By Andrew Schaap, CEO, Aligned
As your business accelerates its digital transformation, is your data center provider able to keep pace?
Published in Issue 5 | December 2020
As businesses feel increased pressure to accelerate their digital transformation to remain competitive in a post-pandemic world, the demand for data center capacity will more likely than not continue its upward growth trajectory. That said, planning capacity under these circumstances, to quote one industry analyst, is akin to “driving in a hailstorm at night without headlights,” especially when so much of the world’s workforce remains remote, and more and more people now rely on technology to shop, socialize, study and entertain themselves. Streaming media, video conferencing apps such as Microsoft Teams and Zoom, cloud collaboration platforms, social media, educational portals, virtual private networks (VPNs) and cloud gaming are all seeing historically high-usage levels. In turn, a companies’ ability to meet the demands for these digital communications, online commerce and entertainment platforms is dependent on the capacity of data centers, placing increased pressure on the speed of new data center builds and expansions. Put another way, as businesses struggle to accurately forecast capacity demand and, in some cases, struggle to keep pace with it, speed is the new scale, and adaptive infrastructure is the means to intelligent and sustainable growth.
A Strategic Response to Capacity Demand
It’s an oversimplification, and wholly inaccurate, to believe that any organization has unlimited capacity. In fact, companies must plan capacity in advance—and for when and where it’s needed—of projected demand. If a company has invested in too much capacity in anticipation of demand, then the resources sit idle as wasted capital in a data center. If they’ve invested in too little capacity, businesses and consumers won’t receive the performance they require, customer experience will suffer and the organization will have lost out on revenue. Now, more than ever, we can readily affirm that data centers are critical infrastructure. In order to answer the heightened customer demand for new data center builds, help customers penetrate new markets and expedite the expansion of existing data center campuses when growth opportunities arise, a strategic response built around three key pillars is required.
Providing companies with greater visibility into their infrastructure via a customer portal that offers predictive analysis also facilitates more effective capacity planning and forecasting across clients’ entire data center footprint.
The central pillar of meeting data center capacity demand is a strong capital foundation backed by sustainability-linked financing. For a certain set of marquee customers having a data center operator that is a good steward of the environment by offering sustainable options for power, cooling and growth is now table stakes. Many data center providers talk a good game where sustainable infrastructure and environmental stewardship are concerned, but sustainability-linked financing is putting the money where one’s mouth is. With accelerated digital transformation and technology use, we’re now seeing unprecedented investor demand, and sustainability-linked loans are among the industry’s fastest growing subsets.
In addition to lower interest rates, sustainability-linked financing is directly tied to the data center provider’s environmental, social and governance (ESG) objectives, and how well it performs vis-à-vis its renewable energy targets, sustainability reporting transparency and Key Performance Indicators (KPIs) related to safety. If the data center provider delivers on its commitments, the company benefits from discounted interest rates; and, if it doesn’t, the rates either stay the same or go up, depending on the actual performance. If you’re going to talk the talk, you’ve got to walk the walk.