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The New Normal in the Data Center space

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By Prashant Goyal, Director – Data Center Solutions, Advisory and Transactions Services, CBRE India

 India’s DC market is all set and ready for a phase of growth on the back of data localization policies and an accelerated, post-pandemic pivot towards digital technology. Demand for outsourced data center solutions has increased in India, and the occupiers would require flexible, scalable operationally, and financially optimal DC solutions. It is expected that fund deployment towards data centers will rise. Global players are likely to continue the investment in the country, focusing on funding prominent developers to advent into the DC segment in the near future. In addition, corporations would be inclined to invest in the cloud and hybrid IT infrastructure against the backdrop of the Covid-19 situation in India.

 Over recent decades, the growth of digital systems has occurred rapidly, and many businesses have found themselves with sprawling data center infrastructures that span multiple regions or even continents, particularly IT innovators with a wide range of applications. According to the Ministry of Electronics and IT, India’s data consumption demands for vigorous growth of data centers. As per the MeITY survey on the need for data centers, Indians consume up to 12 GB/month (2019), as opposed to 0.3GB/month in 2014, and it is expected to rise to 21 exabytes per month by 2025.

This growth also indicates a rise in data storage and processing requirements resulting from increased levels of remote working during the Covid-19 pandemic, which has seen data centers taking an increasingly prominent role. The spurring digital consumption patterns led by online gaming, online education, streaming and e-commerce will cascade into an enormous demand for DC space, scaling up their data center facilities quickly to serve ‘hyperscalers’ & enterprise clients. The previous year, data centers were among the highest performing assets in the US REIT industry, generating a total return of approximately 19.3 percent in the first five months of 2020. Big Data, Industry 4.0, the Internet of Things (IoT), 5G, and cloud computing have played an increasingly influential role in DC expansion today.

 Consolidation of data centers will lead to enormous benefits for businesses beyond cost reductions. CBRE has outlined five benefits of data center consolidation and company enhancements for CIOs revisiting its Data center strategy.

 Increased Productivity

Consolidating data center facilities provides the ability to improve operations, monitor redundancy and flexibility, increase accessibility, and improve the use of IT assets. To eliminate redundancy and scope for human error, IT services automate processes whenever and wherever possible. Therefore, with improved server technology, technologically advanced data centers ensure seamless end to end functionality increasing the productivity of the workforce.

 Strengthen Energy Efficiencies

During a consolidation program, companies can realize enhanced energy efficiencies through hardware refreshes – rightsizing to more energy-efficient platforms. Typically, transitioning to newer infrastructure results in lower PUEs (Effectiveness of Power Use) and lower electric bills. This can provide an organization with direct savings, allowing for reallocation and reinvestment.

 Improved safety, mitigated risk

Reducing the footprint of a firm’s data centers allows data center infrastructure centralization, which strengthens security and streamlines management. Reducing the size of your critical infrastructure helps reduce your organization’s attack landscape and scope of security. By eradicating outdated, end-of-support platforms, mitigating system failure opportunities, consolidation also helps reduce risk. Consolidation or divestiture of a firm’s assets in the data centers also amplifies disaster recovery (DR), permitting firms to implement a more robust DR plan that also includes cloud replication options.

 Companies can introduce best practices for ongoing operations through carefully planned consolidation and migration activities through data center experts. To provide real-time insight and transparency into their IT estate, leading companies use consolidation events as an opportunity to implement advanced management tools, systems, and processes.

Cost Reductions

Cost reduction is one of the greatest business drivers for data center consolidation. Proper consolidation programs can lead to millions of dollars in company-wide cost reductions. Leasing and power rates have been driven down by competition in growing data center markets. Consolidations help to eliminate operations that are redundant and less efficient and reduce maintenance costs. Besides, advanced data center solutions can give organizations an accurate picture of their critical facilities’ total ownership cost.

A long-term strategy for consolidation

With the launch of a data centers consolidation project, perhaps the most important principle to keep in mind is that data center consolidation should be treated as a long-term strategy. Besides the costs that a firm will eliminate by consolidating (staff, facilities, risk exposure), additional costs (new equipment, additional bandwidth if the firm moves from local data centers to remote data centers, etc.) will also be incurred.

 Over time, however, data centers consolidation savings will become more critical. The costs of maintaining the status quo and remaining exposed to all the associated risks will increase if the firm strategically needs to consolidate. These developments would allow enterprise CIOs and technology leaders to engage in new site selection and acquisitions for footprint expansion to streamline their businesses.

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