be managed selectively as a single entity or as a set of
discrete elements.

Focus efforts on segmenting customer types where IoT investment may be high, because it will
not be a ubiquitous opportunity.

Analysis
This report serves as an introduction to a collection of research that examines the impact of the
Internet of Things (IoT) on the data center market, including servers, storage, networking, security
and infrastructure management software. This is recognition that the Internet of Everything has a
potential transformational effect on the data center market, its customers, technology providers,
technologies, and sales and marketing models. For a definition of the IoT, see Note 1. Also see
"Hype Cycle for the Internet of Things, 2013."
According to Gartner estimates, the IoT will include 26 billion units installed by 2020, and by that
time, IoT product and service suppliers will generate incremental revenue exceeding $300 billion,
mostly in services. The component cost of IoT-enabling consumer things will approach $1, and
"ghost" devices with unused connectivity will be common (see "Forecast: The Internet of Things,
Worldwide, 2013").
In different industrial applications, connected IoT devices are embedded in the entire production
and value chain. However, not all "things" must be owned by the enterprise. For instance, a
company that services and replenishes vending machines is closely linked with things (the vending
machines), but those machines may be owned by the client company. The things are outside the
boundary of the replenishing company, but they are still integrated into the company's business and
value chain. The same applies when things are owned by consumers and are located in their
homes. Service businesses in home energy management or home security are closely integrated
with the things and the information and service creation they may provide, but the assets
themselves are owned by the end customer and not the service company.
IoT deployments will generate large quantities of data that need to be processed and analyzed in
real time, which will change the workload of data centers, creating some challenges for data center
infrastructure providers, not least around network latency, compute capacity and network/data
security. But those issues will generate new IT-specific (or better: IoT-specific) service opportunities
for decentralized data infrastructure management. Vendors should compete in the markets for data
center hardware, software and services, and they need to include the discussion of IoT-triggered
business and service challenges in their sales, marketing and product strategies.
Figure 1 lists the main impacts of the IoT on the data center ecosystem and associated
recommendations.

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Figure 1. Top Impacts of the IoT on Data Center Ecosystems

Impacts

Top Recommendations

Processing large quantities of IoT data in

real time will increase as a proportion of
workloads of data centers, leaving
providers facing new security, capacity
and analytics challenges.

Understand that security will have to be

The magnitude of network connections

and data associated with the IoT will
accelerate a distributed data center
management approach that calls for
providers to offer efficient system
management platforms.

Develop data center operations

The rapid growth of data will force data

center vendors to include IoT-aware
infrastructure and capacity management
platforms in their product offerings.

Focus efforts on segmenting customer

integrated as part of the IoT package.

Partner with industry device and platform
manufacturers to be successful in this
emerging marketplace.

management applications that enable a

complex, distributed hardware and software
environment to be managed selectively as
a single entity or as a set of discrete
elements.

types where IoT investment may be high,

because it will not be a ubiquitous
opportunity.

Source: Gartner (February 2014)

Impacts and Recommendations

Processing large quantities of IoT data in real time will increase as a proportion of
workloads of data centers, leaving providers facing new security, capacity and
analytics challenges
The IoT connects remote assets and provides a data stream between the asset and centralized
management systems. Those assets can then be integrated into new and existing organizational
processes to provide information on status, location, functionality, and so on. Real-time information
enables more accurate understanding of status, and it enhances utilization and productivity through
optimized usage and more accurate decision support. Business and data analytics give insights into
the business requirements data feed from the IoT environment and will help predict the fluctuations
of IoT-enriched data and information.
The enormous number of devices coupled with the sheer volume, velocity and structure of IoT
data creates challenges, particularly in the areas of security, data, storage management, servers
and the data center network, as real-time business processes are at stake. Data center managers
will need to deploy more forward-looking capacity management in these areas to be able to
proactively meet the business priorities associated with IoT.

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Security
The increasing digitization and automation of the multitudes of devices deployed across different
areas of modern urban environments are set to create new security challenges to many industries
as well as offer new opportunities to operational technology (OT)-IT security providers. Security
solutions developed as part of industry-specific platforms, such as those developed for industrial
systems, medical equipment and air and defense sectors, are often deployed in integration with
such specialist platforms and in partnership with the major industries' equipment providers. Such
solutions are aimed at securing various aspects of specific devices, such as smart meters,
substations and mobile communication, or focusing on tackling platform-specific vulnerabilities, as
well as security testing and certification in relation to specific industry regulations and standards.
Often, the advantage of these specialist security players comes from a deep understanding of the
often closed proprietary environments and from the close relationships with industry-specific
technology suppliers.

Enterprise Challenges
Significant security challenges will remain as the "big data" created as a result of the deployment of
myriad devices will drastically increase security complexity; this, in turn will have an impact on
availability requirements, which are also expected to increase, putting real-time business processes
and, potentially, personal safety at risk. The fact that many devices will be owned by third parties
will mean that control, risk assessment and mitigation will be outside of enterprises, bringing on a
new set of vulnerabilities, given the fact that many such devices will be connected to enterprise
networks.

Consumer Privacy
As is already the case with smart metering equipment and increasingly digitized automobiles, there
will be a vast amount of data providing information on users' personal use of devices that, if not
secured, can give rise to breaches of privacy. This is particularly challenging as the information
generated by IoT is a key to bringing better services and the management of such devices.
Opportunities will arise for security providers to apply security controls to enable the mining of
information without impacting user privacy.
Recommendations:

Understand that security will have to be integrated as part of IoT infrastructure. Partner with
industry device and platform manufacturers to be successful in this emerging marketplace.

Realize that IoT will increase diversity and introduce a multitude of technology platforms, while
endpoint-centric security offers opportunities to some technology partnerships to also consider
network-centric approaches to mitigate security risks brought by IoT connecting to corporate
systems.

Analysis: Ruggero Contu

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Data
The impact of the IoT on storage is two-pronged in types of data to be stored: personal data
(consumer-driven) and big data (enterprise-driven).
As consumers utilize apps and devices continue to learn about the user, significant data will be
generated. Music playlists, shopping preferences, application and device settings, and usage data
will require a repository for these and other bits of data. In addition, because most (if not all) of the
devices will be connected to the cloud in one way or another, users can expect to have that data
stored in the cloud as well. Consumers will actually prefer this data to be stored in the cloud, as
there may be changes or additions to lists or preferences that will be changed on the fly and will
require them to not be tied to any one device. Be aware that it's all about control of the consumers'
data, and consumers will also require a certain amount of security to be guaranteed alongside
agility.
Already in use in key verticals such as healthcare and financial services, big data is transforming
how and why companies collect, sort and interpret the gigabytes, and sometimes terabytes, of data
generated and stored. However, it's not simply a new technology or solution; rather, it is a result of
many different factors coming together including, but not limited to, rapid data growth, complex
new data types and parallel advancements in technology. The aforementioned lists, preferences
and data generated by users will be a literal gold mine for enterprises who not only want to learn
more about consumer usage patterns, but also use that data to target promotions, services and/or
products to consumers and provide a real competitive advantage. Therefore, the ability of the
enterprise to become more agile and efficient in its storage hardware aspirations will be key, and
the answer may not necessarily lie within the confines of its own data center.
Because of these data types, the impact on storage in the data center will be tremendous. IT
administrators, already tasked with "keeping the lights on" in regard to the current storage
infrastructure, will now be tasked with figuring out how to store, protect and make accessible this
deluge of data. Gartner predicts that storage capacity utilization rates are between 30% and 50%
for most enterprises, so the capacity overhead may be there, but the management of it is a different
story.
Additionally, storage technologies such as autotiering will be key. Administrators want to seamlessly
allow data to shift onto lower tiers as the data "cools," allowing for the most timely, business-critical
data to reside where it can be accessed quickly without impacting application availability.
Recommendations:

Prepare to answer questions from end users, such as "Who owns my data?" and "How safe is
my data?"

Understand that big data isn't one specific technology and enacting a big data strategy will
require the coordination of many different pieces of your IT infrastructure.

Analysis: Anthony Kros

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Storage Management
By nature, IoT data is unstructured and is often referenced as a popular big data example. IoT data
includes, but is not limited to, sensor data, surveillance data, and data collected from wearables
and Web logs. With a few exceptions, IoT data is largely a vertically focused phenomenon. For
example, the oil and gas sector collects IoT data from field equipment, the government from
surveillance cameras, and manufacturers from embedded sensors in wearables and cars. The
purpose of collecting IoT data tends to be analytics-focused.
When compared with other types of big data (files and social media, for example), IoT data has the
following characteristics:

Most IoT data tends to arrive in streams and at a steady pace, although it could be batch
uploads (logs) or bulk transfer (test results). The latter could be processed through intermediate
nodes and passed on in an aggregated manner.

Its volume accumulates fast.

Usage is analytics-driven.

Businesses very rarely access it for production purposes.

It is often regularly deleted after a certain time period unless retained for compliance.

IoT data can be best addressed with big data technologies such as Hadoop or NoSQL. These
technologies provide the needed horizontal scalability, high capacity and parallel processing
capability and can be more cost-effective. Within mainstream enterprises, IT organizations have
generally not yet had to deal with IoT data as a unique dataset. For them, IoT data arrives in the
storage layer the same as other unstructured data. Traditional storage architecture and
management software can treat IoT data the same way as they treat other unstructured data,
although this may not be optimal from a configuration and cost perspective. Most IT organizations
have not felt the need to back up and protect IoT data. Retaining IoT data is rare unless
organizations are required to do so by industry regulations. When required by regulations,
organizations are often forced to offload IoT data to the Hadoop type of environments. However,
protecting such environments with traditional data protection technologies becomes problematic if
not impossible.
In essence, the impact of the IoT on storage infrastructure is another factor contributing to the
increasing demand for more storage capacity, and one that will have to be addressed as this data
becomes more prevalent. The focus today must be on storage capacity, as well as whether or not
the business can harvest and use IoT data in a cost-effective manner.
With the fast development of wearables (mostly for consumers) and the emerging use of smart
machines (for both businesses and consumers), the portion of IoT as a subset of big data will grow
quickly. Organizations that plan to leverage IoT big data need infrastructure solutions and services
that focus on scalability and cost-effectiveness. For serving the analytics purpose of collecting IoT
data, tools designed for processing and analyzing IoT data are in high demand. The workloads with
high I/O demands for tiny reads and writes could kill some RAID mechanisms and thrash some
systems. At least one commodity exchange uses Hadoop purely as a storage array to absorb its

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transaction logs for regulatory purposes. The exchange's managers said off-site backup was out of
the question, creating a big problem.
Recommendations:

Focus efforts on identifying industry sectors and primary use cases where IoT investment
makes the most business sense and has the best potential for downstream analytics.

Technology positioning will be key for horizontal scaling and tiering capabilities. Disruptive
vendors should leverage IoT as an opportunity to introduce new technologies or cheaper
capabilities that support IoT workloads. Incumbent vendors should integrate IoT capabilities
into their product as an enhancement.

Analysis: Jie Zhang

Server Technologies
The impact of IoT on the server market is expected to be evolutionary to a mature, relatively stable
technology sector. Indeed, organizations that manage and consume data collected from a vast
array of devices will require additional compute capacity and may well increase server budgets if
there is a business case to do so. Yet the adoption of IoT will not be ubiquitous for all organizations,
and many will not be able to increase budgets or monetize IoT investment to the same levels as
others. Therefore, the impact of IoT on the server market will be largely focused on increased
investment in key vertical industries and organizations related to those industries where IoT can be
profitable or add significant value. In other enterprises, where the value of IoT may be marginal,
server budgets may well be reordered in the context of the server budget priorities, or some
projects may go ahead utilizing existing assets.
In terms of the workload requirement, the server market is already witness to commoditization of
infrastructure style sweeping through the industry. The commoditization results from the design
practices seen in some of the largest data centers in the world (serving Google, Amazon, Alibaba
and the like) and from the practice of server vendors allowing an ever-increasing proportion of
legacy and new workloads to be run on commoditized components, such as x86 architecture and
Windows and Linux operating systems.
Server technology adoption has long been associated with a commoditized list of source
components. Therefore, in terms of the style of compute resource required for IoT serving, the
expectation is for little change to the existing server design style, although IoT could act as a
catalyst for increased adoption of: (1) in-memory computing and analytics platforms (due to
increased appetite for near-real-time analytics for data in flight); and (2) extreme low-energy
processor-based servers (due to this architecture's potential energy performance benefits in
managing very simple and small workloads at scale).
Recommendations:

Focus efforts on segmenting customer types where IoT investment may be high, as it will not be
a ubiquitous opportunity.

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Technology positioning will be key for server vendors; disruptive vendors should use IoT as an
opportunity to introduce new technologies or capabilities. Established or protective vendors
should integrate IoT capabilities into their product and messaging DNA as an enhancement to
existing capabilities.

Analysis: Errol Rasit

Data Center Network

Existing data center WAN links are sized for the moderate-bandwidth requirements generated by
human interactions with applications. IoT promises to dramatically change these patterns by
transferring massive amounts of small message sensor data to the data center for processing,
dramatically increasing inbound data center bandwidth requirements. This flood of small messages
will also stress perimeter security appliances, forcing technology providers to rethink system
architectures. Within the data center, network switches that support virtualization with low (but not
necessarily extremely low) latency, moderate 10/40 Gbps port density and stable software can be
used to build networks to support big data applications that will be fed by IoT. However, a big data
project may include continuous streams of sensor or machine data, daily batches of transactions,
and log data from a variety of sources. Each of these sources has different needs around
throughput, latency and resiliency. Over time, these requirements are likely to change, often in
unpredictable ways.
Lastly, there are situations where the analytics would be handled within the enterprise and in the
same data center as the rest of the IoT functions. However, there will be an increasing number of
examples where analytics will be handled by a service provider. In these cases, there will be a need
for additional data communication between data centers.
Recommendations:

Understand that security will have to be integrated as part of the main offering. Partner with
industry devices and platform manufacturers to be successful in this emerging marketplace.

Account for the agility and real-time characteristics that IoT data management and processing
require.

Plan to extend analytics-as-a-service as part of processing real-time data for your clients.

Integrate workload predictions and utilization management to circumvent the issues over
designing data centers for peak load requirements. Processing data ad hoc and in real time
requires very scalable and flexible infrastructure.

Provide a comprehensive suite of configuration and management tools that embed network
performance monitoring and application performance monitoring capabilities within the network
fabric to enable the operations staff to optimize it in near real time.

Analysis: Joe Skorupa

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The magnitude of network connections and data associated with the IoT will
accelerate a distributed data center management approach that calls for providers
to offer efficient system management platforms
IoT threatens to generate massive amounts of input data from sources that are globally distributed.
Transferring the entirety of that data to a single location for processing will not be technically and
economically viable. The recent trend to centralize applications to reduce costs and increase
security is incompatible with the IoT. Organizations will be forced to aggregate data in multiple
distributed mini data centers where initial processing can occur. Relevant data will then be
forwarded to a central site for additional processing. Additionally, for near-real-time control
applications, results will be returned to the sources to ensure proper operations of the distributed
system. In some cases, the aggregation sites may also have to store the raw data for some period
in case additional analysis is warranted. This implies a federated security/data/management
environment. This new architecture presents operations staffs with significant challenges, as they
will need to manage the entire environment as a homogeneous entity while being able to monitor
and control individual locations.
Backing up this volume of data will present potentially insoluble governance issues, such as
network bandwidth and remote storage bandwidth, and capacity to back up all raw data is likely to
be unaffordable. Consequently, organizations will have to automate selective backup of the data
that they believe will be valuable/required. This sifting and sorting will generate additional big data
processing loads that will consume additional processing, storage and network resources that will
have to be managed.
IoT creates massive scale requirements around IP address management (IPAM) and related
services, such as DNS and DHCP. Thus, organizations must optimize these services from both a
process perspective and a technology perspective to ensure the environment scales in support of
the IoT initiative. There are several vendors that provide solutions in this space, which is referred to
as DDI (DHCP, DNS and IPAM), including Infoblox, BlueCat, Efficient IP, Cisco, Microsoft, BT, Men
& Mice, Nixu and Alcatel-Lucent.
Recommendations:

Develop data center operations management applications that enable a complex, distributed
hardware and software environment to be managed selectively as a single entity or as a set of
discrete elements.

Provide add-on capabilities for your big data applications that enable customers to identify and
capture source and intermediate data that is required for regulatory/governance compliance.

Optimize IPAM and related services (DNS and DHCP) from both a process and technological
perspective to ensure your solution scales to support your IoT initiative.

Analysis: Andrew Lerner and Joe Skorupa

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The rapid growth of data will force data center vendors to include IoT-aware
infrastructure and capacity management platforms in their product offerings
In order to cope with the increasing management challenges of data flows going through data
centers, data center operations requires the implementation of management information systems
and administration tools for aligning compute production to data throughput triggered through
endpoints. Since many implementations of commercial and public IoT lack the governance of data
collection and distributed management nodes to address the trade-off between mass data
throughput and frequency and policies to pick meaningful or event-specific data, data centers and
infrastructure run into issues on bandwidth constraints and inefficient and resource-intensive
compute cycles. Data center operations and providers will need to deploy more forward-looking
capacity management platforms that can include a data center infrastructure management (DCIM)
system approach of aligning IT and OT standards and communications protocols to be able to
proactively provide the production facility to process the IoT data points based on the priorities and
the business needs. Already in the data center planning phase, throughput models derived from
statistical capacity management platforms or infrastructure capacity toolkits will include business
applications and associated data streams.
Those comprehensive scenarios will impact design and architecture changes by moving toward
virtualization, as well as cloud services. This will reduce the complexity and boost on-demand
capacity to deliver reliability and business continuity.
Recommendations:

Develop interoperability of process management between IoT data flows and capacity
management design of data handling and compute power in the data center to allow for agile
capacity management.

Design IoT costing models and toolkits to help your customers in enterprise data center
operations to visualize and contrast to their businesses the compute cost associated with
implementing a distributed device environment.

Understand how customers with software-defined data center architectures should include
advanced DCIM solutions to build cost-efficient adaptive capacity management according to
IoT-based business requirements.

Analysis: Bettina Tratz-Ryan

Gartner Recommended Reading

Some documents may not be available as part of your current Gartner subscription.
"Forecast: The Internet of Things, Worldwide, 2013"
"'Internet of Things' Deployments Pose a Challenge to Smart-City Information Strategies"
"High-Tech Tuesday Webinar: Internet of Things Smart City Opportunities for TSPs"

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"Hype Cycle for the Internet of Things, 2013"

"Key Technologies for the Internet of Things"
"The Information of Things: Why Big Data Will Drive the Value in the Internet of Things"
"The Internet of Things Is Moving to the Mainstream"
Note 1 The Internet of Things
Gartner defines the IoT as the network of physical objects that contain embedded technology to
communicate and sense or interact with their internal state or the external environment.

This document is published in the following Market Insights:

Computing Hardware Worldwide
Consumer Services Worldwide
Enterprise Network Infrastructure Worldwide
Software Infrastructure Worldwide
Storage Worldwide

Gartner, Inc. | G00250562

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