Post Pandemic: The Next Wave for Enterprise Data Centers
Impact of the pandemic on the data center industry
The almost two years of the pandemic has brought about a phenomenal amount of change to our society in how we live and work and has had a dramatic impact on all aspects of the data center industry.
When the pandemic first began to rip through our lives, we all began working at home at the same time. This in turn accelerated the digital transformation in corporations by at least five years if not more. Immediately, there was a need for more laptops, networks and the transformation to a fully digital workplace with unified communications, adopting platforms like MS Teams, Zoom and all the other flavors of videoconferencing.
At the same time, as wave after wave of the pandemic brought about restrictions on social gatherings and in person shopping, the pace of online shopping accelerated placing more demands on technology and the IT infrastructure necessary to support e-commerce.
This unprecedented demand quickly resulted in logistics and supply chain challenges which were also compounded by a shortage of critical technology components. This resulted in delays in the delivery of servers, network gear and the related infrastructure to build out colocation cages or new data centers. As a result, delays in construction and compute capabilities became commonplace. Many data center operators began stockpiling key supplies to help to mitigate delays. This just contributed to the shortages in the market. Colocation providers supported their customers through this by handling the build and managing migrations.
From an IT perspective, the industry did an excellent job turning on a dime accommodating most employees working remotely. This was instrumental in keeping these businesses operating and thriving during this. What a lot of companies with data centers were not prepared for was the vulnerability of their critical infrastructure in the face of travel restrictions, facilities lock downs and staff absenteeism due to infections.
What kept data center operators up a night (and still does)
One of the first concerns that data center owners and managers had was the continued uptime and operation of their datacenters. The initial focus was on their operations staff to ensure ongoing maintenance and uptime. Initially, with no vaccines available, measures were taken to separate teams into two or more groups where they would not interact or be on-site at the same time thereby creating operational diversity. Visitors and contractors were limited to or restricted from site visits. Strict protocols were put in place for visiting data centers.
Once vaccines were introduced, vaccination became mandatory in many datacenters. Touring the data centers remained difficult as global travel restrictions were implemented very quickly. Data center operators managing third party colocation facilities developed virtual tours and adapted their marketing material to accommodate selling remotely to their clients. This certainly helped with travel restrictions in place. However, due diligence of these sites remained difficult and often this work was outsourced to third parties.
From a labor perspective, we continue to witness what has been termed “the great resignation” as many employees, especially IT professionals, opt for lifestyle changes and early retirement. This combined with the growth of the data center industry has left critical shortages in certain skill sets from data center operators to structured cabling technicians to construction workers and electricians.
We do not expect the pendulum to swing back
What was born out of necessity has now become popular and perhaps even the new norm. Work from home and e-commerce are unlikely to revert to pre-pandemic levels once we arrive at whenever the new normal is. While we do believe that the pendulum will swing back, it will not swing anywhere near what it used to be.
We also believe that there is (and will continue to be) a new perspective on corporate travel as many companies see that life went on without it. Therefore, cost savings in the data center world associated with virtual tours, virtual and remote due diligence are likely to continue, even as travel restrictions relax.
Buy land – they’re not making it any more
The demand for land to build new data centers was strong before the pandemic and has only increased in the last 2 years. Also, as shopping at home ramped, the demand for logistics warehouse space grew rapidly. These warehouses used essentially the same land as data centers. Not surprisingly, the price of land has increased rapidly, thereby contributing to the increase in costs of both data centers and logistic space for e-commerce. Given that these two groups have been earning extraordinary profits during the last few years, the demand for land and the ensuing cost increases are not expected to abate.
The economy of economizing
Given that the cost of equipment, buildings and land continues to increase, we expect to see data center professionals continuing to economize in several areas. The pandemic exposed the vulnerability of data center staff. To address this issue as well as the great signation, we expect to see further advancements in and use of remote management of data centers technologies. We have also seen the use of robots in data centers, which allows equipment to be stacked higher (allowing greater utilization of cubic square feet) and reduce operating costs as robots do not require the same comfort heating or cooling as human operators. We expect there to be further investment and innovations in these strategies to economize on space.
Unchain my supply
As supply chain issues continue, we have also seen colocation operators deploying equipment in anticipation of future demand for clients whether it be “Bare Metal Solutions” (see our article on the Bare Truth about Bare metal”) or infrastructure equipment in inventory, circumventing supply chain lags or issues. The emphasis on “time to revenue” has never been stronger for businesses and their demands for corporate IT to perform at the same speed continue at the same pace. Look for more solutions to accelerate the deployment of compute power whether in the public, private or hybrid cloud configurations.
All of this concentration of data and computing capability has amplified the “all your eggs in one basket” syndrome. The number of cyber threats and ransom attacks continues to increase unabated and has heightened the threat level in the data center industry. In response, data center professionals have responded with increasingly sophisticated strategies to protect data and data centers (see our article on “Stuffing your data under the IT Mattress”).
We can only speculate how business could have coped if this pandemic had happened a few years earlier and some of the technologies currently seen as commonplace were not available. One thing is certain, the pace of change is only going to accelerate. The pandemic was the mother of many innovations and likely will continue to be. If the tone set by the pandemic were not so dire, one might even say that these are exciting times. Challenging is likely a more suitable phrase.
At Cushman & Wakefield's Global Data Center Advisory Group, we have the privilege of working with the organizations across the globe facing the most daunting challenges. It has been our honor to assist these organizations and help them develop innovative solutions in a pandemic world and hopefully soon in a post pandemic world.