Infrastructure Masons Advisory Council members discuss consolidation in the data center industry and the resulting priority shifts.

This is the third in a series of eight blog posts reflecting the top-of-mind issues discussed during the most recent Infrastructure Masons Advisory Council meeting. The Advisory Council members includes five end users and eight partners. They are infrastructure leaders at hyperscale tech companies, colocation providers, mission critical equipment providers, and mission critical facility engineering, design and operation firms.

Driven in large part by hyperscale cloud players, the data center industry is changing. The balance of power has shifted. And there are new priorities beyond reliability and uptime.

“The data center industry has traditionally been fairly conservative and slow moving,” explained one Advisory Council member. “That makes sense given the enormous risks associated with mission critical facilities. For every organization, the data center is the heart. So because of that, there is a lot of risk associated with designing and running data centers.” And where there is risk, there is reluctance to embrace change.

Yet the industry has embraced change, led in large part by the big infrastructure players who have increasingly large shares of power in an increasingly consolidated industry.

Despite its aversion to risk, the data center industry has embraced change, led in large part by the big infrastructure players. – Click to tweet

At the same time, there has been a shift in the “balance of power” – from many smaller data centers to a few hyperscale facilities, as one partner explained it. Before, it was the consumers who made the decisions about how they wanted to design, build, and operate their data centers. Today, with enterprises increasingly moving away from on-premises data centers to colocation facilities and the cloud, the design and build decisions are increasingly in the hands of the smaller group of cloud players and colocation providers.

There has been a shift in the “balance of power” – from many smaller data centers to a few hyperscale facilities. – Click to tweet

As one partner said, “We see data center companies expanding globally through M&A and new construction. The dynamics of the players in the space is changing very rapidly.” In this much more consolidated environment, the large players, predominantly the cloud players, can drive both standards and equipment decisions.

With shifting power comes shifting priorities

The hyperscale players have different priorities than enterprises typically do. They still care about risk, but the factors that go into their risk calculations, and the weight each factor gets, are different.

“In many cases, for many applications, data center downtime doesn’t have the same kind of consequences as it used to.” – Click to tweet

“This industry was historically driven just by availability,” explained one partner. Everything else was secondary. Now that reliability can be accomplished at the application layer, survivability is much more likely even if the data center loses power, cooling, or network. “In many cases, for many applications, data center downtime doesn’t have the same kind of consequences as it used to.”

So now data center operators and end users are increasingly prioritizing energy efficiency, total cost of ownership (TCO), flexibility, and scalability over availability. At the same time, other priorities are rising to the fore. For example, economies of scale, global presence, and latency are increasingly important.

Come back next week for the 4th installment in our top-of-mind series and hear from the Advisory Council on the increasing criticality of data center infrastructure, and what it portends for industry regulation.

Previous posts in the top-of-mind series

The Biggest Challenge of All? People
Top-of-Mind for Data Center Leaders: Our Environmental Legacy

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