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Demonetization triggers demand for data centres

Praveen Nair, General Manager for Datacenter Dynamics India Pvt Ltd (DCD), Mumbai, India suggests  how data centres helped India deal with demonetization

July 4 2017: In November 2016, the Government of India announced it would demonetize the Rs 500 and Rs 1,000 banknotes of the Mahatma Gandhi Series. The move of swiftly taking the notes out of circulation set off a chain reaction of events that led to a period of uncertainty and chaos throughout the nation. Now that the dust has settled and life has returned to normal in most cities, we examine how data centres were central in ensuring that across the country, the average person could still go about their lives with minimal disruption.
Fast growth in digital: Since demonetization, government statistics say digital transactions have increased between 400 to 1000 percent with a huge growth in business from  Rs 520 million (52 Crores) to  Rs 1.91 billion (191 Crores). The surge in data traffic has in turn increased investment in data centers, with data center players increasing their data capabilities and capacities. The Internet & Mobile Association of India has estimated India’s data centre business will touch US $4.5 Billion by 2018, which makes it the 2nd largest in the Asia Pacific region.
At the recent DCD Focus On Hyderabad conference, Srinivas Muppaneni, CIO of Andhra Pradesh State Cooperative Bank and Telangana State Cooperative Bank spoke about the importance of data centres especially post demonetization. He asserted: “Demonetization has forced many banks including ours to provide digital service in villages. For instance, post demonetization many villages in Telangana state have gone digital.”
The increase in digitization of the processes led to huge demand of storage especially from the BFSI (banking, financial services and insurance), telecom, and IT/ITES sectors. These sectors were unable to fulfill the sudden and huge demand of storage from their existing infrastructure and hence they were looking at data center providers. Muppaneni shared his bank’s experience. He said, “Being from the BFSI sector, post demonetization, we were worried whether our existing infrastructure would be able to handle the huge digital transactions or would our systems crash?”
Storage demands: Today, industries are looking at a place where massive amounts of data can be stored and utilized with security and efficiency. Hence it is crucial for today’s data centers to have the right storage, processing and security capabilities. But according to Muppaneni, data centers in India are not yet ready to handle the huge data traffic and there are very few data centers located in India. He asserted: “Data centres in India are not yet ready to take up the increased data volumes and due to security norms, we cannot host our data in the data centres that do not have a physical presence in India. Hence localization of huge data centres with all the required storage, processing and security capabilities is vital.”
Demonetization had an adverse effect on many businesses, but for data centre players, business has been good as there has been an increase in data traffic, usage of network infrastructure and storage space. The data center players are realizing the importance of the Indian market and they are trying to fulfill the demand of Indian companies. However, demand is still outstripping supply.
Some experts in the industry have told us we are currently at a stage whereby the need for more data centres in India is a cause for concern. So what could be done? For starters, State Governments would do well to emulate the Telangana State Government by coming out with a data centre policy which encourages more data centere to be set up by ensuring the entire process is free from bureaucratic red tape, and also ensuring the availability of power and connectivity. Existing data centres should be refurbished and upgraded, data centre practitioners educated and trained with a comprehensive framework in mind and finally, data centere should be audited and certified as to meeting key standards.

DCD is organising a  Webscale  conference in Bangalore on July 19-20 to highlight the impact of demonetization and how data centres are an integral part of the digital economy.