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Navigating new challenges in the data centre industry for 2024 and beyond

Fri 8 Dec 2023

In this feature, Jon Healy, Group Chief Operating Officer at Keysource, delves into the evolving landscape of the data centre industry as we move into 2024.

He discusses the significant influx of capital into the market, which makes it an attractive investment compared to other sectors.

But despite the positive outlook for the short and medium term, Healy raises concerns about the dynamic nature of the industry and the factors that could rapidly alter its trajectory.

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What’s New In The Data Centre Industry For 2024 And Beyond?

The inrush of available capital that we have seen enter the data centre market in recent years is reflective of its promising returns and the comparative performance of other markets. This is coupled with a relatively low risk, given its resilience through recent years, which is overall very positive for the short and medium term of the industry. But what, if anything, has started to change?

Keysouce’s State of the Industry 2023 report reinforced this positive view, but new concerns are arising where these conditions in the data centre sector can quickly change, influenced and directly affected by technology, regulation, energy resources, corporate governance, and a lack of skilled people.

This year’s report shows that the data centre and related sectors continue to grow despite the current global unrest, political scepticism, and economic uncertainty. But it also flags a number of challenges that are arising and forcing decision-makers to operate differently.

The report gathered views and insights from more than 250 IT directors and senior data centre professionals.

Areas Of Concern

In addition to the impact of growing demand, the industry is facing a trilemma in dealing with the competing and compelling challenges of developing and delivering on sustainability targets. These include the pressure to speed up project delivery to remain competitive, as well as the continuing supply chain and skills issues. This is also against a background of rising costs.

Feedback from respondents reveal that their budgets are slightly down from last year, although it is fair to say we were starting with a relatively high bar.

However, there is no doubt operational overheads are continuing to rise overall. But key questions remain around how this will be offset, and will more corners be cut?

More Haste, Less Speed?

The pressure to speed up project delivery is perhaps the most concerning finding of the report, especially as a high number of those surveyed have admitted to identifying quality issues as a result.

There is a fine line between delivering at speed and making rushed decisions and/or cutting corners. We are certainly seeing some organisations prioritising speed above all else, which is risky considering our respondents’ strong concerns about getting the correct advice, as the skills shortage continues to bite.

In previous years, these energy and sustainability challenges, like the race to low PUEs, have benefited from there being enough available time for innovation to help. This is now time which the sector or customers arguably do not have or are not willing to give.

In reality, you can only compress a project so much with risking a costly mistake.

Is The Data Centre Sector Woefully Unprepared?

The lack of progress shown in this survey around sustainability strategy and delivery is both disappointing and unsurprising. Once again, it opens the sector up to allegations of greenwashing.

For most organisations, there is more immediate pressure on other areas and, whilst the European Commission’s Energy Efficiency Directive (EED) is looming, it clearly lacks the teeth needed.

When asked about the changes in regulation requiring businesses to report on data centre/hosting metrics, a huge 81% said they were confident in their ability to provide this, yet only half of respondents have suitable ways of measuring key metrics.

Even more surprising is the fact that 64% of respondents have not evaluated the carbon impact of existing data centre services and solutions, and 57% are not intending to evaluate the impact of future investments.

These conflicting facts lead us to believe that the industry really is woefully unprepared for the need to measure and report on its sustainability deliverables.

The sustainability landscape remains complicated and confusing covering a range of issues such as overall business strategy, power, renewables and capacity.

There is no ‘one size fits all’ and no clarity around the value of reporting. We are seeing clients that are understandably overwhelmed by the task and we believe that expert advice is key throughout.

Are We Able To Change?

Looking ahead, it is once again a challenging and exciting time for our sector. There is certainly work to do to balance these new priorities.

This may simply not be possible for some organisations given the limited resource pool and supply chain issues.

One solution is to look at changing the traditional project process and increasing collaboration across the supply chain.

As an industry, we have proven to be good at adapting and reinventing ourselves to cope with the fast-moving environment we operate in. But this approach would involve getting people to work together in a way they never have before, potentially sharing sensitive information with their competitors.

Can we change? I hope so. Remaining static is not an option, but failure certainly is.

About the Author

With a background in engineering and extensive experience in the data centre and critical environment industry, Jon Healy has led a range of award-winning solutions and services for a host of companies, from global enterprises to major government organisations.

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If you have insights, opinions, or expertise related to any aspect of the technology sector that you would like to share, we want to hear from you. Please contact our Editor, Stuart Crowley, at [email protected] to contribute to the ongoing dialogue in the tech community.

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