The datacentre industry is set to enter an unprecedented era of global growth, but a new report has warned that providers could fail to capitalise on the opportunities in many countries due to local challenges such as struggling economies, immature markets and concerns over security and regulatory compliance.
Law firm DLA Piper’s inaugural Global Data Centre Market Report – which surveyed 235 customers, developers, hosting providers, investors and consultants across the world – found 69% were optimistic about a huge expansion of the industry due to converging trends such as mobility, big data, cloud computing and improvements in service efficiency.
“Lack of datacentre capacity in certain markets, the proliferation of mobile and data-heavy services, the growth of cloud and the convergence among key players in the market are all contributing to growth in the sector,” said Anthony Day, DLA Piper’s legal director for technology and sourcing.
However, more than three in ten respondents believed that creaking global and European economies would hamper growth in some regions. They also expressed concern that emerging markets – often characterised by such challenges as poor infrastructure, political instability and a lack of funding – could be left behind.
The largest proportion of respondents (12%) felt the UK offered the greatest opportunity for datacentre growth over the next three years, followed by Central and Eastern Europe (11%) and China (10%). However, patriotism may be partly responsible for the UK’s pole position, since four out of ten survey respondents were based here.
- Cloud computing
- Big data
- Cost cutting
- Mobile technology
- Business digitalisation
- Datacentre infrastructure management (DCIM)
- Emerging markets (e.g. Africa)
- Green IT
- New technologies
- New datacentre builds
A diverse market
The survey found a host of factors are driving global datacentre growth (see panel), but the report went on to note that this diversity highlights the need for industry players to focus on specific countries’ local needs and challenges.
“Rather than viewing datacentres as one homogenous category, there is a diverse spectrum of requirements depending on which part of the market you are aligned with,” it said.
“This is why local knowledge is so important in this sector...to understand how this will impact the way the industry develops from country to country, and how this will shape the manner in which datacentres are located, financed, built and marketed in each.”
Among the country-specific challenges cited by different categories of respondent, lack of adequate infrastructure was high on the list for IT and telecoms consultants, and many of those on the supply side also felt over-regulation and burdensome tax regimes were inhibiting the potential for growth. Customers, meanwhile (particularly those based in the Asia-Pacific region) ranked security concerns as one major obstacle to take-up.
It is important to understand how local factors will impact the way the industry develops from country to country
Scott Thiel, head of intellectual property and technology for DLA Piper Asia, said: “Data security is the number one agenda item for many datacentre customers in Asia-Pacific, partly driven by the patchwork quilt of data protection legislation in the region, but also by an often ill-conceived view of vendors not approaching these risks with the same degree of importance compared to other markets.”
Releasing pent-up demand
The report notes providers should do more to quell customer concerns over both security and regulatory compliance in the localities where they operate.
“For datacentre providers, offering solutions that are regulatorily compliant can be a key factor in driving growth in their markets as it helps to ease the compliance burden for their customers. It is in this space that there is still huge potential for cloud vendors to better develop their solutions to meet the requirements of their regulated customers and unlock greater value from this slice of the market,” it said.
It also suggests that businesses' need to become more cost and energy efficient may “act as a catalyst for expansion” of the datacentre industry. Three-quarters of respondents believed bona fide green accreditations would boost the appeal to customers of using datacentre facilities.
There is still huge potential for cloud vendors to better develop their solutions to meet the requirements of their regulated customers
“It is encouraging to see that sustainability and clean tech (and the clear impact this can have on rising energy costs) are starting to gain importance on a global stage,” said the report.
Clearly, there is plenty of pent-up customer demand to use datacentre and cloud services which providers can tap into if they address the various local challenges they face. And, not surprisingly, the main driver for this demand is cost.
“Customer organisations seeking to reduce both opex and capex costs by outsourcing all (or a critical component) of their datacentre operations was another key trend that emerged,” the report said.
But potential customers also rank innovation high on their list when considering providers. This suggests many are looking for more than just the best price.
And for providers, all of this means there is no one-size-fits-all approach when it comes to meeting different customers’ and countries’ needs. As Paul Jayson, real estate partner at DLA Piper, said: “The level of sophistication demands bespoke solutions.”