2024 State of the

Data Center Report

How Power Design and AI Demand Has
Forever Changed the Industry

By Bill Kleyman

WHITEPAPER
How Power Design and AI Demand Has Forever Changed the Industry

Table of Contents
Contributors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Note from the Author. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

The 8th State of the Data Center Report: Section Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

The 2024 AFCOM State of the Data Center Report: An Exploration of Our Data-Driven World. . . . 5

Introduction: State of the Data Center Industry Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Section 1: Data Center Construction and DCIM Implementation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

The Number of Data Centers is Growing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

New Data Center Builds and Prefabrication. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

DCIM Integration Initiatives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Section 2: Power, Cooling, Infrastructure, and Sustainability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Rack Density and Expected Changes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

The State of Data Center Cooling. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Investment in Renewable Energy, Nuclear Power, and Water Conservation. . . . . . . . . . . . . . . . . . . . . . . 11

Section 3: Cloud Migration Trends and Deploying AI Solutions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Rebalancing Cloud Workloads. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Select Technology Implementation Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Deploying AI-Capable Solutions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Section 4: Infrastructure Threats and Supply Chain Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Security and Infrastructure Threats. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Supply Chain Challenges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Section 5: Budget and Personnel Trends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Shifting Budget and Spending Trends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Working in the Data Center Industry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Final Thoughts: A Look to The Future. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

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How Power Design and AI Demand Has Forever Changed the Industry

2024 State of the

Data Center Report
How Power Design and AI Demand Has
Forever Changed the Industry
A Look at the Evolution of Our Industry
8th Edition

Report compiled by:

Bill Kleyman
AFCOM, Data Center World Program Chair
Featured AFCOM Contributor
Data Center Knowledge, Contributing Editor
CEO, Apolo

Report Reviewed by:

Jen Steele - AFCOM
Senior Manager, Data Center Programs
Informa Tech

Jordan Sutlive - AFCOM

Content Manager, Data Center Programs
Informa Tech

Statistical Analysis by:

Kristin Letourneau, PhD
Director, Market Research
Informa Engage

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How Power Design and AI Demand Has Forever Changed the Industry

Note from the Author

I recall writing this note the previous year, not fully realizing how much our industry was about
to change. We published the report just as ChatGPT took the world by storm. Fast-forward to
today, and we’ve seen an entire year of innovation, data center growth, and market acceleration.
Our critical infrastructure facilities have never been more important than they are today. I should
note none of this report was written by ChatGPT. (Just in case you were curious.)

While I don’t want to make this paper focused on AI alone, it became clear that artificial
intelligence is a significant driver in how we will be building facilities moving forward. Simply
put, every data center will become an AI data center. It’s critical to understand the significant
shift that happened. To do so, I want to speak directly to you, the reader.

Over the past year, we have dynamically changed how we interact with data. The change
happening isn’t a technology trend; it’s a foundational shift in how humans interact with
information. Everyone reading this has used Google or Bing in the past hour, day, or week. That
means every one of you is a user of Generative AI. We’ve been conditioned to type a question into
our favorite search engine for years only to receive a blue link. Today, the first response is a GenAI
response, followed by the blue links. This change happened so fast that many hardly noticed.
But this change is here, and it will impact your facilities.

While attending a recent conference, I learned how drastically we as an industry are playing
catch-up with this new demand. Since the second half of 2021, over 100 megawatts of pipeline
construction have been added every single month.

United States Data Center Absorption and Construction

Absorption (MW) Under construction (MW)

1400 3500

1200 3000

1000 2500

800 2000

600 1500

400 1000

200 500

0
H1 2019 H2 2019 H1 2020 H2 2020 H1 2021 H2 2021 H1 2022 H2 2022 H1 2023
Under construction (all markets) Absorption primary markets Absorption secondary markets
Source: JLL Research
*Includes markets with complete historical data from 2019-2023

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How Power Design and AI Demand Has Forever Changed the Industry

The large hyperscale cloud providers are increasingly accommodating new AI requirements
and the need for more computing power. Rapid growth makes finding space and power for
smaller market requirements challenging. Across the board, impacting practically every market
and data center type, we have seen a significant surge in demand, with a mounting focus on
capacity to meet higher-density data center requirements for AI development.

As AI requirements grow, data center operators must adapt their infrastructure to accommodate
high-power-density server clusters. Language models dominate the AI conversation today with
predictions that in the next five years, LLM-based applications will be as prevalent as web apps.

As you continue to absorb the data in this report, please note that this “trend” is not a fad or even
a trend in some cases. The way we interact with data has experienced a human-level shift. We as
a society will be interacting with data in ways we never thought possible. And the use cases will
only continue to grow.

A year of non-stop innovation

As ChatGPT and Generative AI took off, we at AFCOM quickly took notice. The 2024 AFCOM State
of the Data Center Report will reflect non-stop change and innovation in our industry. We’ll
bridge all new topics and showcase further questions based on the critical trends in our industry.

The 8th State of the Data Center Report: Section Overview

This report will look at some of the most impactful trends in our industry. The report and
findings will shed new light on this growing digital industry with all-new sections.

In the 2024 report, we will review the following:

▲ Key Market and Data Center Trends

▲ Data Center Build, Design, and Construction

▲ Security Threats

▲ Implementation Plans

▲ Supply Chain Challenges and Updates

▲ Cloud Migration

▲ Cooling, Water Conservation, and Renewables

▲ CAPEX/OPEX Updates

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How Power Design and AI Demand Has Forever Changed the Industry

The 2024 AFCOM State of the Data Center Report: An Exploration of

Our Data-Driven World
With the help of our amazing AFCOM team, our nationally-
held Leaders Labs, and the tens of thousands of people who
received this report, we gathered some absolutely amazing
insight that we’re excited to share with you. Reviewed under
the watchful eye of Dr. Kristin Letourneau, Ph.D., Director of
Market Research at Informa Engage, who oversaw our study
methodology.

Our fantastic AFCOM team, alongside our AFCOM advisors

and members, have collaboratively unearthed remarkable
insights we’re eager to share with you. Meticulously
scrutinized by Dr. Kristin Letourneau, Ph.D., the Director of
Market Research at Informa Engage, our research approach
aligns with the highest marketing research methodologies and
practices standards. This report offers a clear lens into the nuances
of the data center market and our progressive digital landscape.

The insights presented in this report are designed to significantly expand

your understanding of the data center market and its dynamic nature within the business
world. Regardless of your role, embracing this report will be vital in integrating into our digital
era. It encourages an openness to novel possibilities, cutting-edge technologies, and innovative
solutions, all contributing to the growth of your business and its users. More importantly, this
report guides you in becoming an informed and responsible participant in our digital-centric
world.

The data center, pivotal to digital transformation, has established itself as a crucial element in
creating and designing advanced digital solutions. I am confident that you will find this report as
insightful and illuminating as I have.

Bill Kleyman
AFCOM, Data Center World Program Chair
Informa Tech - Featured Analyst, Speaker, and Contributor
CEO, Apolo
January 20, 2024

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How Power Design and AI Demand Has Forever Changed the Industry

Introduction: State of the Data Center Industry Report

We’ve taken your feedback to heart. And we’ve also closely followed the updates from our
industry. This year’s report has been refined to be more succinct, following in-depth reviews of
pertinent subjects and engaging in industry dialogues. As a result, you’ll notice new sections,
additional queries, and deeper insights into burgeoning industry trends.

So, relax and join us as we delve into these exciting updates.

Section 1: Data Center Construction and DCIM Implementation

The Number of Data Centers is Growing
The latest S&P Global study indicates nearly 10,000 colocation and wholesale data center
facilities across North America, EMEA, Asia-Pacific, and Latin America. However, as our data
needs continue to grow, the number of facilities to support this demand will only increase.

NA EMEA
29% 31%

9,900+
sites tracked as
of Q4 2023
LATAM APAC
5% 35%

The recent study reveals promising, and not entirely surprising, trends in data center growth, as
evidenced by two key metrics mentioned above:

1. Expansion in Number of Data Centers: There is a significant projected increase in

data centers across various locations. Currently, the average number of facilities per
respondent stands at 14. This figure is anticipated to rise notably, reaching an average
of 22 facilities over the next three years, marking a considerable expansion in the data
center infrastructure.

2. Rise in Construction of New Data Centers: Alongside the overall increase in facilities,
there’s a notable surge in the construction of new data centers. The current average
of new data centers being built stands at one per respondent. However, this number
is expected to multiply sixfold over the next three years, indicating a robust growth
trajectory in creating new data center spaces.

These findings collectively suggest a robust and expanding landscape for data centers, reflecting
these facilities’ escalating demand and strategic importance in the digital era. The level of
growth in the data center industry begs the following question: How will we support new
construction and design efforts to support all these new facilities? With that question in mind,
let’s dive into some of the new questions from our survey.

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How Power Design and AI Demand Has Forever Changed the Industry

New Data Center Builds and Prefabrication

The massive boom in infrastructure design and construction prompted us to ask a few new
questions to better understand how our industry will keep up with the pace of demand.

The latest trends in data center construction for 2023-2024 highlight a dynamic and evolving
landscape driven by various factors, including technological advancements and environmental
considerations:

1. AI-Driven Infrastructure: The rise of artificial intelligence (AI) is significantly influencing

data center design and infrastructure. Data centers are adapting to accommodate
higher rack load requirements to support AI workloads and computational power
demands. This change is driven by significant companies like Meta, Google, and
Amazon, as well as AI-focused companies seeking more extensive power availability
from a single location.

2. Growth in Secondary Markets: Data centers are expanding into secondary markets
due to power shortages in primary markets. This includes developing submarkets
around existing data center corridors and undertaking large projects in new areas with
sufficient power and land resources.

3. High-Density Colocation: The demand for specialized high-density colocation services

is increasing. This trend is driven by the need for facilities optimized for new processors
and software frameworks tailored for generative AI and other advanced technologies.

These trends reflect a sector rapidly adapting to technological innovations, environmental

challenges, and market demands, emphasizing the importance of sustainable and efficient
design in the future of data center construction.

To build towards a more efficient design and construction state, we asked our respondents what
their approach to new data center builds would be.

Per our AFCOM report, the hybrid approach, a mix of traditional building and prefabricated
modules, appears to be the most common approach to new data center builds over the next
three years.

▲ 42% indicated that a hybrid approach to data center

construction, using prefabricated modular facilities
alongside traditional building techniques, is the best
way to go.
78%
Diving deeper into prefabricated data center designs, we of respondents
were curious to learn which part would be prefabricated are most likely to
and delivered. Respondents planning to leverage report exploring
prefabrication in new data center builds are most likely to prefabricated power
report exploring prefabricated power modules (78%) and modules in new data
prefabricated cooling modules (72%). center builds

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How Power Design and AI Demand Has Forever Changed the Industry

Prefabricated Data Center Models Being Explored

Power module (e.g., power supply, backup) 78%

Cooling module (e.g., chiller) 72%

IT module (e..g., an enclosure
39%
with multiple racks)
Shell (used to encapsulate modules) 39%

Auxiliary (e.g., NOC rooms, 28%

corridors, meeting rooms)

Physical security module 28% 0 10 20 30 40 50

Diving into power modules specifically, as it is the most popular prefabricated approach, we
wanted to discover the features of a modular power design that were most interesting to our
respondents. The features that respondents look for most in prefabricated power models are
power distribution equipment (92%) and uninterruptible power supply (92%). In a two-way
tie for third, switchgear and transformer equipment (77%) were the next-most sought-after
features.

DCIM Integration Initiatives

During the recent AFCOM Data Center World event in Austin, our DCIM class attracted a large
audience. In a departure from our usual approach, we concentrated on illustrating the evolving
perception of DCIM over the years. Our focus was on managing a data center’s most vital and
current operational aspects. We utilized cutting-edge technologies such as artificial intelligence,
machine learning, and virtual reality to achieve this.

The point is that the evolution of digital twins, data modeling, and virtual reality has come a long
way. And it’s being applied in DCIM. To illustrate the growth, consider these metrics specifically
around AR/VR and smart systems:

▲ In 2020, 16% stated that they already had some augmented or virtual reality solutions
deployed as part of their DCIM strategy.

▲ In 2021, that number increased to 20% of those deploying the solution.

▲ In 2022, almost one in four (24%) actively deployed augmented or virtual reality systems.

▲ In 2023, 30% of respondents indicated they would deploy or work with AR/VR and smart
system integration.

▲ In 2024, 58% stated that they have deployed or will be deploying AR/VR systems for their
DCIM solution.

Over three years, the adoption of these advanced systems within DCIM has nearly tripled.

With that in mind, there are a few other significant changes in how data center leaders have
evolved their DCIM Implementation Plans.

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How Power Design and AI Demand Has Forever Changed the Industry

This year, we saw a shakeup in the top 5. For the first time since we released this report, security
(both physical and logical) was at the top of the DCIM Implementation Planning list for data
center leaders. This year, security tops the list again. Here’s the breakdown:

▲ Security (physical and/or logical) – 59% currently implemented

▲ Power/energy/environment management - 56% currently implemented

▲ Cable management – 55% currently implemented

▲ Asset tracking/management – 50% currently implemented

▲ Integration with ITSM – 45% currently implemented

Unsurprisingly, security ranks high on the priority list, especially with the increasing worry over
the physical security of critical infrastructure. Integrating more deeply with DCIM systems is a
logical step, given their extensive insight into a wide range of operations within data centers.

Section 2: Power, Cooling, Infrastructure, and Sustainability

Rack Density and Expected Changes
We continue to see an increase in rack density, closely following industry trends. In 2021,
respondents reported an estimated mean rack density of 7 kW in their primary data centers.
Last year, the average was 8.5 kW/rack. Today, the estimated average has
jumped to 12 kW per rack. And most respondents (55%) expect a
further increase in rack density over the next 12-36 months.

To that extent, most respondents (60%) are actively

working to increase density in their racks today. They’re
accomplishing this with several methods. Most (58%)
primarily focus on improving airflow, followed by
containment (42%) and liquid cooling (40%). In
a close fourth, respondents also leverage new
sensors (31%) for improved visibility.

This information isn’t surprising, yet the

solutions needed to manage increased
density present significant challenges. Many
organizations are striving to maximize their
operations within limited spaces.

Consequently, there’s a shift towards

investing in advanced cooling systems,
enhanced power management, and
improved capacity technologies to meet
these demands effectively. On that note, let’s
dive into what keeps your data centers nice and
cool.

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How Power Design and AI Demand Has Forever Changed the Industry

The State of Data Center Cooling

Last year, fewer than half (46%) of respondents reported their current cooling solutions meet all
their requirements. 35% of respondents indicated they persistently run out of cooling capacity
and must adjust.

Today, these metrics have improved as data center leaders shifted their cooling strategies to
support more workloads, densities, and use cases. Still, over a third of respondents (38%) report
their current cooling solutions are inadequate to meet their needs, including 20% actively
looking into new systems for scalability.

Respondents are turning to liquid cooling for help to support emerging cooling requirements.
Today, only 17% of respondents have adopted liquid cooling in their facility. However, an
additional third (32%) plan to do so within 12-24 months.

Types of Liquid Cooling or Water-Cooled Solutions

Direct-to-chip single phase 48%

Two-phase immersion 33%

Single-phase immersion 27%

Rear door heat exchangers 27%

Direct-to-chip cooling inegrated 18%
with rear door heat exchanger

Direct-to-chip two phase 15%

As an all-new question, we were curious about respondents’ liquid cooling implementation

plans. They will most likely have implemented direct-to-chip single phase (48%), followed by
two-phase immersion (33%).

Regarding liquid cooling in data centers, there’s been a remarkable uptick in innovative
applications, such as integrating emerging solutions, novel liquid cooling techniques, and hybrid
models to support new and evolving needs within the industry. Liquid cooling is expected to
remain a focal point of discussion and development.

Investment in Renewable Energy, Nuclear Power, and Water Conservation

Our sector’s expansion and critical role, along with its substantial energy needs, have
necessitated a heightened emphasis on sustainable practices and the exploration of renewable
energy sources.

From this year’s report, three in four respondents (73%) plan to utilize renewable energy,
including 27% who are currently doing so.

Respondents believe solar (59%) is gaining the most traction in data center operations, followed
at a distance by wind (28%).

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How Power Design and AI Demand Has Forever Changed the Industry

Let’s bring up another important topic: nuclear power. Last year

was the first time we asked the question of nuclear power as a
renewable energy source. In 2023, 10% of respondents indicated
that they are seeing traction around nuclear technologies, and
this is where we may begin to see the rise of Small Modular
59%
of respondents
Reactors (SMRs).
believe solar power
This year, that figure more than doubled, as 21% of respondents is gaining the most
stated that they see nuclear technology as gaining traction in traction in data
our industry. In fact, nuclear power came third on the list behind center operations
solar and wind.

According to the International Atomic Energy Agency, small

modular reactors (SMRs) are advanced nuclear reactors with a
power capacity of up to 300 MW(e) per unit, which is about one-
third of the generating capacity of traditional nuclear power reactors.

While SMR vendors plan to launch commercially available SMRs sometime in the late 2020s to
the early 2030s, many hurdles remain – from perfecting the technology and gaining regulatory
approval to developing viable business models. Nevertheless, data center analysts say SMRs hold
promise.

“There is a well-up of interest in nuclear as a potential solution for power-constrained markets

that the data center industry has been challenged with,” said Alan Howard, an Omdia principal
analyst focusing on data centers and colocation services. “It’s really clean energy. To get to a net-
zero economy, nuclear is going to have to play a big role.”

According to the IAEA, over 80 commercial SMR designs being developed worldwide target
various outputs and applications, such as electricity, hybrid energy systems, heating, water
desalinization, and steam for industrial applications.

As of this writing, further SMR developments in the USA have occurred. For example, The
Nuclear Regulatory Commission (NRC) approved the first SMR design in the US: NuScale’s
advanced ‘light-water’ SMR, which can generate 77 MWe. In October 2023, hosting provider
Standard Power announced plans to use NuScale’s SMRs to build two nuclear power plants in
Ohio and Pennsylvania to provide nearly 2 GW of power to nearby data centers by 2029.

It’s important to note that while SMRs have a lower upfront capital cost per unit, their economic
competitiveness is still to be proven in practice once they are deployed.

Outside of operating with renewable energy, leaders in the data center space also focus on
water conservation efforts. Two in three respondents (63%) plan to employ activities and
initiatives to decrease water usage, including 18% who are currently doing so.

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How Power Design and AI Demand Has Forever Changed the Industry

Concerning water conservation, respondents are most likely to employ or consider leveraging
new cooling solutions that do not require water (45%), followed by eliminating evaporate
cooling (37%).

Water Conservation Solutions Employed or Under Consideration

Leveraging new cooling solutions 45%

that do not require water
Eliminating evaporate cooling 37%
Working with vendors and partners to
build water treatment solutions
29%

Effluent/gray water recycling 22%

Rainwater collection 16%

Pipeline and/or civil engineering
14%
water projects
0 10 20 30 40

Section 3: Cloud Migration Trends and Deploying AI Solutions

Rebalancing Cloud Workloads
Cloud migration, specifically repatriation, has been a fascinating topic. Over the past few
years, we have continued to see most respondents indicate that they are seeing some cloud
repatriation happening. This year, we dove a bit deeper into the topic.

Concerns about the escalating costs of cloud computing remain significant. This issue has
become so pressing that a specialized role has emerged, focusing on managing and reducing
cloud-related expenses. Initially, shifting from capital expenditure (CapEx) to a subscription-
based model in IT seemed cost-effective. However, the reality of increasing monthly charges,
often for services with unclear usage patterns, quickly diminished these perceived savings. This
challenge led to the creation of the FinOps discipline. Professionals in this field use innovative
tools and methodologies to track, analyze, and control cloud costs, ensuring that the value
derived from cloud services is optimized. And they’ve given us a good understanding of what lies
ahead in the cloud:

“The dirty little secret of cloud spend is that the bill never really goes down,” says J.R. Storment,
executive director of the FinOps Foundation.

The positive development is the emergence of a more seasoned cloud and infrastructure
deployment market. This maturity brings a heightened awareness among leaders about which
elements need to be developed in the cloud and which are better suited for on-premise
environments. Let’s look at some cloud repatriation trends over the last three years.

▲ 2022: 59% of respondents saw the repatriation of workloads from cloud computing back to
on-premise data centers or colocations.

▲ 2023: 83% of respondents saw the repatriation of workloads from cloud computing back to
on-premise data centers or colocations.

▲ 2024: Most respondents (71%) have seen a migration of workloads from the cloud back to
on-premise data centers or colocations.

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How Power Design and AI Demand Has Forever Changed the Industry

Since we started asking this question, we have seen consecutive years of cloud workload
migration into on-premise infrastructure. With that in mind, we asked a follow-up question. We
were curious to see if there would be an impact on facilities once these workloads return on-
premise. For those data center operators that saw repatriation, 71% have seen an increase in the
power load demand, including 22% who report a significant impact.

Expanding on this topic, we also asked respondents which types of workloads they see being
repatriated. The top ten workloads being repatriated include:

Types of Workloads Being Migrated from the Cloud

ERP systems including supply chain management, 39%

human capital management, financial management
Storage management including BDR, archiving,
document management, general data storage
36%

Web applications 32%

IT Management solutions 32%

Commercially licensed databases 28%

Virtual desktops and/or virtual applications 27%

Custom applications (DevOps 26%

processes, services, Kubernetes)

Service management solutions (ITSM, ITOM) 24%

Content management (enterprise content

management and web content management) 23%

Financial management solutions 23%

AI workloads, like Large Language

Model Training or Inference Training 21%

It was fascinating to see some workloads traditionally deployed in the cloud now being
deployed within a colocation. Some of these trends will continue as end users calculate the
actual cost of cloud computing. As a very important note: these metrics are not suggested that
cloud computing is going away. We continue to see massive increased in new workloads and
new use cases being deployed within the traditional hyperscale cloud ecosystem. However, with
infrastructure and application maturity, many enterprise leaders have a better understanding of
what should reside in the cloud and what should be colocated on premise. These metrics
indicate a growing maturity in terms of how certain workloads are distributed.

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How Power Design and AI Demand Has Forever Changed the Industry

Select Technology Implementation Plans

As an additional question, we were curious to learn about implementation plans for data center
leaders. Specifically, we wanted to know which pieces of technology had the most impact on
data center infrastructure planning. Not surprisingly, data center distribution has continued
to fuel the edge data center market. And new requirements around AI, LLM, and generative AI
have pushed data center leaders to look into GPU and other high-density compute solutions.
Respondents are most likely to have currently implemented or plan to implement:

▲ On-premises cloud services

▲ Edge compute

▲ GPU/High-density compute hardware

Technology Implementation

Currently implement Will implement Will implement No plans to implement

within 12 months within 3 years

On-premise cloud services 39% 19% 11% 38%

Edge compute 28% 20% 16% 36%

GPU/High-density
computer hardware 26% 21% 15% 38%

Recycled servers or
other IT hardware 30% 11% 11% 48%

OCP solutions, including

DC-powered racks 18% 17% 16% 49%

White-box/commodity hardware 17% 17% 16% 51%

Immersion cooling 14% 16% 19% 51%

Direct-to-chip cooling 14% 14% 22% 49%

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How Power Design and AI Demand Has Forever Changed the Industry

Interestingly, we saw Open Compute (OCP) platforms being positioned higher. 51% of
respondents indicated that they are either already deploying OCP or will be doing so in the next
36 months.

Finally, tying back the cloud repatriation metrics, it was interesting to see on-premise cloud
services take the top spot in this implementation list. It showcases an end-user market wanting
to create deeper ties with its colocation partners outside hyperscale cloud solutions.

Deploying AI-Capable Solutions

Reasons for Deploying AI-Capable Solutions

To support new generative AI use cases 43%

To create new service and solution areas 38%

To support client use-cases 37%

To support an internal enterprise use case 33%

To compete in an emerging market 26%

To lower the cost of the cloud 0

23% 10 20 30

As a new question on this year’s survey, we were curious to see if our respondents were
leveraging or deploying AI-capable infrastructure to support emerging demands. Throughout
this report, you’ve witnessed metrics around GPUs and the growth of the data center industry.
Regarding AI solutions, most respondents (56%) plan to deploy AI-capable solutions in their
data centers, most commonly to support new generative AI use cases (43%).

Regarding AI in the data center, only 4% of respondents don’t believe that AI workloads will
increase capacity requirements. Most respondents (53%) believe new AI workloads (generative
AI) will “definitely” increase capacity requirements for the colocation industry. Another 31%
believe it will “probably” do so. These metrics indicate that AI-based workloads are here to stay
and impact the traditional data center design approach.

Section 4: Infrastructure Threats and Supply Chain Challenges

Security and Infrastructure Threats
Ensuring that our infrastructures are up and running is no easy task. Emerging threats against
physical infrastructure as it relates to physical and cybersecurity continue to exist.

According to the Uptime Institute’s 2023 Outage Analysis, when outages occur, they are
becoming more expensive, a trend likely to continue as dependency on digital services
increases. With over two-thirds of all outages costing more than $100,000, the business case for
investing more in resiliency — and training — is becoming stronger.

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How Power Design and AI Demand Has Forever Changed the Industry

Enterprise Outage Math

$100,000/Incident
Uptime Institute

Cost of an $ $5,600/Minute
Gartner
Outage
$ $100,000
Facebook’s lost revenue
from an outage in 2021

$ $34,000,000
Amazon’s lost revenue
during 2021 outage
High-Profile
Outages ~$1,000,000,000
$$ Alibaba’s lost revenue during
Singles Day outage in 2021

Source: Data Center Knowledge

https://www.datacenterknowledge.com/security/time-double-check-those-data-center-deadbolts-security-review-2023

For the 8th year in a row, and not surprisingly, ransomware hit the top of the list. When asked to
indicate the top five security and infrastructure threats to their companies, respondents were by
far most likely to mention:

▲ Ransomware: 54%

▲ Advanced persistent threats – threat of IT and corporate data: 48%

▲ Inside threats (human): 40%

▲ Outside threats (human): 39%

▲ Loss of PII: 37%

While DDoS slipped down in the list, human and physical threats against infrastructure
continue to grow. Leaders in our industry aren’t the only ones monitoring physical infrastructure
threats; Federal regulators have also noticed. In January 2023, the Federal Energy Regulatory
Commission (FERC) and the Department of Energy’s Office of Cybersecurity, Energy Security,
and Emergency Response (CESER) held a joint technical conference discussing supply chain risk
management in light of increasing threats to the Bulk Power System.

The result of this meeting was felt quickly. A few days after the meeting, FERC directed the
North American Electric Reliability Corporation (NERC) to re-examine its Physical Security
Reliability Standard, CIP-014-1.

This is an excellent reminder to all of you to review your physical infrastructure security and
ensure it is up to date.

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Let’s shift our focus back to ransomware for a minute. In a recent 2023 article on Data Center
Knowledge, we covered a ransomware attack against a data center that, quite literally, cost the
company everything. The attackers succeeded in encrypting all servers’ disks and the primary
and secondary backup systems, whereby all machines crashed and lost access to all data.

While it’s unclear exactly how the ransomware attack happened, the company stated that it was
amplified by moving infected systems from one data center to another that was unfortunately
wired to access their internal network to manage all of the facility’s servers.

Please take note of these incidents, and be sure to review your cybersecurity approach,
especially as it relates to ransomware.

Supply Chain Challenges

Once again, the conversation around supply chains continues to be one of the hottest topics.

According to Simon Ellis, Program Vice President of Global Supply Chain Strategies at IDC:

“Disruption has been front and center again and has largely validated the supply chain
transformation journey that so many companies are on. In fact, companies that have
aggressively pursued business transformation are outperforming those that have not. The supply
chain will continue, must continue, on its journey of almost unparalleled levels of change with
digital transformation at the center of efforts to both improve efficiency and effectiveness and
be resilient to further, inevitable disruption.”

Like last year, this year’s report indicated that 93% of respondents have had at least some supply
chain challenges. Interestingly, about one in four (21%) of respondents experienced equipment
outages due to supply chain constraints.

Expanding on the supply chain question, we were curious to learn more about where
constraints are experienced. Respondents are most likely to have seen supply chain constraints
with power systems (58%), IT equipment (54%), and cooling systems (49%).

Section 5: Budget and Personnel Trends

Shifting Budget and Spending Trends
Most respondents report increased operational expenditures in 2023 (54%). The top drivers of
OPEX increases are increasing energy costs (62%), increasing equipment service costs (57%),
and increasing personnel costs (52%).

Drivers of Increased Operational Expenditures

Increasing energy costs 62%

Increasing equipment service costs 57%

Increasing personnel costs 52%

Increasing prices in software
licenses and network services
40%
Total cost of supporting an
increased processing workload 34%

Increasing cost of colocation providers 24%

0 10 20 30 40 50

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How Power Design and AI Demand Has Forever Changed the Industry

Regarding CapEx, half of the respondents (50%) reported increased capital expenditures in
2023. The top drivers of CapEx increases include investment in existing facilities infrastructure
(52%) and expansion of new facilities (47%).

Drivers of Increased Capital Expenditures

Investment in existing facilities infrastructure 52%

Investment in existing facilities expansion 47%

Investment in IT refresh, over and
above annual refresh targets 43%

Investment in new facilities construction 43%

Supply chain challenges 43%

Acquisition of new applications 19%

Acquisition of a new company 14%

0 10 20 30

Working in the Data Center Industry

The data center industry remains a dynamic and enticing career option. This year, similar to the
last, we observed consistent trends in the types of roles that were most sought after.

The personnel types posted for the most growth in recruiting include Data Center Engineers
(51%), Multi-Skilled Data Center Operators (45%), and Security Specialists (39%).

Here are the top staffing opportunities within digital infrastructure:

Personnel Types Poised for Most Growth in Recruiting

Data center engineers 51%

Multi-Skilled Data Center Operators 45%

Security Specialists (physical and data) 39%
Specific Data Center Professionals
35%
(electricians, power systems design)
Data Center Managers 28%
System Administrators/IT Generalists 26%
Connectivity and Telecommunications Professionals 19%
0 10 20 30

DevOps/SRE Professionals 18%

One important note regarding demographics. The data center industry continues to be in dire
need of young talent and diversity. 85% of our respondents were male. Of all the respondents,
70% are 45 or older.

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How Power Design and AI Demand Has Forever Changed the Industry

Final Thoughts: A Look to The Future

We are at the cusp of crafting a digital era like no other. In our world of unceasing connectivity,
the reliance on data center operations is skyrocketing, magnifying the indispensability of
the resources they provide every moment. With the advent of generative AI, groundbreaking
applications in large language models, and an insatiable demand for digital infrastructure, the
significance of our data centers has reached unprecedented heights.

In this journey, challenges are inevitable, and barriers are meant to be broken. The true mark
of visionary leaders in this realm is their ability to achieve more through collective effort. The
data center industry is a melting pot of innovators, visionaries, and intellects, all driving our
technological use and experience. In this rapidly evolving landscape, there is very little tolerance
for complacency. Embrace experimentation with new technologies; they could revolutionize
your business and user experience.

Envision a future woven with ceaseless connectivity, encompassing everything from cars to
cities, businesses to individuals. A future brimming with IoT devices, intelligent systems, and
life-enhancing technology. This industry is a kaleidoscope of fascinating facts and figures,
sometimes overwhelming, yet always exhilarating. To truly make a mark, it’s essential to delve
deeper into your business and technology ecosystem, not just to follow but to set the trends.
Look beyond the apparent and position yourself as a trendsetter in a world and industry that
thrives on change.

“We are at the cusp of crafting a digital era like no other. In our
world of unceasing connectivity, the reliance on data center
operations is skyrocketing, magnifying the indispensability of
the resources they provide every moment.”

-Bill Kleyman

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