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Modern data centers are the most critical infrastructure of our digital world. As of December 2023, there are approximately 10,978 of these facilities worldwide. The United States is home to the largest share – about 5,381 data centers as of March 2024.
We all know the many benefits and uses of data centers. But the real question is, how are these critical infrastructures built? Do builders have to meet specific requirements?
If you’re planning to build a modern data center for your business, you’re at the right place. Scout Cities has all the information you need about data center parts, suppliers, workforce, locations, customers, and supply chain dynamics.
Key Components of Modern Data Centers
A data center is made up of multiple interconnected components, including:
Servers and Storage Systems
Leading technology giants such as Dell, HPE, and Cisco are currently dominating the server market. Dell is known for its PowerEdge server series, while HPE focuses on hybrid cloud solutions and edge computing.
Before you invest in one., consider factors like processor speed, core count, memory capacity, and storage interface.
Storage systems, on the other hand, must have high performance, capacity, and cost-efficiency. Most data centers rely on traditional Hard Disk Drives (HDDs) or high-performance Solid State Drives (SSDs) for storage.
Networking Equipment
Routers, switches, and firewalls are some of the main networking equipment used in data centers.
Routers direct data traffic across different networks, while switches help data packets reach their destination. Lastly, firewalls protect the data center from unauthorized access and cyber threats.
Cisco is one of the main players in the data center networking space – known for its Cisco Nexus Series Switches. Meanwhile, Juniper Networks offers high-performance networking solutions such as the QFX Series Switches.
Before you invest, consider factors like data transfer speeds, security features (intrusion prevention, encryption, etc), and redundancy mechanisms for 24/7 availability.
Power Supply and Management
Modern data centers need uninterrupted power since outages can cause costly equipment failures. A robust power infrastructure can guarantee system uptime and data integrity.
Uninterruptible Power Supplies (UPS) are typically the main defense against power interruptions as they provide backup power during outages. Generators are better for prolonged blackouts, while Power Distribution Units (PDUs) are best for load balancing and monitoring.
Kohler Uninterruptible Power is one of the main suppliers of modular UPS systems and generator packages. MTU Solutions is another industry leader specializing in diesel generators and dynamic UPS systems. Before you invest, consider factors like power efficiency, redundancy levels, and battery backup time.
Cooling Systems
Excessive heat can lead to hardware failures, system inefficiency, and energy overconsumption. That’s why many modern data centers use advanced, heavy-duty cooling systems.
Air cooling is the most common approach, using fans to circulate cool air through the facility. Meanwhile, liquid cooling systems get the job done faster and can handle denser equipment configurations.
Before you invest, consider factors like cooling capacity, energy efficiency, redundancy, and equipment density. Schneider Electric is a good option if you’re focused on sustainability, while Vertiv is known for its Liebert Cooling Systems and Vertiv Geist SwitchAir.
Workforce Requirements
The global data center workforce is expected to grow from approximately 2 million full-time employees in 2019 to nearly 2.3 million by 2025. Here’s what you need to know about its requirements.
Skilled IT Professionals
Data centers operate primarily on a skilled IT workforce.
That includes network engineers – responsible for designing, implementing, and maintaining the data center's network infrastructure. Meanwhile, system administrators manage server and storage systems. Lastly, data center technicians provide on-site support for hardware and software issues.
Ideally, these professionals should have certifications such as CompTIA A+, Network+, and Security+. Advanced certifications like Cisco CCNA and CCNP are also required for network engineers.
Facility Management and Maintenance
Facility managers oversee the overall facility, including power, cooling, and physical security systems. They should hold certifications such as LEED (Leadership in Energy and Environmental Design).
Data centers need a skilled team of electricians and HVAC technicians for obvious reasons. They may also need specific trade certifications and licenses to comply with local regulations.
Security Personnel
Data centers need protection from both physical and cyber threats.
A skilled team of security guards can deter unauthorized access and monitor the facility. Meanwhile, cybersecurity analysts protect the digital side of things: cyberattacks. Lastly, compliance officers ensure adherence to industry regulations and data privacy standards.
Ideally, these professionals should have certifications such as CISSP (Certified Information Systems Security Professional) and CISM (Certified Information Security Manager).
Ideal Locations for Data Centers
Choosing the right location is arguably one of the most important considerations when building a data center. Here are some factors to keep in mind.
Proximity to Major Markets
An ideal location will place your data center near major markets. Not only does it guarantee low latency, but it can also provide faster data transfer speeds and a better user experience.
For instance, Northern Virginia is the largest data center market in the world, with over 2,552 MW of total power capacity as of 2023. It accounts for over one-third of global online traffic. The region offers access to dense and diverse fiber cabling and allows enterprises along the Eastern Seaboard to share data with low latency.
Similarly, Silicon Valley in Northern California is home to nearly 150 data centers. That’s because it offers robust connectivity options, like onramps to leading cloud providers, internet exchange points (IXPs), and high-capacity fiber networking. It’s easily one of the most interconnected locations in the world.
Dallas is placed right between these two locations, making it another ideal choice. It has over more than 150 data centers, mainly thanks to the power costs well below the national average.
The New York/New Jersey region is another great example – home to about 126 data centers. This region is a major financial hub with essential connectivity for financial services and enterprises that need low-latency access to markets. It also has a well-developed telecommunications infrastructure.
Climate and Environmental Considerations
Cooler climates are typically preferred for data center locations since they reduce the energy consumption of air conditioning systems. Locations with consistent temperatures and low humidity levels are also ideal.
Iceland's natural climate is ideal for data centers, with temperatures rarely going above 20°C or dropping below -10°C. In fact, Icelandic data centers use between 24 and 31% less energy than equivalent sites in the UK or USA.
In the US, Minnesota experiences cold winters with average temperatures around 20°F (-6°C) in January, making it perfect for natural cooling. There are approximately 45 data centers in this state.
Finland's climate is also ideal for data centers, with temperatures ranging from -4.8°C to 18.2°C. The same goes for Canada, which is also investing heavily in renewable energy.
Energy Availability and Cost
Data centers need access to affordable and reliable energy. Renewable energy like hydro, wind, and solar can help cut operating costs and environmental impact.
In addition, favorable energy policies and incentives can make it easier for a data center to scale its operations.
For instance, Oregon has a large share of renewable energy in its power mix, with 24% of its electricity coming from hydroelectric power and 5% from wind power as of 2022. It also has an average cost of $0.06 per kilowatt-hour (kWh) – much lower than the national average.
As of 2022, 76% of Washington state's electricity was generated from hydro sources. The wind power sector contributes 12% to the state's total electricity generation. The state’s average cost is also $0.06 per kWh.
More importantly, Texas produces more renewable energy than any other state, with 146 million MWh in 2023, making up 27% of its energy mix. It’s been a top data center hot spot thanks to its central location, excellent connectivity, and relatively minimal risk of natural disasters. Plus, the region has very competitive energy prices.
Sweden is another leader in renewable energy, with 54% of its electricity generated from hydroelectric power and 24% from wind power. The country even aims to be fossil fuel-free by 2040 and currently has an average cost of $0.15 per kWh.
Regulatory Environment
Lastly, locations with clear and consistent regulations, along with tax incentives, can also attract investments to facilitate data center operations. That includes places with data privacy laws, cybersecurity frameworks, and supportive infrastructure policies.
Arizona has a business-friendly environment with a strong focus on attracting data center investment. The state offers a 10-year extension of tax incentives through 2033, which includes a waiver on state, county, and local sales taxes on equipment purchases and labor services for data centers. Phoenix is especially favorable, with power costs well below the national average.
Chicago, Illinois, is another great example. The city has a low cost of living compared to other major cities. Plus, Illinois has a 10.25% tax incentive that exempts data center providers and their tenants from state and local sales tax on equipment purchases.
Customer Demands and Expectations
A good data center isn’t just defined by its location, workforce, and equipment. It also needs to cater to its specific customer base’s demands.
Reliability and Uptime
The main demands from data centers are 24/7 availability and minimal downtime. Any disruption can lead to major financial losses and reputational damage.
In fact, a study by Uptime Institute found that 15% of downtime costs over $1 million. However, these costs can be avoided with certain measures.
Redundancy in power supplies, cooling systems, and network infrastructure makes sure your operations aren’t interrupted. Meanwhile, failover systems automatically switch to backup systems (UPS) in case of failures.
Scalability and Flexibility
Modern businesses need data centers that can adapt to fluctuating workloads. Scalability allows for rapid resource expansion to make room for growth.
Modular data center designs should allow for incremental additions in capacity. One way to guarantee this is by integrating cloud services, which also provide access to a vast pool of resources.
Security and Compliance
Data breaches and non-compliance with regulations can have severe consequences. This can be avoided with security measures like physical access controls, network firewalls, intrusion detection systems, and encryption.
Most importantly, data centers must adhere to industry standards like GDPR, HIPAA, and PCI DSS.
Supply Chain Considerations
Lastly and most importantly, the data center must take the supply chain into consideration before building the facility.
Component Sourcing and Procurement
Data centers must source high-quality components from reliable suppliers. The market for this procurement is expected to grow at a CAGR of 20.45% from 2023 to 2027.
Unfortunately, this step isn’t as easy as the rest. Recent supply chain issues have extended timelines for the construction and delivery of components, with only modest improvements reported in 2022. As of early 2023, 52% of data center operators noted improvements in supply chain experiences, but there are still major bottlenecks.
You can still mitigate these risks with inventory management, alternative sourcing options, and supply chain visibility tools. Buyers must have robust supplier qualification processes, diversify the supply chain, and establish strong relationships with key suppliers.
Logistics and Transportation
Data centers rely on efficient logistics and transportation to get their components and equipment delivered on time and within budget. The main challenges here are coordinating shipments, managing customs clearance, and avoiding transportation damages.
However, these issues can be avoided by optimizing your transportation routes and using real-time trackers.
The COVID-19 pandemic emphasized the value of supply chain resilience. It increased lead times for essential components drastically, with some items experiencing 52+ week lead times!
Sustainability and Environmental Impact
The construction and operation of data centers have certain environmental implications. In fact, data centers currently consume 2% of the world's energy. Ideally, every data center owner should incorporate sustainable practices into the supply chain to decrease the industry's carbon footprint.
That includes sourcing eco-friendly components, using minimal packaging, and opting for energy-efficient transportation modes. You can also implement recycling programs and waste reduction initiatives for a greener supply chain.
Future Trends in Data Center Construction
The data center construction market is expected to grow from $259.97 billion in 2023 to $348.23 billion by 2028. Here are some trends we can expect until then.
Sustainable and Green Data Centers
The increasing concern around the environmental impact of data center construction and design is driving the industry toward sustainability.
For instance, green data centers are being built to reduce the ecological footprint of digital data storage. They optimize energy efficiency, reduce water consumption, and minimize waste. The green data center market will reach $140.3 billion by 2026.
Another important strategy is opting for renewable energy sources like solar and wind power. Modern data centers also use waste heat recovery systems, which can convert excess heat into usable energy.
Here’s another example of sustainable and green data centers. Microsoft's data center in Dublin, Ireland, uses seawater cooling to reduce energy consumption. Another data center in Quincy, Washington, is powered by hydroelectric energy. These initiatives not only cut operational costs but also establish Microsoft’s reputation as an environmentally responsible company.
Edge Computing and Modular Data Centers
Edge computing is gaining traction as data processing shifts closer to data generation sources. This approach reduces latency, improves response times, and has many real-time applications.
Modular data centers are completely flexible and scalable, making them ideal for edge deployments. These prefabricated data centers can be rapidly deployed in any location to meet changing demands.
Google's edge data centers are the perfect example of this trend. By deploying smaller, modular data centers closer to users, Google has been able to enhance the performance of its cloud services and improve user experience. These edge data centers have advanced networking and storage technologies to support the ever-changing demands of Google users.
Artificial Intelligence and Automation
Artificial intelligence (AI) and automation are completely revolutionizing data center management. AI-powered predictive maintenance will make it easier to keep equipment in good condition, reduce downtime, and increase efficiency. Automated resource management systems can also allocate resources based on real-time demand using minimal energy.
Companies like IBM perfectly exemplify AI-driven data center management. Their AI platform analyzes tons of data from sensors and systems to predict equipment failures and optimize their cooling systems. This approach reduces downtime and operational costs.
Plus, AI-powered chatbots and virtual assistants are being deployed to provide support to data center staff. That means less money is spent on training and employee service initiatives.
Conclusion
Data centers are the most crucial infrastructure of the digital age, processing and storing nearly all of the information that powers the world.
Building and operating a modern data center isn’t as simple as renting a warehouse near your office space. It requires careful planning, advanced technology, and a deep understanding of the current industry trends. Plus, modern data center owners also need to consider factors like sustainability, efficiency, and resilience.
If you are considering locating a data center or need more information about data centers, you can sign up for Scout, and we will source you off-market real estate, local data, and incentive information.
