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The rising use of synthetic intelligence (AI) means a speedy improve in information use and a brand new period of potential information middle business progress over the subsequent two years and past.

This shift marks the start of the “AI Period,” after a decade of business progress pushed by cloud and cellular platforms, the “Cloud Period.” Over the previous decade, the biggest public cloud service suppliers and web content material corporations propelled information middle capability progress to unprecedented ranges, culminating in a flurry of activity from 2020 to 2022 as a result of surge in on-line service utilization and low-interest-rate financing for initiatives.

Nevertheless, there have been important shifts throughout the business up to now yr, together with an increase in financing costs, construct prices and construct instances, mixed with acute energy constraints in core markets. For instance, typical greenfield information middle construct instances have prolonged to 4 or extra years in lots of world markets, roughly twice so long as a couple of years in the past when energy and land have been much less constrained.

In the meantime, the biggest web corporations are participating in an accelerating race to safe information middle capability in strategic geographies. For every of the worldwide expertise corporations, AI is each an existential alternative and a risk with distinctive challenges for data center capacity planning. These dynamics are prone to lead to a interval of elevated volatility and uncertainty for the business, and the stakes and diploma of problem of navigating this setting are larger than ever earlier than. 

Versatile information middle capability planning can enable for altering inputs in quickly altering markets. Trying again, the Cloud Period gave rise to a totally new set of market-propelling prospects with totally different wants than earlier generations. Business gamers that have been in a position to tackle these evolving wants received an outsized share over the past business cycle. 

Key concerns for information middle business executives and their buyers ought to be:

  • State of affairs planning to capitalize on the evolving wants of the market. 
  • Proactive, but versatile, methods for market choice, facility design and different future selections.

New period of shopping for information middle capability: Programmatic shopping for is over

In the course of the Cloud Period, public cloud service suppliers turned extra refined in forecasting the ramp-up of demand and adopted a extra programmatic strategy to procuring capability. For a number of years, these patrons usually procured comparatively customary quantities of third-party capability structured with an preliminary dedication, adopted by a reservation and a proper of first provide for the same amount. Nevertheless, as demand ultimately outpaced the unique forecasts, cloud service providers (CSPs) needed to return to the marketplace for extra capability. 


Over the previous two years, buyer habits has notably shifted: With the advantage of hindsight, information middle prospects are actually more and more prepared to signal considerably bigger offers, significantly in markets the place energy is at the moment comparatively extra obtainable to keep away from last-minute scrambles for extra capability and complex footprints. They’ve additionally demonstrated a willingness to lease capability at larger costs in markets the place capability is constrained. 

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Key consideration for executives and buyers: 

  • Prior fashions and expectations might have adjustment to replicate this Evolution in buyer shopping for habits. 

Self-build information middle growth approaches are evolving

The biggest cloud and web corporations, the hyperscale patrons within the data center industry, have traditionally most well-liked to construct capability themselves in markets the place there’s important anticipated demand, potential financial benefit and manageable threat.

Nevertheless, intense competitors has led these gamers to rely extra on leased capability from third events to get a extra environment friendly path to market. In response, there are indicators that the self-build technique could also be shifting.

Hyperscaler organizations acknowledge that it’s unrealistic to self-build every little thing, and leasing will proceed to play an vital function in capability procurement. In consequence, hyperscalers are relying extra closely on leasing for pace to market benefit, whereas additionally contemplating smaller self-builds to probably offset future demand. This implies a possible improve within the whole variety of self-builds and a extra heterogeneous mixture of self-builds and leased capability inside cloud areas and even particular person availability zones. For third-party suppliers, assessing the specter of potential future migration threat, given this dynamic, will likely be more and more vital. 

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Key consideration for executives and buyers: 

  • The shifting mixture of self-build vs. leasing throughout the business and inside particular native markets could alter the dimensions of the addressable market, execution decision-making, and potential dangers.

Elevated energy demand for AI workloads, cooling shift to liquid

AI workloads require power-hungry graphics processor models (GPU), leading to a lot larger energy density necessities throughout the information middle. At the moment, the AI market is comparatively homogenous on the server infrastructure stage, with Nvidia holding about 95% of the GPU market for machine studying (ML).

Due to this fact, the vast majority of high-end AI workloads are run on related {hardware}: Particularly, chassis consisting of eight of Nvidia’s newest AI-specific GPUs (H100s), with every chassis consuming 5 to 6kW of energy. As much as six chassis can slot in a single information middle rack, leading to whole rack densities within the 30 to 40kW vary, in comparison with roughly 10kW/rack densities for commodity public cloud workloads. 

In consequence, hyperscalers and information middle operators should discover methods to successfully cool the gear. Some main hyperscalers have introduced plans to shift to liquid cooling options or elevate the temperatures inside their information facilities to help these larger densities. 

Key concerns for executives and buyers: 

  • Present designs ought to help the longer term wants of power-dense workloads as densities shift over time.
  • Choosing totally different cooling expertise choices might have to contemplate each financial and sustainability issues.

Environmental, Social and Governance (ESG) calls for

The information middle business ESG concerns are primarily targeted on sustainability. To attain their sustainability objectives, business members have introduced ambitions associated to renewable vitality utilization, water utilization and discount of their carbon footprints. Knowledge middle operators are using quite a lot of methods, the place obtainable, to satisfy these objectives:

  • Effectivity enhancements
    • Vitality-efficient designs utilizing applied sciences akin to free cooling, environment friendly energy distribution and environment friendly lighting techniques
  • Renewable vitality utilization
    • Procuring renewable vitality from the grid
    • On-site renewable era, together with photo voltaic and wind
    • Energy buy agreements (PPAs) for long-term renewable vitality, specifying quantity and worth
  • Water utilization
    • Air-cooled techniques
    • Closed-loop water techniques to cut back water use
    • Rainwater harvesting and water recycling
    • Water-free cooling, akin to evaporative cooling or adiabatic cooling
  • Carbon neutrality
    • Vitality restoration utilizing warmth from IT gear
  • Waste discount 
    • The power to make the most of these methods will range extensively by market relying on native local weather, native vitality combine and different components akin to the necessity for employee security. 

Key concerns for executives and buyers: 

  • ESG technique ought to be differentiated from opponents. 
  • An ESG technique ought to attempt to deal with desired, measurable change, or it could run the danger of being labeled as “greenwashing.”

AI plugins: Subsequent wave of ecosystems

OpenAI has lately introduced plugins to help third-party companies, akin to fashionable on-line ordering and reservation functions. These plugins are designed to assist builders entry and combine exterior information feeds instantly into OpenAI’s language mannequin, permitting for extra refined coaching and prompting capabilities.

This new performance may probably reshape current information middle ecosystems round particular industries or information sources. As this dynamic evolves, it will likely be important for operators to establish future “magnets” for these communities of curiosity and provide a related set of connectivity merchandise to help the wants of those ecosystem members. 

Key concerns for executives and buyers:

  • To help ecosystem growth, the best set of merchandise, companions and infrastructure is crucial. 
  • It is very important establish the highest-value prospects on this new market setting and decide how the gross sales group is supplied to focus on them.


The stakes have by no means been larger for information middle business members to develop proactive, versatile methods to navigate this new period and construct the best information middle capability in the best markets. AI is driving elevated information storage demand, which is positioned to outstrip provide within the close to time period. Builders, buyers and customers will profit from versatile information middle infrastructure methods that may harness the AI revolution and result in outsized progress.   

Gordon Bell is EY-Parthenon principal for technique and transactions at Ernst and Younger LLP.

Lillie Karch is EY-Parthenon senior supervisor for technique and transactions at Ernst and Younger LLP

The views mirrored on this article are the views of the authors and don’t essentially replicate the views of Ernst & Younger LLP or different members of the worldwide EY group.


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