Market changes drive the evolution of data center management
Outsourcing is a trend seen in almost every sector of the economy, and the data center industry is no exception. This kicks off our series of articles on how data center facilities management is changing the operating models of REITs and data center providers.
The demands of today’s modern IT environment indicate the need for high levels of agility. It doesn’t just revolve around technology, but also about evolving and adapting to market and business demands. This means seamlessly scaling an environment based on a data center’s IT and business goals.
Outsourcing is a growing trend in almost every vertical and business segment. But what happens when too much is put on the plates of data centers and business leaders? Suddenly, they are more focused on managing various facility details than ensuring that data centers run smoothly, and every executive must consider whether outsourcing in a particular area makes sense and is profitable.
Outsourcing facilities management enables organizations today to have a more successful digital transformation strategy.
This is where we begin to change the way we think about REITs, data centers, and managing large data center campuses. In many situations, outsourcing facilities management, based on the specific needs and idiosyncrasies of the type of facility and data center provider or REIT business, will help an organization become a public company. flexible rather than a set of properties. Additionally, facilities management outsourcing enables organizations today to have a more successful digital transformation strategy. This is the crucial difference to remember. And it’s operational change that helps REIT and data center leaders become more operationally efficient and save a lot of time and money in the process.
This series of articles takes an entirely new approach to real-world data center success. We’ll look at the importance of outsourcing, how data centers are viewed as an asset class, the direct impact of outsourcing on EBIDTA, and how you can provide thought leadership through outsourcing and market differentiation services.
Market changes drive the evolution of data center management
There has been substantial growth in the data center sector. A new report from Fortune Business Insights indicates that the global demand for more efficient computing technologies combined with the economic benefits of modern, consolidated connectivity applications has contributed to the exponential increase in the scale and power of data centers. As the report highlights, the global data center infrastructure market size is expected to reach $142.31 billion by 2027, compared to 2019, when the global market value was $94.56 billion. dollars.
“The ever-increasing need for data exchange, storage and security is expanding the demand for data centers in the United States, but one solution does not fit all.” Pat Lynch, Executive General Managers of Data Center Solutions at CBRE
The growing use of data centers by organizations amid the Covid-19 pandemic has further fueled the growth of this market and the importance of business agility in the online space. Additionally, rapidly changing global market competitiveness and advanced technologies, such as cloud computing and big data, have made it easier and cheaper for businesses to shift their workload to data centers. in colocation, stand-alone or on a large scale.
This growth translates into more expansions of data center providers and REITs, driving new supply. A recent study by CBRE indicates that the main markets for wholesale data centers in the United States – Atlanta, Chicago, Dallas/Ft. Worth, Tri-state New York, Northern Virginia, Phoenix and Silicon Valley – accounted for more than 56% of record annual uptake in 2018. New shipments increased total data center inventory in these markets by 17.3% in 2019, increasing competition between specific markets in 2020.
The new supply comes mainly from two sources: new suppliers bringing their first capacity online and expansions by existing suppliers. Competition among vendors will continue to drive market prices and contract terms, creating aggressive rental scenarios. End users are looking for creative hybrid computing environments through efficient sizing, allowing them to take advantage of both new supply and government incentives.
With that in mind, how much does running a data center really cost? In the United States, the average 5-megawatt data center costs $270.1 million to operate over 10 years, according to CBRE. Costs will rise from $276 million to $368.4 million for data centers in Boston, Chicago and Silicon Valley.
“Capital and operating costs vary widely by market, and non-monetary factors such as proximity to a corporate office, fiber density, and environmental and other risk factors can also influence purchasing decisions. business site selection.” Pat Lynch, Executive General Managers of Data Center Solutions at CBRE
At the low end, companies can expect to pay between $227.5 million and $248.3 million opening stores in markets like Atlanta, Omaha and Portland, Oregon.
Today, leaders in the business and IT space are constantly under pressure to reduce the overall operational cost of the business, including the cost associated with IT operations. The in-house data center adds huge expenses associated with the substantial level of investment required to deploy and maintain a modern, energy-efficient data center infrastructure. This makes data center outsourcing solutions and services a better alternative, which has a positive impact on the growth of the global data center infrastructure outsourcing market.
Working with leaders in the facility management space will positively impact operating models, EBIDTA, and an organization’s ability to be agile in the market. As mentioned earlier, these types of partnerships allow data center and REIT leaders to become true technology companies rather than a collection of locations and properties.
In future articles in this series, we’ll explore important changes related to facilities management and outsourcing. Plus, we’ll look at real-life examples of how outsourcing directly impacts a company’s ability to respond to the market while reducing costs and improving EBIDTA. Finally, we will see how these specific partnerships are the engine to help technology leaders break away from legacy data center paradigms when it comes to facilities management.
To better understand REITs and data center leaders who are evolving their operating models and facilities management strategies, we will examine the following:
- Critical Trends Around Today’s Data Center Market
- Outsourcing: legacy versus modern approaches
- The data center as an asset class
- How Outsourcing Improves Colocation, Data Center Provider, Corporate and REIT Finances and EBIDTA
- Focus on the core competencies of data center providers, enterprises and REITs and where partners will help
Download the full article, “Focusing on Data Center Expertise,” courtesy of CBRE, to learn more. In our next article, we’ll look at the changing data center landscape – legacy versus digital.