When 2020 was officially ushered out the door, the world had reason to rejoice at the conclusion of a grueling year. And data centers operators are no exception, as they’ve been under incredible strain to support the massive uptick in network traffic and digital solutions needed to keep the world virtually connected.
There’s every indication that recovery from the pandemic is on the horizon. Even so, the Independent Data Center Alliance (IND-DCA) expects five key factors will actually increase dependence upon data centers in 2021 and beyond.
Expect strong M&A activity
Just as we saw in 2020, merger and acquisition (M&A) activity will continue unabated in the data center market in 2021. With 113 acquisitions worth almost $31 billion, 2020 saw a 107% increase in mergers and acquisitions over 2019.
We expect that growth to continue in 2021, driven by the burgeoning demand for cloud services and the subsequent increase in data from applications and smart devices. The fastest, most cost-effective way to grow and meet such demand is through acquisitions.
In fact, just five days into 2021, Databank closed its acquisition of zColo, a deal started in 2020 that’s valued at $1.4 billion. And Bluebird Network announced its acquisition of ColoHub Data Center to strengthen its capabilities and fiber network footprint in Iowa and Illinois.
Expect intense focus on sustainability
As data center operators increasingly focus on growing their footprint through acquisitions, they will also invest heavily on sustainability with an eye toward competitive differentiation, future-proofing their facilities and vastly negating energy consumption and carbon emissions. Increased attention will be placed upon the transition to liquid cooling, water recycling, energy recovery, solar, and wind.
Data-intensive technologies like AI, connected devices and autonomous cars are driving up energy needs at data centers, as is the massive uptick in the digital transition of companies and countries. Operators must mitigate their impact on the environment, especially as data centers currently account for more than 1 percent of global energy consumption. We expect data centers to continue to focus on sustainability to reduce costs, comply with existing and future regulations and revamp the industry’s reputation as a leader in the global sustainability movement. We expect the data center market to embrace a more sustainable and environmentally aware approach to development, already adopted by providers such at Bulk Data Centers in Norway.
Expect an increased dependence upon technology
There’s no question that a major focus of data centers this year will be toward lowering costs. We expect data centers will do so in large part by embracing and integrating technologies like neural networks, remote monitoring and digital twins as revealed by Future Facilities in late 2020.
Because digital twins create an identical replica of a data center to use for simulation, operators can test scenarios ahead of real-world deployments. Neural networks and AI have a key role in shaping the hardware design and architectures that support data centers. Remote monitoring is essential for ensuring connectivity and delivering more secure, reliable and efficient remote work capabilities. Moreover, remote visibility and management are key to safely maintaining and servicing digital networks.
Expect increased movement toward the edge
While the global pandemic created massive economic disruption in 2020, it was a stellar year for 5G, with operators deploying 135 networks in EMEA, APAC and the Americas. Moreover, vendors commercially deployed more than 300 5G devices in 2020, and the expectation is that such growth will continue unabated in 2021. That growth will be fueled in large part by end-user demand for applications like gaming, the Internet of Things (IoT) and AI.
We expect such demand to drive up the need for data center capacity that can only be met by processing data as closely as possible to the edge, thereby increasing speed and reducing latency. As such, data centers have to adapt and scale operations by deploying new, smaller data centers in edge areas as quickly as possible vs. deploying only in major technological and economic hubs. A company like DartPoints is one to watch. In 2020, the company received funding from Astra Partners, deployed a new edge data center colocation interconnection facility in Eastern Iowa and acquired MDC, a data center in Ohio in late 2020.
Expect things to stay remote – regardless of the pandemic
Even when Covid-19 is firmly in the rearview mirror, we expect that things won’t return to business as usual, especially for companies that have supported remote operations and integrated digital technology to enable those operations. Instead, we expect that remote work, meetings and events will be a much bigger piece of business going forward. And as enterprises invest in digital solutions to support remote work – think cloud, automation, IoT, and AI to improve operations and increase resiliency – data centers will see increased demand for capacity.
But remote operations will also impact how data centers operate. We expect greater use of data center infrastructure management (DCIM), cloud-based solutions that incorporate performance benchmarking and predictive analytics, as well as remote facility management. Also gaining traction is remote infrastructure management (RIM) for monitoring, security services, network management and server administration.
Regardless of the challenges that 2021 will bring, data center operators can expect support from members of the Independent Data Center Alliance to continue to share knowledge while supporting business enablement. Let us know today how we can help you prosper in 2021.
