At the beginning of this year, it has become clear that AI technology is revolutionary, dramatically affecting data centre construction and deployments, and network architecture design in general.
Our insatiable expansion of data consumption and appetite for cloud-based services, accelerated by the glitzy promises of generative AI, means the need for robust and secure data storage, faster data transfer, higher compute intensity, and increased data centre efficiency have never been more paramount. I have said it since enterprises first started to move to the cloud: If there is one thing we know for certain, it is that our dependence on data centres is only going to increase.
Here are four key trends that will continue to impact and influence data centre operations for the rest of 2024.
1. No surprise, generative AI will drive aggressive and expanded data centre build-out
According to recent research from MSCI, AI-directed investments are driving record levels of construction activity for Asia Pacific’s data centres, with the investments totalling more than US$ 1.6 billion surpassing figures recorded in 2023. One needs only consider the billions of dollars committed recently by several tech giants toward the cultivation of more advanced AI capabilities to understand how seriously the industry views AI’s potential.
Speed to market—how quickly hyperscale, enterprises and operators can get data centres up and running—will continue to be equal parts challenge and competitive advantage. Powered by enormous data increases and further intensified by the significantly higher computing of generative AI applications and workloads, organisations must broadly rethink how they plan, design and construct new facilities (or refurbish existing locations) to not only meet today’s increased demand but anticipate how that will look in the months and years ahead.
2. Availability of Labor and Power will hinder data centre construction
In 2023, a substantial concern for data centre operations was supply chain delays, which led to a shortage of chips and other foundational products and raw materials. While those challenges have largely abated, they have now given way to labour shortages and power availability—with seemingly no light at the end of the fibre-optic cable, if you will.
Subsequently, central banks adjusted interest rates globally, which fundamentally changed the economics around data centre construction and further spiked the costs of construction labour, which was already in short supply. While operational labour—those skilled jobs needed to manage and maintain data centres—also remains a challenge, it is not nearly at the same urgency as the hundreds or even thousands of workers across dozens of trades required to get 100,000-square foot facilities from land and raw materials to ribbon cutting.
New AI deployments consume significantly more power per rack. This increases the challenge at existing data centres to accommodate AI clusters and raises the difficulty in identifying new locations that can support the increased power consumption. New power plants and the infrastructure to deliver and manage that power for these higher-consuming data centres increase the challenges in identifying new sites and gaining regulatory approval.
While increased productivity and efficiency are hallmarks of generative AI, it will likely have the opposite effect on the construction/labour and power front. As generative AI use and density increase, the labour and power needed to keep pace with the physical installation and maintenance of essential components, such as new chips, servers, and cabling, will escalate considerably.
3. Sustainability will save or sink data centre deployments
With heightened awareness in boardrooms of companies’ climate impacts, enterprises must recognise and implement highly efficient and sustainable practices across all three levels of the data centre lifecycle—site location, construction, and operation—while avoiding material cost increases to day-to-day operations. Anything that draws a milliwatt of electricity or power must be optimised, from chips, servers, switches, and cooling systems to the vending machine in the break room. It is a challenge increasingly aggravated by compute-heavy generative AI workloads.
Indeed, you may have come across recent stories of metro areas showing trepidation at the prospect of a new data centre proposal, and all the electrical, space and water impacts that can accompany them. The current environment values ecological and social responsibility as much as economic prosperity. While plenty of companies have invested resources to address their direct carbon footprint, we will continue to see increased scrutiny in 2024 on indirect footprints as well, from supply chain impacts down to carbon declarations of individual products and materials purchased for data centre operations.
That said, current macroeconomic headwinds continue to put enormous pressure on enterprise leaders to perform a delicate dance—implement sustainable practices and processes without increasing costs or, most importantly, impacting profitability. According to PricewaterhouseCoopers’ Asia Pacific CEO Survey 2024, 85% of APAC CEOs were willing to accept a reduction of only 6% in the rate of return for climate-friendly investments, compared to other opportunities.
4. The global regulatory tug-of-war on data centres will increase
We will continue to witness a tug-of-war between lawmakers and corporations over two key data centre sticking points—sustainability (the land and energy needed to operate) and data sovereignty (where and how data is stored).
Some jurisdictions have already enacted complete moratoriums or temporary pauses on new data centre construction, while many others have imposed restrictions in places including London, Amsterdam, and Singapore where protests regularly make the news.
On one hand, latency demands and data sovereignty laws will force data centres into more localised areas. On the other, despite their necessary role to avoid data being shared and processed abroad, data centres are likely to face stiff resistance from elected officials and distrust from local communities. Of course, an aggravating factor in this debate is and will continue to be AI, particularly as more enterprises endeavour to develop and deploy this technology into their operational processes while they maintain heightened awareness about the integrity of the data used to train their models.
Of course, the limitless potential of AI to benefit citizens can also be curtailed if governments try to accelerate its development without consideration for areas such as preserving the public’s trust and safety.
In ASEAN, governments are advocating for a balanced approach to AI with a proposed regulatory framework, led by the Philippines, to address ongoing concerns posed by AI. The proposed AI framework, which is scheduled for launch by 2026, seeks to unify nearly 700 million people across 10 countries in ASEAN, each with its independent legal system, intellectual property and governing censorship rules.
The proposed framework rollout will ensure a robust foundation for ASEAN nations to take guidance from, in implementing more flexible policies regarding data sovereignty and sustainable practices when it comes to AI development.
The silver bullet: efficiency is the only way forward
In the broader technology space, we rarely stumble across a silver bullet, a perfect, bespoke solution, but for the myriad of hurdles data centres face in 2024, all pathways appear to lead to a single, intrinsic solution—efficiency.
On the labour front, more efficient data centres—from a design, power usage, and power density perspective—mean fewer are needed, thus resulting in less construction and maintenance burden. More efficiently designed “plug-and-play” infrastructure products and architectures are easier to install, which translates to less time spent—and less reliance on highly skilled labour.
From a sustainability standpoint, more efficient data centres that leverage a combination of renewable energy sources—wind, solar, geothermal, hydro/tidal, and even safe, reliable nuclear power—mean less reliance on potentially scarce local power sources. AI and machine learning advancements further advance this efficiency by seamlessly pinpointing and addressing power-intensive compute hotspots. Additionally, we will see a shift to cradle-to-cradle rather than traditional cradle-to-grave product life cycles to limit waste, where data centre components that are regularly upgraded, such as servers and switches, will filter into a robust reuse/recycle market rather than going directly to landfills.
Finally, within the vast regulatory ecosystem, data centre efficiency—characterised by minimised physical, carbon, and energy footprints—plus transparent data sovereignty compliance can help reduce social and political resistance to data centre deployments. Physical efficiency, leveraging existing multi-tenant or co-location brick-and-mortar infrastructure, can reduce overhead and alleviate anxiety for local officials and communities who may oppose watching heavy machinery break ground on vast new standalone complexes.
As competing technology innovations, labour, sustainability, macroeconomic conditions, and regulatory pressures put the squeeze on hyperscale, enterprises, and operators, an unrelenting global appetite must be balanced by an intransigent commitment to efficiency—throughout the location/discovery, construction/design, and operations/management phases—to power data centre growth and expansion in 2024.
This article is written by Rakkiet Hong, Senior Director, Enterprise Southeast Asia, CommScope
The insight is published as part of UPTECH MEDIA’s thought leadership piece, written within its repository of contributor articles.
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