Commissioned by CyrusOne, DCD’s report Data Centers: An Industry Shaped by Disruption & Change has taken a look at how the global data center industry has remained resolute and resilient despite the adverse economic conditions across the world caused by the Coronavirus (COVID-19) pandemic.
The sector has played a crucial role in ensuring access to critical information and services as well as supporting key parts of the economy. This mission-critical industry has never been more important.
In this piece, we’ll be looking at how past disruptions have impacted the industry and what can be learned from them. We begin the story with a theme 2020 has reiterated for many across the data center industry: massively increasing demand. Unprecedented growth from 2000 onwards has seen rapidly increasing demand for digital and online services such as e-commerce, but also in growth for the data centers that enable such services.
With a potentially limitless demand for data, we’ve seen transformations take place across nearly all industry sectors; shopping, communications, entertainment, and more. The world of ‘always on’ and almost endless choices, with the added benefit of convenience, puts a huge strain on the data center industry. Even in the face of this growth, the industry has been able to respond adequately. But what factors have an impact on data centers being able to meet this demand?
Global recessions, lack of capital, and strained resources
Our report identified a lack of necessary resources as the most critical threat to global data center stability. It seems quite straightforward, without the necessary monetary resources required to operate at a level sufficient to supply global demand, data centers will fail. The report looks back at the dot-com bubble and crash that occurred throughout the late 1990s and early 2000s.
Increasing interest in the use of the Internet in the late 1990s led to rapid investment in Internet-based businesses, without taking into account traditional investment metrics. However, investors quickly realized the lack of materialization in profit and earnings for many ‘dot-com’ businesses led to a rapid decline in investment and faith - leading to the dot-com crash.
The period following led to a drastic decline in investments in digital services, thus impacting investment in data centers. Expanding sectors such as colocation began to face significant financial hardship, and thus naturally had to cut back on expansion. The sense of risk around IT, digital, and data center infrastructure created significant stalls in the industry’s ability to expand. This presented a difficult situation - how would accelerating IT requirements of business and consumers be sated by the data center industry? Overall, the industry was able to demonstrate some resilience and continue to operate - and scale where necessary following the dot-com crash (and, in fact, the 2007-2009 Global Financial Crisis).
More recently, we have seen delays in build agreements which meant the industry had to meet increasing demand without relying on high-capital projects or data center expansions. The industry adapted in a number of ways, the DCD research report found, indicating “asset sweating,” use of colocation providers, and cloud services all increased following the stalling of new data center builds and expansions throughout this period.
The threat of disasters - natural and man-made
It goes without saying, earthquakes, tsunamis, volcanoes, hurricanes, etc. all form serious threats to data centers around the world. Typically, these types of disasters are more localized, yet they still represent a significant threat to the availability of people and resources required to run, operate, and improve data centers. Our report indicated that the total number of disasters has been rising since 1970 (from 60 events per year to 320 in 2019). Continuing geological and climate-based risk factors are of significant threat to the stability of data centers worldwide.
Rapidly accelerating effects of climate change are an increasing threat to data centers worldwide. Climate change, and its knock-on effects, can interrupt a data center’s access to power, water, networks, staff, and suppliers. For example, Hurricane Sandy struck the Atlantic Coast of the United States in October 2012. Measures taken by power suppliers in the area led to data centers staying down for several days, over what could be considered a critical period of access to digital services. Flooding in places like Lower Manhattan severely impacted fuel storage for data centers, further impacting local networks. Overall, the hurricane is reported to have knocked out 300,000 voice access lines, 4.5 million data circuits, and disabled 10 cellular towers. While many data centers were not directly damaged, limited access to necessary power and fuel several impacted their ability to operate.
Similarly, following the 9/11 attacks, the localization of facilities and assets was identified as a key problem. Infrastructure supporting key economic networks (such as New York’s Financial District) were almost entirely vulnerable to interruption. A more distributed approach to network distribution was taken almost immediately after to ensure business continuity in the face of significant disruption events.
Overall, the data center industry has proved resilient in the face of crisis, and has used many of these crises to learn and adapt. However, the main challenge remains the same: maintain availability. Make sure you download the full report to get all the data, statistics, and insights into how the industry has dealt with crises throughout the years.
Download this free DCD Research Report, brought to you by our content partner CyrusOne.
Totaling almost $31 billion
This year has been a good one for data centers, but here’s hoping we never have another like it