Davis’ career within Financial Services Technology spans 35 years, giving him a unique perspective on the exacting requirements and meaning of mission-critical environments. Having previously been a Managing Director at UBS, JPMC, Deustche Bank & Morgan Stanley, where he was responsible for Data Centre Strategy, cloud strategy, and leading HQ workplace developments in London, NY and Asia; most recently completing UBS HQ in Singapore and an 11MW Hyperscale DC in Zurich for Green.AG. Davis has been involved in over 2msqft of data centre developments spanning the UK, Europe, US, and Asia. He has an MSc in Intelligent Building Design & Operations and is a Chartered Engineer and Fellow of the Institute of Engineering and Technology.
The Data centre is really a four-dimensional asset class; 1st It forms a real estate asset, 2nd it is mechanical in terms of essential cooling systems, 3rd it comprises a complex electrical subsystem, whilst 4th, it comprises a highly complex technology installation scaling technology infrastructure and application architecture. The latter forms the ‘lifeblood of our digital economy’ and during Covid now recognised globally as a Critical Industry by most governments. The data centre is the lifeblood of everything we do in our digital economy – from browsing, ecommerce, social media, and sophisticated compute algorithms. Reality, the Data centre now consumes 100X the energy of the offices/ businesses they support!
Data centre design requires specialist coordination, and represents a sophisticated array of platforms that requires specialist skills to design, build and most importantly operate, with confidence. Investment trends vary and recent industry benchmark data suggests the build cost per MW near $12-14M/MW. The key issues facing our global industry are multiple and continuously developing; primarily energy efficiency driven with a laser focus on sustainability and skills development.
Compute and technology infrastructure workload are the key drivers of energy consumption within the Data centre, and this has been an industry dilemma driving a balanced approach to be achieved across resilience and environmental management. Within enterprise organisations Data centre facilities were traditionally designed with building resilience forming a crutch to the weaknesses of the infrastructure and application architecture – This in turn led to the development of high availability principles being a primary underlying design criterion for the Data centre – the rest forms history.
Global enterprises developed their Data centre strategies aligned to regions, within each region dependent upon Primary/ Recovery sites ensuring fail-over; often misguided as many applications had global influence in those business transactions. Financial services have traditionally been the largest consumers of the Data centres and led the way in the early 2000’s by building their own portfolio – yet this was also misguided, and their real estate portfolios always challenged by the lifecycle mismatch between Mechanical/Electrical and technology platforms; this frequently formed a clash between CFO and CIO communities.
Since this initial ‘gold rush’ of data centre builds for enterprise clients, the co-location/ retail market took up some of the new demand – but this was a sluggish start; the past three years however have been transformational in terms of new capacity witnessed across the US and Europe (circa 2.8GW stated as Q4/22 Tier I&II European market capacity availability). Taking the technology dimension and adoption of Cloud principles forming a strategic influence in this growth the underlying architecture dilutes the strategic value of Real Estate assets on companies’ balance sheets in my opinion.
In today’s economy, Enterprise applications and services depend entirely upon the data centre, everything an Enterprise produces; every transaction, every client record, the whole client experience is under pinned by the data centre.
As the adoption of hybrid cloud across industries accelerates, the industry has been responding positively to market demand; we see 1st hand how Hybrid Cloud and Cloud based services contribute and compliment enterprise technology landscapes. This shift change in adoption has direct impact on how we manage our assets, and with specific focus on meeting the growing demands of ESG and the impact on our Operating plans.
Cloud computing is a model of enabling access to a shared pool of computing resources (e.g., networks, storage, servers, and storage) that can be quickly provisioned and released with minimal service provider interaction.
With four deployment methods – Private Cloud, Community Cloud, Hybrid Cloud and Public Cloud, and three service models – Infrastructure as a Service (IaaS), Platform as a Service (PaaS) and Software as a Service (SaaS), Cloud comes with multiple benefits to the enterprise consumer – most important and disruptive are the business enabling ones, enabling businesses to rapidly transform and create new services and penetrate existing and new markets.
What changes in the cloud? Cloud is the catalyst for new business models, due its dynamic nature, global reach, and openness to partners, it is the place where disruptive innovation is happening. Cloud adoption enables rapid response, easier access to new markets and transforms the customer experience and mobility options. Cloud services are designed with the user experience front and centre, and cost of adoption becomes directly with explicit transparency and the ability to influence/ steer underpinned by optimization of unit pricing based upon scale of the cloud providers.
Cloud has disrupted the traditional hosting model, a profound impact on agility, innovation, global reach, security, and economics. Historically Enterprises focused on their fixed cost of technology with forecasted workload, this impeded their agility and hampered their operating expenses. Adoption of cloud has the advantage of starting ‘greenfield’ with a focus on standardization, automation, and scale. Traditional Enterprise technology consumption cannot provision due historical disparate platforms. Reflecting on the past 5-7 years of enterprise compute solutions, most engaged upon their home-grown journey with a purposeful ‘virtualization’ campaign – shifting from dedicated business servers/ applications to a shared virtual estate. This was pursued with an in-house infrastructure automation IaaS offering and solving for application centric PaaS offerings; this was the initial validation of cloud-based services as some of these offerings were ‘On and Off’ premises offerings.
As the adoption of Hybrid and Public cloud services accelerated, Clouds of all forms – Private, hybrid and public are disrupting the traditional business and IT models with a profound impact on agility, innovation, reach and economics, and above all, reliability, security, and cost certainty and cost transparency.
Reflecting, Cloud is a fundamental change in the DNA of Enterprise technology behaviours. Enterprise companies recognised that incremental optimization of inhouse technology platforms does not yield the benefits required. Their existing legacy platforms are cost intensive to maintain, have limited scale and speed of change, and do not offer the flexibility and agility the digital economy demands. Cloud providers have addressed those shortcomings with a high level of standardization, ruthless automation, and modern technology. Cloud adoption has now become mainstream across numerous industry sectors and offerings continue to mature as digitization continues to evolve and disrupt business flows. Concluding – Everything as a Service is now mainstream, and as a Data Centre operator we are working extensively with our Hyperscale customers to enable their country specific penetration, and in parallel reviewing our own efficiency operations to adapt to this new paradigm and business model.
What is the impact to the industry? how have we adapted, what are the incremental issues that we must resolve and how and where does this fit within the ESG strategy? Aside from industry efficiency focus across four key metrics – Carbon intensity, renewables mix, Trending PUE and overall efficiencies that meet our key environmental targets?
As digitization trends continue cloud adoption is accelerating. Among Industry CIOs cloud computing would have the most measurable impact on business followed by AI, VR and IoT. Forecasters predict spend will increase sixfold compared with traditional IT Infrastructure spend, and if these predications turn out to be true, around 60% of enterprise workload will be cloud-based by 2024.
Cloud economics have come home to roost. Modularisation, automation, high performance, 5x9s reliability, reduced cost, eco system connectivity, security and less proprietary solutions all provide efficiency opportunities for the consumer.
For any organization embarking upon their journey to cloud, there are multiple steps to be considered, starting with full transparency of the existing enterprise compute environment – and this must include Real Estate as this is one of the key pillars of the Data centre stack. This has been and will continue to be a key hurdle for enterprises to understand, as the conflict originates from the mismatch of the asset type! Real estate forms a balance sheet asset with 25 years lifecycle, whilst technology now is consumed and disposed of real-time based on workload type; the advent of ‘pay as you go’ doesn’t fit with real estate.
With a renewed focus driven in part by the Paris agreement upon sustainability and the impact of Data centres upon the environment, many organisations have reacted, truthfully, tactically, to meet with the initial wave of reporting to meet their shareholder and investor concerns. Forming a baseline and now commonly understood, Operators have developed the required reporting to demonstrate efficiencies, and this represented an additional challenge to the industry – instrumentation. Following upon the adage ’you cannot improve unless you measure’ the semblance of key data requires the appropriate telemetry be deployed and trend analysis applied. Early DCIM installations aided monitoring of room performance and enabled efficiency gains be tailored, but still fell short of the required levels of reporting to achieve the macro-economic statistical data required. Key metrics forming the industry benchmark include – average PUE, average WUE, % Renewable energy, water usage disclosure, carbon emission disclosure and finally energy usage disclosure.
But here is the rub, as an Operator it is our duty to ensure our facilities are operating at best-in-class environmental levels, and where available procure renewable energy for the operation of the core facility plant; however, Operators are not able to influence the use of the compute utilisation of the infrastructure consuming that demand – this is strictly in the remit of the Consumer (Enterprise, Co-Lo or Hyperscaler customer). Our role becomes that of a custodian, sharing the appropriate levels of facility utilisation with the intent of ensuring best-in-class utilisation of the entire facility. As the industry adapts to these emerging reporting requirements, data quality, internal resource constraints and the need for expertise continue to be obstacles to thorough ESG analysis. Many Operators across all geographies are still in the process of determining their frameworks around ESG reporting. This includes which external ratings to utilize, how much relative emphasis to give and which metrics to focus on when reporting corporate disclosures and engaging directly with their own management teams. As previously stated, enterprise customers have reached a point where pure internal incremental optimization is not delivering the results (performance, cost, and efficiency) needed. Data Centre operators are addressing these shortcomings with a high level of standardization, ruthless automation, and modern technology – this extends to and includes ESG strategies as a key benefit.
With lifecycle being a key consideration and previous challenge to owner/operator communities, the Data centre operators have embraced best-in-class construction methodologies and importantly embrace many of the worlds leading construction techniques. Most referenced and applicable to the built environment, regardless of intended use is LEED (Leadership in Energy and Environmental Design), this is a US certification system, and forms a non-profit accreditation. As with lifecycle, LEED covers the design, construction, maintenance, and operation of the building. Within Europe, alternatives exist and largely BREEAM (Building Research Establishment Environmental Assessment Method) is used for new, refurbished and extensions to existing buildings. It is encouraging that more of the developer community are embracing at the outset of their investment these standards which in turn ensure the finished product and for its operating lifespan meet with the requirements of ESG strategies; however, much more needs to be done here!
In Q4/22, through their regular reporting of capacities across the primary European markets, CBRE reported that to date (Tier I & 2 Markets), 2.8GW formed the total supply within Europe. This is an astonishing fact, and with key considerations to ESG compliance which remind us is primarily driven through energy consumption across the core infrastructure within the Data centre, this stands out as a real industry challenge! – as again many of these KPIs are mis-represented and likely under reported as ESG now becomes a mainstream reporting obligation.
This explosive growth and surge in data storage and the wider economic demand for Data centres continues to stress/ challenge some of the key cities that have historically been early adopters of Data centre operators. Throughout 2022 we witnessed on a global level country (Singapore, Dublin, Frankfurt, and the Netherlands) impose restrictions on future new capacity. Key issues raised included power availability, environmental impact and economic value through the industry having a low resourcing model and therefore not representing big employment opportunities. Key and likely to form an essential planning consideration will be the implicit design and ensuring these sites meet with and exceed their sustainability targets.
With a focus on Switzerland, significant growth has been equally witnessed with new market entries from the international community embarking upon new facilities. Zurich and the greater surrounding area have been and continues to be of wide appeal – abundant renewable energy, however, building in Switzerland has restrictions. The challenges include construction techniques as have historically led toward concrete being the primary method of construction and requirement for excavation (why? land is NOT in abundance so maximising the available plot drives these considerations and therefore has impact on cost of build). With a large financial services industry coupled with Pharma and Insurance, and the security of data sovereignty, makes Switzerland a standout location in contrast with the other Tier I and II markets across Europe. New capacity coming on stream in 2023 exceeds 100MW.
Concluding, we have witnessed forecast uptake in 2023 for Hyperscale deployments/ adoption, driven primarily by the uniqueness of proximity, security, use of renewable energy and the ability to meet with many sustainable design options (re-use of waste heat within municipalities) exceed peer markets. Switzerland is ideally suited to meet with the growing demand for local, and international customers alike. Our commitment to ESG implicit within our Operating regime and the uniqueness of Swiss culture for being best-in-class ingrained within our DNA.