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Shailesh Dash

DATA CENTERS ARE INCREASINGLY BEING REINVENTED, EVEN MORE DURING THE NEW NORMAL

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4 years ago Shailesh Dash

RE-INVENTION OF DATA CENTERS IN THE NEW NORMAL Data centers are one of the more understated enabling elements of the digital economy. Over the past few years, especially in 2020, data generation has accelerated at an exponential pace, with the resulting growing need for processing data evoking major developments in data center infrastructure. Today, digitization is at the heart and soul of all economic growth; with nearly every industry witnessing a digital transition in some form or other, data centers have evolved into large and complex hubs to collect, store, process, distribute, and enable access to colossal mountains of data and host entire networks of computing and storage systems, servers, and other components. With reports stating that each person creates around 1.7 MB of information per second, the world is evidently becoming increasingly data-driven. As of 2020, IT spending on global data center systems was estimated to have reached a whopping USD 208 billion. This trend is not likely to slow down in 2021 and the evolution of digital infrastructure will play a key role in this transition. Almost every business across the world, as well as government bodies, produce and use vast amounts of data which necessitates the need to have robust data centers to store and process their infinite data. This can be done by their own centers or by accessing a number of available options such as rented servers at co-location facilities or public cloud-based networks (via hosts such as Google, Microsoft, and Amazon). For larger tech behemoths, data centers are located at multiple regions all over the globe to aid smooth and continuous data sharing and access. Currently, over 3 million data centers are reportedly in existence across the globe in largely diverse structures and sizes. Given the spectacular changes taking place across businesses, data centers are also witnessing a major transformation in terms of structure, capacity, bandwidth, storage, and other aspects—with futuristic data centers poised to shift to a model that is much more evolved than the current one. Business dynamics are constantly developing which is correlated to the shift in the dynamics of the location of data centers and IT infrastructure; this implies that the technology powering data centers must be agile, responsive, and scalable. On-premise data centers are currently estimated to account for about 61% of the infrastructure, but this is projected to change over the next five years—the share of on-premise centers is expected to reduce while cloud providers will witness strong growth. By 2025, hyperscale cloud and physical infrastructure is forecast to account for around 49% and 28%, respectively, of the IT infrastructure market. The COVID-19 pandemic has further accelerated the development from static facilities with limited capabilities to fluid and agile ones that can meet the growing requirements of technology-enabled businesses. The importance of developing the capacity of data center infrastructure has become largely prominent. The need for such enhancements is colossal with research suggesting that, by 2024, Global 2000 Enterprises will create data at a rate of 1.4 million gigabytes per second and will require about 20,000 petabytes of additional data storage per year. This capacity of growth is also indicative of new opportunities arising within this space. Major global cloud computing players are thus expanding in a bid to set up large data centers with huge acquisitions implying the immense scale of these servers. For example, Microsoft recently purchased 900 acres in Virginia near its 1.1 million sq. ft. data center space for its future cloud operations expansion plans with further acquisitions to house more data centers. This can help us understand the importance and changes occurring in the need for data centers. POPULAR TRENDS WITHIN THE INDUSTRY The ongoing pandemic has highlighted the need to decrease reliance on human administration. This has further facilitated data center automation in rapidly becoming the new norm. AI and robotics are now playing key roles in enhancing data center management through their use for tasks such as server installation, storage management, and site security. For instance, Facebook’s Site Engineering Robotics team is designing and developing robotics solutions to automate and scale its data center infrastructure operations. On the other hand, a recent survey showed that around 73% of data center managers intend on increasing their use of automation during the pandemic, while about 33% expect hiring challenges to translate into smaller operations teams amid growing server volume, thereby leading to smarter data centers. The concept of edge computing is another trend that is elevating software automation across data centers, with edge data center companies such as MobiledgeX, Swim.ai, Mutable, and Edge Gravity vastly moving the market. Edge computing is expected to take off in a big way over the next few years as global giants in digital infrastructure are also exploring this technology. Amazon Web Services (AWS) is potentially extending its AWS cloud to provide edge computing at physical data centers, colocation facilities, and telco centers. Telecom giant American Tower’s purchase of Colo Atl and deployment of six edge modules at its tower sites also display its thrust into edge computing technology. Edge, or micro-data centers, are also opening up avenues through other applications, such as 5G networks, which are widely deemed the next big thing. However, cloud computing is perceptibly the one trend within digital infrastructure that has outshined all others, playing an arguably greater role than any other technology. As tech innovation advances, the growing importance of flexibility has prompted organizations to migrate to more agile technologies, such as cloud, in third-party data centers. In 2019, for the first time, companies were found to spend more on cloud infrastructure services annually than on physical data center hardware. As the growing significance of agile systems pushes dependency on such digital networks, businesses are likely to implement mechanisms that will accelerate their transition to cloud-based infrastructure over the next few years. However, this does not mean that physical data centers have been rendered unfeasible. Many companies are switching to a hybrid-cloud approach, wherein some workloads are uploaded to the cloud while others that require higher scrutiny and security remain in data centers. As the global trend moves toward digitization, the demand for data centers and cloud infrastructure is likely to reach unprecedented heights. Cloud and data center providers are expected to see improved up-times, bandwidth, cost efficiencies, as well as better agility and scalability. This will provide them with a strong market foothold and poise them for growth in the imminent future. EMERGING TRENDS A host of other new trends are emerging within the data center ecosystem, such as Software-Defined Networking (SDN), Hyper-converged Infrastructure (HCI), Micro segmentation, Micro services, Containers, Non-Volatile Memory express (NVMe), Service Meshes, and GPU computing. Notably, graphics processing units, or GPUs, were once used just for video gaming, but it has now emerged with new applications through its computing model that can help exceed the processing ability of CPUs, process multiple threads simultaneously, and handle bigger workloads from IoT, machine learning, and analytics. Consequently, GPUs are being increasingly used within data centers, with companies such as Nvidia, entering this space and tapping into the plethora of unexplored opportunities herein. INCREASED ACQUISITIONS AND INVESTMENTS With the criticality of data center infrastructure to the success of businesses of all sizes, this avenue is seeing high merger and acquisition activities on a global scale. Listed data center market leaders Digital Realty and Equinix are actively acquiring smaller players to explore new markets and services in order to build on their market position. Private investment has also risen within this field with Macquarie Infrastructure Partners (MIP)’s investment in Netrality Data Centers and Aligned Energy, and Colony Capital’s investment in Data Bank and Vantage. Global investment firms are also investing in data centers with prominent examples including Goldman Sachs-backed Global Compute, KKR-backed Global Technical Realty, Brookfield-backed Evoque, GI Partners-backed GI Data Infrastructure Fund, and EQT Infrastructure-backed EdgeConneX. Other major players within this domain such as Nvidia, AMD, Xilinx, Alphabet, Avoxi, Intel, Achronix, and IBM will also continue to grow. While data centers will remain extremely important in the digital age, the means of deploying such infrastructure and its related technologies will continue to fundamentally evolve. Data centers are no longer restricted to their physical structures and flexibility, adaptability, and resilience will take center-stage as the way data is processed will be rewritten in the new normal.


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