The social networking titan Facebook appears poised to break ground on a new Texas data center located in the Fort Worth area. According to The Dallas Morning News, the project is worth nearly $1 billion and will be a boon to both the tech company and the region as a whole.
As the news source indicated, the developers of the new facility and Fort Worth officials had been mum on the true identity of the progenitor of the massive 750,000-square-foot data center, but recent documents filed with the state government of Texas confirm that the project is for Facebook. The company itself, however, has yet to comment on the development.
Incentives abound for Facebook and Texas alike
The original design of Facebook's new Texas data center will start out as a 250,000 square foot facility, which will triple in size over the next few years to its final stage of 750,000-square-feet. It's no coincidence that the company chose the Fort Worth area for a new data center. The Dallas Morning News reported that the City Council has already voted to provide economic incentives for the tech company for locating the new facility in their municipality. In addition, the Northwest Independent School District is also looking to enact tax abatements to support the large project.
The Dallas-Fort Worth area, in return, will be looking at a $1 billion investment in the region, plus the additional property taxes that Facebook would pay for the data center.
Why Texas is so attractive as a location for a data center
Beyond Facebook, it's worth it for companies with large-scale data storage needs to consider a Texas data center. The state's central location and low electricity prices make it a very attractive locale for data center colocation.
"Dallas-Fort Worth has become the third largest data center market in the world," Curt Holcomb, executive vice president with commercial real estate firm JLL, told The Dallas Morning News. "For the same reason you have all these people moving their headquarters and offices here…the data centers are coming here."
According to Data Center Knowledge, Facebook is quickly building out its arsenal of data centers just to keep up with its users' activity. Facebook currently accounts for 9 percent of all Internet traffic, with users uploading about 300 million photos each day. Data center colocation, then, is a strategy for the company to add storage capacity and boost performance for its ever-growing platform.
Cloud computing may not be a new concept, but it is still evolving at a rapid pace. The needs of enterprises that rely on these services are driving the changes that cloud computing and its related infrastructure. Attesting to this point, The Whir looked at data from Forrester Research and found that of the 158 companies Forrester surveyed, 80 percent said they plan to expand their cloud adoption over the next three years. A third of those surveyed have already incorporated three or more public cloud providers within their IT operations.
Several technological and business trends are coming together to make this rise of cloud computing possible. demand for communication- and collaboration-enabling technologies, improved Wide Area Network technologies and constantly improving data center services are all combining to shape the nature of the market for cloud computing.
Technologies that form the underpinning of the cloud
The cloud is a catch-all term for a wide number of technologies that enable the delivery of hosted services over the Internet. One of the key drivers of cloud adoption among enterprises is the need for reliable and fast communication and collaboration tools.
A recent article in Data Center Knowledge pointed out that telephony has improved dramatically, with unified communication tools that allow for fast and secure VoIP and video conferencing all over the world becoming a staple at all levels of a business. A data center provider facilitates this well thanks to the advancements made in physical and virtual security for data center facilities.
Intelligent WAN technologies have also made a significant impact here, Data Center Knowledge explained. Improved connectivity and a greater degree of optimization have given providers the ability to distribute and monitor data as well as control and prioritize specific workloads. And with the further development of high-bandwidth networks, data centers all over the world can utilize direct lines of communication with tenants and better direct network traffic.
Lastly, the overall improvement in data center resources has played a major role in the development of cloud services. Virtualization, better optimization, high-bandwidth fiber optic networks and other developments have enabled the delivery of cloud services, and the increasing degree of automation being built into data centers will only further enhance that, Data Center Knowledge concluded.
Shifting business needs also define the cloud market
The needs of the enterprise market have played a critical role in determining the path that innovation in the cloud sector takes. The Whir explained that IT purchases for businesses are largely based on criteria like costs, effectiveness, complexity and compliance.
The entire IT value chain has been disrupted by the widespread proliferation of managed services, the cloud and infrastructure, and that has led the market for these services to become fragmented, with providers looking to streamline their operations and provide only what their core competencies allow them to. For the rest, they are forming key alliances with other providers and data center services to fill in the gaps.
As the analysis from Data Center Knowledge made known, it's clear that the improvement of data center services is a critical driver in the growth of cloud services. With more and more businesses looking to outsource the parts of the IT value chain they cannot scale on their own, data center services will become an increasingly critical component of the IT value chain as the hub for communicative and collaborative technologies as well as the more general services they provides like data storage.
A number of trends in the business and tech landscape are converging and providing the impetus for the rise in the data center construction industry. Cloud computing, big data, the Internet of Things, sustainable business – all of these are driving enterprises to adopt data center colocation as a smart business strategy.
The costs of building out an on-premise data center that can scale with business needs are quickly becoming too much for most enterprises to handle. That's why many of them are looking to outsource their data storage to a dedicated data center provider – the cost savings enable them to direct more capital to their core competencies rather than deal with the unwieldy costs a proprietary data center would engender.
A report titled "Global Data Center Construction Market 2015-2019" found that the data center construction market is set to grow at a 10 percent compound annual growth rate between now and 2019. This market and its ancillary industries – architecture, design, electrical and mechanical systems, security and permitting – are all slated for massive growth to handle some of the aforementioned trends. Here are a few of these market forces driving data center construction and creating demand for their services:
Internet of Things set to be the primary driver of data center demand
The IoT refers to the network of physical objects with electronics, software and sensors that allows them to communicate with other devices, operators and manufacturers. This value-add makes it possible for stakeholders to gather and store data on every asset under the IoT umbrella that can help drive decision making. The IoT is quickly assimilating just about every type of object, and today includes everything from Wi-Fi-enabled household appliances, machinery, electrical and mechanical systems in buildings, vehicles and even major public infrastructure.
"By 2020, component costs will have come down to the point that connectivity will become a standard feature, even for processors costing less than $1. This opens up the possibility of connecting just about anything, from the very simple to the very complex, to offer remote control, monitoring and sensing," said Peter Middleton, research director at Gartner. "The fact is, that today, many categories of connected things in 2020 don't yet exist. As product designers dream up ways to exploit the inherent connectivity that will be offered in intelligent products, we expect the variety of devices offered to explode."
Research from IDC found that the IoT will be the key driving force behind data center colocation. The research agency found that from 2014 to 2019, the data center capacity utilized by IoT-related workloads is projected to increase by a staggering 750 percent. This is the kind of workload that most businesses won't be able to scale up on their own, hence the need for data center services that can be deployed and then quickly adapt to business changes. But it's not just storage, IDC wrote – the need for IoT analytics will also be essential for enterprises and looks to be another major strain on their networks.
Energy efficiency goals foster data center growth
Many large enterprises have outlined ambitious energy-saving goals as a means to cut down on their costs and reap the reputational benefits of having an environmentally friendly business. A business with its own data center is going to see its energy expenditures spike, no matter how many power-saving components it adds to it. By outsourcing their operations to a data center provider that has the capacity to invest in leading-edge green technology, businesses can reduce their energy bills without sacrificing the computing power or storage they need.
Today, many data centers are incorporating renewable energy sources like wind, solar, hydropower, biomass and others into their operations to provide a sustainable way to power their facilities and cool their facilities. In addition, data centers are taking advantage of the IoT themselves, using Internet-connected building management systems to control key processes like HVAC, security, etc. This helps them monitor critical metrics and ensure power isn't being wasted.
Uptime and reliability are critical selling points for any data center, and with the market becoming so competitive, most of them don't want to be the victim of a debilitating outage caused by excessive electricity uses. Nor do they want their own costs to spike because of the unpredictability of energy prices. The use of green technology provides a useful hedge against the vagaries of the energy market.
Businesses benefit when their data center providers have a commitment to green architecture. In addition to keeping to cost of the service low, an energy-saving partner is yet another credential for an enterprise trying to project an environmentally conscious image as part of its branding.
The market for data center services is leading to a rapid rise in the construction of facilities, and the new additions are sure to benefit enterprises that are increasingly coming to rely on these services.
In 2011, mobile video game maker Zynga famously left Amazon's cloud services to build its own $100 million data center to handle its computing needs. Four years later, the company is abandoning the project and is heading back into the cloud, The Wall Street Journal reported.
It turned out that the company couldn't grow enough to make the massive investment worth it, and is now attempting to reduce its costs by shifting back to a data center colocation strategy. So what can other businesses learn from Zynga's backtracking here?
An article in Network World pointed out that the payback on such a massive investment doesn't come in years, it comes in decades. Running a data center, even one equipped with cost-cutting features like software-defined routing, renewable energy-powered cooling, and cheap connectivity, is an unwieldy proposition for a business where its core competencies don't involve building out on-premise data storage at scale.
To that end, businesses with big data needs should look for data center colocation services that allow them to outsource these processes and free up capital that can be used for reinvestment in the business's primary focus.
One of the most prominent technological trends today is the rapidly expanding "Internet of Things." The IoT refers to the network of Internet-connected physical objects, which includes everything from Wi-Fi enabled appliances, machinery, whole buildings and even the electrical grid. As far as businesses are concerned, these devices communicate with one another and with central decision makers to improve process efficiency by collecting and storing performance data.
Naturally, the nearly endless number of endpoints generating such a high volume of data will require a considerable amount of storage capacity, and for that reason, businesses that have come to rely on IoT devices are turning to data center colocation to help them accommodate the deluge of data.
Internet of Things slated for massive growth
In both the consumer and commercial markets, IoT devices are proliferating at a breakneck pace. Research from Gartner found that by 2020, the base of devices under the IoT umbrella will reach a total size of 26 billion units. This will result in a projected $1.9 trillion in global economic value-add in various markets. Gartner expects the IoT's growth to outpace that of smartphones and tablets between now and 2020.
"The growth in IoT will far exceed that of other connected devices. By 2020, the number of smartphones tablets and PCs in use will reach about 7.3 billion units," Peter Middleton, research director at Gartner, said in a press release. "In contrast, the IoT will have expanded at a much faster rate, resulting in a population of about 26 billion units at that time."
Data center colocation services will be instrumental in handling IoT growth
The rise of the IoT will in turn lead to an increase in the demand for data center services. According to research from IDC, datacenter capacity utilized by IoT workloads is projected to increase nearly 750 percent between 2014 and 2019.
"Equal, or even greater, investments in the IoT platform services residing in the datacenter will be instrumental in delivering the IoT promise of anytime, anywhere, anyhow connectivity and context," Rick Villars, vice president of Datacenter and Cloud at IDC said. "Given the number of devices connected and the amount of data generated, businesses must focus on their IoT service platform requirements at the level of the datacenter itself, not just the individual servers or storage devices."
IDC explained that the IoT will be the primary driver of data center expansion, which will also lead to greater demand for cloud infrastructure. Timely IoT deployment requires agility and scale, and that means businesses will increasingly turn to data centers to ensure a quick implementation for their IoT equipment and infrastructure.
Data is increasingly becoming the currency by which business success is measured. Simply put, the businesses that can make the best use of the virtual reams of data they collect are the ones poised for success now and in the future. That's why each data center provider must move beyond just acting as enterprise storage and start finding ways to position themselves as strategic business assets, an article in CIO explained.
The rapid adoption of the hybrid cloud is one key driver in data center growth. A report from Cisco found that by 2018, 78 percent of workloads will be processed by cloud data centers. By that same year, Cisco also expects that 59 percent of total cloud workloads to be from SaaS usage.
The number of ways in which businesses are using data centers – and the data they house – is evolving constantly. CIO pointed out that because of this, data centers can't operate on a one-size-fits-all policy that assumes every business uses its data the same way. Data centers will have to deploy a number of technologies like solid state drives, hybrid arrays (SSDs and traditional hard disk drives) and tiered storage to meet the changing needs of their customers.
The expanding market for managed IT services and cloud computing has led to a marked rise in the growth of data centers throughout the U.S. Colocation solutions have become an increasingly attractive option for businesses that want to cut down on their IT infrastructure and management costs. The desirable pricing of data center colocation has led to a high demand for the services and propelled the market to a state of staggering growth.
Growth of the data center market leads to booming locales
Data Center Knowledge looked at research from 451 Research and found that the data center colocation market is slated to reach a total size of $36 billion by the end of 2017. With that sort of growth, the global data center footprint is projected to increase from 109 million square feet to roughly 150 million square feet. Global annualized revenue in this sector is estimated to be about $22.8 billion.
In North America alone, 451 Research forecasted that the data center market will grow by 32 percent by 2016, reaching a total size of $14.8 billion. It makes sense: research by JLL found that IT budgets are generally growing, but in spite of higher IT spending, there is a considerable push to eliminate redundancies and bolster efficiency. In-house ownership is no longer seen as the best option for IT services, so businesses are turning to data center colocation to free up resources that can be reallocated to value-added business initiatives.
The high demand for data center services has led to emerging markets in many regions throughout the U.S., with nearly every industry imaginable demanding more and more space in data centers. Here are a few of the geographic regions that have separated themselves from the rest and are quickly becoming the most popular locations for data center colocation:
JLL found that many industries in Texas and the surrounding areas are looking for managed services in a Dallas data center. Demand is coming from a diverse array of sectors, such as hospitality, finance, insurance, technology and telecom. With utilities in the southwest growing as well, data centers are looking to lock in long-term pricing with energy providers to help keep their costs low.
This region is quickly establishing itself as a primary tech hub in the U.S., and data centers have sprung up in this region to meet the needs of these enterprises, as well as those of the government. According to JLL, the tech sector is driving Northern Virginia data center demand, but there is an ever-present demand across all industries for colocation.
Data center providers are increasingly moving into this area as demand from the telecom and tech sectors has grown over the last few years, research from JLL stated. Phoenix data centers have benefited from the organic growth of the Phoenix tech sector, which is increasingly looking for ways to cut costs and improve efficiencies.
JLL explained that Houston, like most of the top markets for data center colocation, is seeing an upswing in demand from a variety of sectors. What makes Houston unique is that there is significant demand from the oil and gas sector in the Gulf region for data center services. As offshore and onshore oil and gas drilling rely on Internet-connected capital for exploration, these companies will look for data centers that can accommodate the rising volume of data generated by their operations.
With the advent of cloud computing and Internet of Things technology in the health care industry, providers are inundated with more data than ever before. This data, which includes sensitive patient health and personal information, must be handled safely, lest a provider find itself the victim of a breach. For data security and storage, healthcare providers often turn to colocation solutions to help them manage the load while keeping costs down.
With so much riding on the safe storage and transport of critical data through the network, healthcare data center security has been at the forefront of the industry. A Ponemon Institute study from 2014 showed that the average cost of a breach increased from $5.4 million to $5.9 million from the year before.
Healthcare data is especially attractive to cybercriminals due to its high value on the black market. Because of this, Health IT Security reported that security must be a high priority for health care data centers. Providers looking for a colocation solution should look for strong physical security, up-to-date environment testing and policies that encourage security best practices. Multi-tenant segmentation is also a critical feature for data centers, as it allows tenants to properly secure critical data points.
Microsoft and Amazon, two of the main players in public cloud services, continue to fortify their businesses with new releases of top-notch technology. As more IT managers depend on these cloud entities for their expansion plans, they should consider data center colocation as a secure, high-performance option.
Microsoft unveils new cloud technology
Microsoft introduced Azure Stack, an assemblage of cloud technologies that enable infrastructure-as-a-service and platform-as-a-service data center capabilities, at the inaugural Ignite Conference in Chicago, according to CIO Magazine.
The news outlet noted that Azure Stack provides IT managers with the ability to transfer data with the same hybrid cloud service that Microsoft uses internally. Microsoft CEO Satya Nadella spoke at the conference about the growing pervasiveness of cloud computing throughout the business world, CIO reported.
"We will consume data at unprecedented levels – security, privacy, regulation all matter in the cloud," Nadella said at the conference, according to the news source. "We are building the intelligent cloud. At the core of that is the backend infrastructure that drives all of your enterprise mobility needs, the agility you need to have new value and new applications."
Patrick Moorhead, an analyst with Moor Insights and Strategy, said Azure Stack can be applied to private, public and hybrid cloud services, the news outlet noted. The hybrid cloud has become an increasingly attractive option for businesses that want to keep an internal network while expanding with budgetary constraints. Azure Stack's versatility will be useful for these kinds of enterprises.
First to market, Amazon sustains cloud leadership
Amazon Web Services launched its cloud computing service in July 2006, Bloomberg reported. The product wasn't fully refined at the time of its debut, but the company also recognized the value of beating the competition to the punch.
"Large tech companies usually wait to launch until they've built all the bells and whistles their development team can imagine," said Andy Jassy, Amazon's head of Web services, the publication reported. "We thought it was very important to be first to market."
Amazon's cloud service held approximately 800 million files shortly after its launch and would soon claim Dropbox and Netflix among its higher-profile clients, according to Bloomberg. While Microsoft and other tech players have gradually increased their own cloud market shares, AWS continues to be the market leader. Deutsche Bank recently approximated the service's value at $6 billion, the publication noted.
The ongoing vigor of Microsoft and Amazon cloud services will create plenty of expansion opportunities for business leaders around the globe. Colocation solutions should be at the core of these plans.
More business leaders around the globe are implementing the cloud to cut infrastructure costs, globalize their workforces and ease the processes of data storage and backup. However, not all of these executives have clearly defined game plans for expansion.
Whether you're aiming to expand a healthcare data center, a financial data center or just an internal network of a private business, colocation solutions can be an effective step toward high performance and security. A colocation provider offers flexible, scalable server space that can help data-driven businesses grow as they continue to implement the cloud into their daily operations. Some enterprises want to back up their infrastructure in remote locations. Others seek to expand their storage capacity but don't have the funds to do. Colocation can serve as a top-notch, cost-effective expansion plan for all of the above.
Survey highlights cloud growth, hints toward colocation
A recent survey by KPMG LLP, an audit, tax and advisory firm, found that 49 percent of cloud users attribute cost efficiencies as the top reason for implementing the technology. Another 48 percent noted its value in regards to workforce mobility and flexibility. As businesses continue to adopt the cloud, the market for colocation solutions seems poised to grow right alongside.
"People's expectations as employees are a lot different than they were ten years ago," said Mark Shank, managing director of the digital and mobile practice for KPMG. "Employees today demand the same access, experience, and richness on their work computers and mobile devices as they have on their personal devices. Cloud is making that possible, and organizations are turning to it to enable a more flexible and mobile workforce."
Cloud and mobile connectivity
In a recent interview with TechRadar Pro, Per Wising, the head of research and development for Projectplace, said that cloud computing is encouraging collaboration in the business world. To ensure consistent, secure growth of the cloud, aspirational enterprises should look toward data center colocation as a method of intelligent expansion.
"We can already see apps being developed for cloud tools, and it will only be a matter of time before they're widely available for all desktop applications and devices," Wising told the news outlet. "As the workforce shifts from office based to a more fluid team style, there will be a greater focus on mobile apps that empower individuals to use smartphones, tablets and laptops."