Put IT executives from some of the City of London’s biggest financial institutions round a table and they quickly reach agreement on what is ‘the big challenge’ in IT today.

The problem aired and shared at Information Age’s latest roundtable debate centred on data centre capacity – or the lack of it. With every turn of today’s constantly accelerating business flywheel, demand for data centre processing power is rising, while the space available to house new servers remains stubbornly fixed. Two of the delegates – both from large international banks – outlined how their data centres were full to capacity and that they have been operating a “one server in, one server out policy”, for over a year.

New, more compact blade server designs can help in this respect, but only if data centres have access to the extra electricity needed to both power and cool the resulting densely packed server arrays.

The fact is that few, if any, City data centres are equipped, or can easily be upgraded, to accommodate such high-density processing configurations. “Our power is limited to 125 watts per square foot,” reported the infrastructure manager of one major investment bank. “We have reached the point where we must start looking for a new data centre.”

That produced a chorus of nods as others outlined similar woes. “It’s a real problem,” said another IT executive working for a large financial services company: “Our ability to grow and our time to market is suffering because of [data centre] capacity issues.”

Suitable locations in the City are in short supply. Although several operators are known to be developing new central London sites, most of these are thought to be already fully subscribed, or too small to meet everyone’s requirements.

The alternative, said one delegate, is to join those companies, such as DHL, that have moved their data centres away from central London to remote sites as far away as Prague. However, although most agreed that, with the exception of the most time-critical trading applications, there are no longer any real technological barriers to this strategy, in practice “that is not something [business] people want us to do.”

Faced with such resistance to conduct a physical migration of the data centre, companies are turning to virtual alternatives. For a lot of companies this involves taking a fundamentally new view of a technology that has hitherto been treated as a means of optimising disk capacity. Now, though, said an IT analyst with a global merchant bank, “issues of power and heat are forcing us to look at doing virtualisation properly.”

The experience of those that have taken the plunge is compelling: “We were used to seeing [server capacity] utilisation of 35%, now we’re optimising up to 85%. We’re consolidating servers, producing application to server ratios of 16:1 or even 24:1 in one case.”

But virtualisation is proving difficult to sell to IT’s business paymasters. “That's my machine, I’ve paid for it,” is an all too common response from executives confronted by the prospect of seeing dedicated servers placed in a shared pool of resources.

 “There is still a huge psychological aspect to keeping servers close; users, who have paid for the kit, want to have it close,” said the data centre chief from a large retail bank.

Clearly, more must be done to teach business about the need to abandon old thinking around resource ownership for a new service-oriented approach of IT delivery. As yet, there seems to be no consensus about how to make that leap.