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How the last two years have affected the data centre industry

Written by Jack Bedell-Pearce, CEO and co-founder, 4D Data Centres

With a new year now upon us, those in the industry are reflecting on the past 12 months and the lessons that can be learnt from the changes wrought by COVID-19 since 2020. The data centre industry continues to adapt to meet the demands of businesses moving towards a long-term WFA (Work from Anywhere) model. The pace of digital transformation and the widespread adoption of hybrid-IT is accelerating. So how have these changes shaped the data centre and cloud sectors over the past two years, and what does this mean for 2022?

The impact – COVID-19 

COVID-19 has hit certain parts of the economy hard, and while the adoption of more cloud and remote working services has been a boon for data centres, it’s not all been plain sailing for the sector.

The domino effect of international supply chains being disrupted at the start of the pandemic in 2020 continues to plague the sector. Microchips used in servers, routers and firewalls are in short supply which has led to cost increases and long lead times on orders. While chip production has ramped up and supply chains are slowly unclogging, the pent up demand from other sectors (most visibly the automotive manufacturing sector which is struggling to deliver modern cars on time) will continue to impact the tech sector long past 2022.

Freedom of movement restrictions due to COVID-19 have impacted the ability of tech companies to hire from overseas in the past two years. Whilst this will ease in 2022 as we move from a pandemic to an endemic phase, a deficit of skilled technical engineers in the UK will continue to dampen growth.

Digital transformation

The demand over the past two years has however created something of a coiled spring within the economy, which bodes well for the data centre sector. Despite a mild Omicron-related stumble in December 2021 (which is already showing signs of abating), the economy is poised to re-bounce significantly in 2022. As remote working becomes a reality and companies generally adopt a flexible approach to working at home and in the office, businesses are starting to implement the digital transformation plans that were created in the preceding 18 months.

While there will always be winners and losers from this kind of change, data centres are likely to be net beneficiaries. Better home and office connectivity will be required and more SaaS solutions will be adopted – all of which need data centres that host cloud servers and fibre routes.

Security and resiliency

A lot of businesses in the UK have taken positive steps in recent years towards reviewing and improving their data security, not only to be compliant with GDPR but also to mitigate the significant costs that come with a data breach or ransomware attack. These attacks can not only be costly in terms of reputational damage and bitcoin (to unencrypt the ransomed data) but also in time lost from systems being offline.

Uptime has therefore become a much higher priority for businesses now that they know their home workers will be sitting idly if systems are knocked offline. Greater scrutiny is being paid to where services are being hosted. Are the servers physically located in the UK (or even in the EU) and how well maintained are the data centres in which these systems live?

With some very public outages from major hosting providers like Meta, AWS and Azure in 2021, companies are looking carefully at backup systems and considering hosting their most critical systems on hardware/private clouds they own themselves. Private clouds are not the cheapest option out there, nor are good quality established data centres. But compared to the cost of an entire business grinding to a halt because of downtime, they tend to work out as the most cost effective in the long run.

The environment and sustainability

With Glasgow COP 26 still fresh in our minds, there is significant pressure on data centres to work towards lowering overall emissions. Fortunately, the mere act of moving servers from an office into a colocation data centre (as has been the trend since offices were downscaled during the COVID-19 pandemic) lowers overall emissions as data centres are generally more efficient than in-house server rooms.

Not to rest on its laurels though, many data centres are already pledging to reach a net-zero emissions target by 2030. This is even more ambitious than the same pledge set by the UK government but with a deadline twenty years later in 2050.

In 2022, we’ll see a lot of the next generation data centres being built with green technology at their core. Where space allows, evaporative cooling will continue to supersede traditional condenser cooling systems, though even these are making leaps and bounds in efficiency. To reduce the losses in power transmissions, we may even see some data centres being designed and built with local power production (in the form of green hydrogen or biofuel).

As well as being more efficient, these mini power plants would in theory offer greater stability for the data centre and may end up supplying excess power to local residents and businesses.