What factors are set to drive demand for data centre transformation in Europe?

May 9, 2023

Article published by Intelligent Data Centres on 9 May 2023

The market in Europe is expected to be worth US$18.53 billion in 2023. Between 2023 and 2033, a 13.1% CAGR is predicted for growth. The market is driven by the high demand for data centre transformation from hyperscale data centre customers including large Internet businesses and suppliers of public cloud services.

The introduction of disruptive technologies like autonomous cars, the Internet of Things (IoT), cloud computing and sophisticated robotics has increased the need for Edge Computing solutions in developed countries like the UK, Germany and France.

Thanks to the development of 5G, which is driving the market’s expansion, the data centre transformation providers now have the opportunity to deliver these services in distant areas of Europe with greater connection.

The global data centre transformation market size is estimated at US$10.5 billion in 2023. In 2033, the size of the world market would be US$35.65 billion.

Data centres are under pressure due to the ongoing adoption of cutting-edge technologies by various enterprises, including Big Data analytics, cloud computing and IoT, as part of their plans for Digital Transformation.

This in turn increases demand for data centre transformation on a worldwide scale. It is anticipated that the sector would benefit greatly from the increased need for software-optimised data centres on a global scale.

Stumbling blocks in the market
A shortage of skilled labour and problems with regulatory and portability compliance are impeding the data centre transformation market expansion. The management of utilities, physical security, building upkeep and other physical components are not subject to customs control because colours are managed by a different organisation.

Despite having no control over the location, the supplier completely manages their data centres using the public cloud, taking care of equipment maintenance and upgrades. Thus, all of these constraints are restricting the market for data centre transformation.

Key takeaways

  • With 44.9% of the data centre transformation market share in 2023, North America led the way and during the forecast period, it is anticipated to rise at a CAGR of more than 13%.
  • During the forecast period, the Asia-Pacific data centre transformation market is anticipated to exhibit a considerable CAGR of over 14%.
  • With a maximum revenue share of 36.2%, the consolidation services segment led all service segments during the projected period and is anticipated to continue to lead.
  • In the end-user category, the cloud service providers segment had a key revenue share of 46.2% and is expected to increase at the maximum CAGR of almost 13% over the projection period.
  • By 2033, the verticals section’s IT and telecommunication segment generated US$8176.48 million in revenue and it is anticipated that this segment would expand at a CAGR of 12% over the forecast period.

Competitive landscape
Due to the numerous competitors operating both in the domestic and international markets, the data centre transformation market is very competitive. With the top competitors pursuing tactics like product and design innovation, the market seems to be moderately concentrated.

Among others, Dell EMC, Cisco Systems and IBM Corporation are some of the market’s significant players in data centre transformation.

Industry experts offer their input on the factors driving data centre transformation across Europe…

Fredrik Jansson, Chief Strategy Officer at atNorth
The digital data explosion and increasing sustainability pressures are driving businesses to carefully consider how and where they’re housing their large datasets. This demand is driving data centre transformation in Europe.

The digital data explosion will fuel the need for high-density data centres
Companies are increasingly adopting emerging technology solutions like AI or automation solutions in every part of their business. These types of high-performance computing applications are powerful and becoming essential to create and maintain a competitive advantage. Yet, most in-house IT infrastructure (or indeed many legacy data centres) cannot cope with data processing speed and demand.

Newer data centres are built with high-density, high-performance applications in mind, with some data centre providers like atNorth even offering High Performance Computing as-a-Service (HPCaaS). This way, as business requirements change and demand fluctuates, the necessary infrastructure can be scaled accordingly.

For example, the weather and climate security platform, Tomor​row​.io, provides data intelligence to help predict the business impacts of weather and solve climate security challenges. Tomor​row​.io historically used the public cloud to host the high-performance computing (HPC) used to run its numerical weather prediction models. But, as the team and its operations scaled, so did the associated costs. By taking advantage of atNorth’s efficient data centre hosting facilities and HPC services, Tomor​row​.io is able to scale and run complex calculations over extensive geographical areas in real time and has reduced its HPC costs by more than 60%.

Sustainability pressures will drive workloads to the Nordics
In 2020, digitalisation generated 4% of global greenhouse gas emissions. Digital Transformation and the increasing demand for HPC continues to accelerate and with this comes the need to store and process an exponential quantity of data. The resulting storage specifications are becoming bigger and more complex, and unsurprisingly, data centres now have a huge and growing impact on the environment.

Choosing a data centre is a long-term investment and businesses navigating a digital explosion in the current economic uncertainty are having to make careful decisions. To assess the environmental and energy footprint of its data, a company first has to uncover where its data is located. A company’s data can reside on-prem or in the cloud’, be outsourced to a managed service provider or with a colocation partner.

The second step is to assess the digital environmental footprint by calculating the associated CO2 emissions and Power Usage Effectiveness (PUE). This is necessary to establish what your current footprint looks like and find a data centre that can offer a decarbonisation solution.

A company that recently went through this exercise is BNP Paribas CIB. By moving a portion of its data centre footprint to an atNorth data centre in Iceland, BNP Paribas CIB achieved a reduction in energy consumption of more than 50%, an 85% decrease in CO2 output and transitioned to using 100% renewable energy.

The most successful businesses will be mining the digital data explosion to gain competitive advantage. And, by utilising Nordic high density data centres as a decarbonisation platform, more compute at a lower environmental footprint can be achieved. The looming recession will accelerate this trend as businesses also realise the financial impact of using less energy – going green is cheaper!

Read the complete article online here.

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