2022 Predictions: What’s Next?
By Matt Pullen, EVP, Managing Director Europe, CyrusOne
We’ve gone full steam ahead into a brand new year and it’s fair to say a lot still remains unknown about the months ahead. From the pandemic and supply chain issues to an ever-increasing focus on sustainability and plugging the skills gap, there are myriad issues that are continuing to impact data center operations and development both in the UK, Europe and further afield.
Firstly, continued cloud momentum will drive data growth in new markets. Cloud adoption is still relatively low throughout Europe; however, we will see continued momentum in 2022. This momentum will be spread across the entire region, as opposed to concentrated in specific markets. This will be supported by continued development of network infrastructure across Europe including the Nordics, East and Southern Europe. Lower latency across the region will mean that hyperscalers in particular will have some choice in where they concentrate their activities.
Next, sustainability will remain front and center this year and it’s likely we will see sustainability focused regulation and legislation introduced over the coming years that will impact our industry. While this sector in Europe has already come together to commit to eliminate the environmental footprint of data centers by 2030 through the Climate Neutral Data Center Pact, we anticipate additional measures stemming in part due to commitments agreed to by governments during COP26.
We’ll see an acceleration of ESG across all infrastructure providers – if you consume power in any form you’ll have to have an articulated strategy for ESG and evidence of tangible strides towards net zero. It’s more than just buying RECs, we need to make sure the power itself is green and sustainable.
Supply chain issues will also continue to have an effect, having represented one of the biggest challenges over the past 12 months. Many customers across the sector have continued to expect the same timing and pricing agreed at the outset of pre-letting agreement, despite rising costs on equipment, land and materials, which has led to frustration on both sides, meaning the need for collaboration and compromise will continue to be critical.
Scale and a collaborative approach to M&E typography will help to offset the rising cost of construction. The trend is definitely towards campus facilities in digital gateway markets offering a pathway to an excess of 40+ MW (IT) for individual customers.
Finally, as it relates to the talent pool crisis, I believe 2022 will be the year of consolidation of service providers. The lack of a talent pool will create a huge competitive scramble from tier-1 providers to grab the talent that they need, and they will do this by absorbing the smaller providers. Tracking what the competition is doing will have never been as important as it will be for the year ahead.
The continued growth in the market will increase the talent pool crisis. Industries which were suffering during the pandemic and providing data center industry recruitment opportunities are coming back to life. The DC industry will have to increase its focus on training, development and partnerships with academic institutions in order to prime localized talent pools.
From a recruitment point of view, I suspect that we will see the base value of the existing engineering pool increase, and the value will be inflated because there will be more work than people. I predict that this could lead to mobility and will put an increased focus on reward but also the broader value that organisations can offer their talent. The industry will need to take note as the pressure on engineering teams will increase as cloud companies look to maximize utilisation of contract capacity whilst the industry pushes to close the gap between demand and supply.
The road ahead is long, and in order to make this work, we need participation from not only industry key stakeholders but also from service operators and everyone else that the data center industry encompasses.