The economics of data center connectivity is a delicate dance between performance and cost.
While data center operators are continually pushed to meet growing capacity and uptime demands, while future-proofing their infrastructure, there is also the reality of budget constraints, especially in the murky economic waters of 2023.
Data Center Frontier is January called this a year of dueling cross-currents that could constrain or accelerate business activity in the sector.
“This sets the stage for pockets of vibrant activity in an industry grappling with higher costs, a slowing economy, and a challenging landscape for delivering new data center capacity,” wrote Rich Miller in the Data Center Frontier article.
In January, McKinsey & Company profiled the sector in “Investing in the Rising Data Center Economy.”
“The explosion in demand for data centers has attracted the attention of investors of all types—growth capital, buyout, real estate, and, increasingly, infrastructure investors. In the US market alone, demand—measured by power consumption to reflect the number of servers a data center can house—is expected to reach 35 gigawatts (GW) by 2030, up from 17 GW in 2022, according to McKinsey analysis,” said the article.
The United States accounts for roughly 40 percent of the global data center market.
McKinsey & Company breaks down data centers into four main components:
“Data centers are typically owned and operated either by big companies (such as cloud vendors, banks, or telcos) for their purposes or by co-location companies,” says McKinsey & Company. “The latter lease out the space and typically provide network capacity and power, as well as the cooling equipment that keeps down server temperatures. Tenants bring their IT equipment.”
Data Center Frontier says that data centers are not immune to the business cycle, but the industry also sees continued investment during economic troubles, especially when external forces (such as the pandemic) drive the decision-making.
“As cloud services and AI continue to remake the business landscape, enterprise IT shops must confront the tension between budget constraints and the competitive risk of falling behind in an era of digital transformation,” wrote Miller.
Southwest Airlines' troubled holiday season serves as a warning for those that sacrifice performance too much for the cost.
“Southwest’s epic meltdown over the Christmas weekend, which disrupted its operations for more than a week, appeared to be the result of years of deferred upgrades to homegrown software systems,” Tom Krazit wrote at Mostly Cloudy. “It’s a wake-up call to any IT and finance departments returning from the holiday break knowing they’ve been putting off those updates.”
Even something as basic as selecting a network cabling architecture has trade-offs between performance and cost with top-of-rack (ToR) architectures vs. middle-of-row (MoR) or end-of-row (EoR) architectures:
Data center operators must keep an equilibrium between cost and performance in various aspects of data center operations. Here is a look at six areas:
Backup power systems, such as uninterruptible power supply (UPS) units and backup generators, are also essential for maintaining operations during power outages. By balancing the upfront investment in risk mitigation with the potential losses incurred during downtime, operators can make informed decisions that optimize both performance and cost.
They should consider factors like improved efficiency, reduced management complexity, and potential revenue gains from enhanced services. Conducting a cost-benefit analysis and calculating the ROI helps operators strike a balance between performance requirements and economic constraints.
Virtualization techniques, such as server consolidation and workload balancing, enable operators to achieve higher resource utilization and reduce power consumption. By effectively optimizing power usage, operators can strike a balance between meeting performance demands and controlling energy expenditures.
Additionally, airflow optimization techniques, such as implementing appropriate server rack layouts and using blanking panels, facilitate efficient air circulation. By adopting these thermal management practices, data center operators can maintain optimal performance while minimizing cooling-related costs.
By actively engaging with DCIM systems, operators can identify potential bottlenecks, plan for capacity expansion, and optimize resource allocation. For example, monitoring power usage effectiveness (PUE) metrics can highlight areas for improvement and guide decisions to enhance energy efficiency. With data-driven decision-making facilitated by DCIM, operators can strike a balance between performance optimization and cost control.
Adaptability and staying abreast of emerging technologies and industry best practices also play vital roles in achieving this balance between performance and cost in a continuously evolving economic landscape.