The race for AI supremacy is driving international competition, with growth and productivity at the forefront of government agendas.

As nations contend for leadership in AI tech, ensuring the right infrastructure is in place is crucial—and data centers are central to this strategy. AI-capable data centers have quickly become key strategic assets, reflected in the $22 billion global investment in the sector during the first five months of 2024. According to Gartner, spending on data center systems will increase by a quarter (24 percent) in 2024.

However, data center operators face significant operational inertia, limiting their ability to adapt to rapid shifts in demand. This inertia threatens to prevent operators from capitalizing on this investment surge, keeping them from being a part of the AI-driven growth narrative.

Governments recognize data centers as critical infrastructure

Data centers will be pivotal to the growth of global economies amidst the AI gold rush. They provide the critical digital infrastructure needed to power the AI revolution, enabling countries to boost economic growth and productivity.

In September, the UK designated data centers as critical national infrastructure and pledged to review rejected planning decisions for sites in Iver, Buckinghamshire, and Abbots Langley, Hertfordshire. These plans are part of the government’s drive for economic growth, with the government announcing £6.3 billion ($8bn) of global investment in UK data centers. These sites will provide the computing data and data storage to give the UK the infrastructure required to train and deploy AI technologies.

Furthermore, research shows found that local authorities in the UK’s 20 biggest cities have overwhelmingly greenlit planning permission for data center projects, with only three out of 88 applications being declined. A further five were withdrawn, while plans for the East Havering Data Centre Campus are listed as undecided.

Meanwhile, Ireland is expecting more than €4.5 billion ($4.75bn) in data center investment by 2025, backed by a strong governmental stance on the sector's importance, including new sustainability principles for data centers.

Across Europe, Germany has labeled data centers as the "lifeline of the digitalized world," and France is pushing legislation to classify large data centers as projects of major national interest. Similarly, Norway's updated data center strategy facilitates easier establishment of new centers and better use of their waste heat—underscoring the growing political recognition of their strategic value.

Key challenges to data center growth

Demand for data centers is skyrocketing due to AI's high computational requirements, presenting massive opportunities for operators. However, many operators struggle to overcome barriers that hinder their ability to adapt. These challenges can be summarized in five key areas:

1. Power access shortages: AI workloads require high-performance processors that draw significantly more power than traditional CPUs, making power access a major challenge. Gaining reliable power sources demands extensive planning, and delays can be costly if not properly managed.
2. Sustainability and ESG concerns: Operators are under pressure to meet increasingly stringent environmental, social, and governance (ESG) standards. Rising compute demands intensify cooling and power needs, impacting sustainability. Falling behind on these requirements risks delays and could lead to non-compliance with evolving regulations.
3. Talent shortages: Finding and retaining qualified talent remains a major challenge, with 53 percent of operators struggling to hire and 42 percent facing retention issues. Operators need professionals skilled in data center operations, as infrastructure expertise is crucial to effectively managing growing demands.
4. Supply chain disruptions: Global material shortages have caused project delays for 83 percent of operators. These brittle supply chains – coupled with limited staffing – stretch teams thin, slowing material acquisition and impacting construction schedules. Addressing these challenges is vital to avoiding significant setbacks.
5. Health and safety requirements: Rapid expansion of data centers means health and safety protocols must be prioritized to prevent accidents that could lead to delays or financial penalties. Zero-incident policies and adherence to safety regulations are increasingly becoming a focus for data center developers.

Breaking through operational inertia

To overcome these barriers, data center operators need a more holistic approach to design and operations. This includes maintaining the right balance across infrastructure demands, skills, sustainability, and health and safety considerations. Building modular facilities that emphasize flexibility, interchangeability, and connectivity can help operators stay agile in the face of changing technologies and market demands.

Operators should look to work alongside experienced partners to navigate these challenges. Strong partnerships can provide the necessary expertise, streamline project management, and address supply chain and talent pipeline issues. By leveraging this support, operators can adapt more readily to evolving requirements and seize growth opportunities in the AI-driven data center sector.

Data center operators must rise above operational inertia to meet the demands of AI and contribute to global growth. Doing so requires strategic partnerships, innovative approaches to infrastructure design, and a clear focus on sustainable, safe, and efficient operations—all of which will help them capitalize on the AI revolution and cement their role in the future of digital economies.