The Next Big Opportunity for Design Teams — Data Centers as a Service, by Gregg Young

A major opportunity for the AEC industry is on its way spurred by changing competitive strategy in the Data Center industry.

Three developments driving this are:

1. hyper-growth in the amount of data to be processed globally;
2. growing user intolerance for latency (processing/transmission delays) and
3. the need to rapidly relocate processing operations across geography to follow customers.

Leading data center owners are adapting to the drivers above, giving rise to a new competitive strategy embracing three pillars:

1. Reducing Latency. The aggregate amount of IoT data to be processed will grow geometrically as the overall use of IoT devices quadruples in next five years. Also, the data produced will come from more geographically dispersed sources. Simultaneously, the high cost of transferring mountains of IoT data does not support the continued use of centralized processing hubs. In its place, processing “on the edge” (near the data source) is taking hold — to cut the latency. Edge processing will give significant advantage to global data center operators active in many geographic markets. Digital Realty and Equinix are prime examples.
2. Substitution of Premises. Shifts in the point of data origination (think IoT sensors) will lead landlords with global footprints to replace fixed term leases tied to one location with “service agreements”. Such agreements will allow tenants to relocate to another facility owned by the same operator. The potential here is to one day enable customers to close an operation in Virginia and open a replicated environment the following day in Amsterdam. To achieve this, leading data center operators will assist relocations offering technical service teams on both ends to assure transitions are successful with minimal customer downtime.
3. Standardized Facilities. As a front-end investment to ease transfer between facilities, we will see progressively more standardized specs and components (e.g. power, racking and aisle spacing, cooling systems, UPS, etc.). Leading operators will combine building techniques such as modularization, “kit of parts” components and containerization to support substitutability.

These pillars coupled with direct connectivity provide the underpinning of a “Data Center as a Service” [DCaaS] strategy that will compete with the conventional term lease model. If executed well, DCaaS will create “stickiness”, encouraging customers to consolidate space needs within a single DCaaS brand. In short, this is a solid customer-centric strategy which could provide transformative benefit for a significant portion of the user base.

What is the role for the AEC (Architecture, Engineering & Construction) industry?

AEC players need to be more pro-active thinkers at the enterprise level, contributing more effective construction strategies to support the pillars — i.e., latency reduction, substitutability, and standardization. The next big opportunity for the AEC team? Collaborate with the owner to future-proof their standardized designs– anticipating how changes in processor technology will affect the building and adjusting the design to reduce down the road capex. The virtual design and industrialized construction tools are already available to address this. What’s needed is the mindset to become strategic partners with the industry ….

From your professional perspective, what’s your take on this challenge?
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Gregg Young is Managing Director at Stanfield Partners.