Colocation: How AI and the Cloud will Shape its Future

With insights from CommScope & Systal, discover how AI, cloud and sustainability initiatives seek to shape the future of the data centre colocation market

The data centre colocation market is continuing to evolve, propelled into a future driven by digital transformation. 

In line with changing business needs and the growing importance of reliable and scalable infrastructure, data centre businesses are looking to harness artificial intelligence (AI) and the cloud to support their innovations.

Colocation data centres refer to a data centre that allows customers to rent out space for their own hardware. Renting out space in a data centre is often more economical for companies, rather than maintaining their own on-premises servers.

AI and the cloud dominate industry consciousness

It is expected that the colocation market will only continue to grow. Research in December 2023 found that the data centre colocation market would expand at a 14.9% CAGR and reach US$279.1bn by 2034.

This growth highlights the significance of robust data infrastructure and how the industry is seeking to evolve to keep up with customer needs.

“It’s no surprise to see the data centre colocation market receiving significant investment in new facilities throughout the world,” says John Bidgood, Chief Technology Officer at Systal Technology Solutions. “The desire to migrate towards cloud-based services, improvements to fibre network connectivity, and the rise of utility and real estate costs are driving our customers towards these solutions more than ever before.”

However, some key reasons for colocation market expansion are the rising adoption of AI and Cloud. Whilst generative AI (Gen AI) models present both opportunities and risks, including public anxieties, many governments are already addressing the concerns alongside the positives.

Already, the data centre is feeling the impact of AI. As Lewis White, Vice President of Enterprise Infrastructure Europe at CommScope, explains: “Any existing governmental data centres do not have the correct infrastructure or power capacity in place to support the bandwidth required for AI. Fortunately, multi-tenant data centres (MTDCs) are extremely efficient and have the white space and fibre backbone to support these builds.

“To ensure that power and cooling delivery are appropriately balanced, efficient white space design needs to be top of mind for providers when supporting a tenant’s AI installation.”

Cloud companies are already working to build more data centre capacity, moving to newer areas across the Asia-Pacific (APAC) region, Latin America and the Middle East and Africa. These locations are selected strategically by companies as they are currently experiencing unprecedented digital growth and can offer greater sustainable infrastructure.

“In these regions, established MTDCs with available space and power will be the first landing zones for many of these cloud companies,” Lewis says. “However, in some instances, these data centre providers will need to change their go-to-market model from one of pure colocation to a hybrid model that allows mega-watt white space instals to co-exist in the same building or on the same campus as smaller customers.”

Maintaining safe colos in a turbulent cybersecurity landscape

In a colocation environment, servers and networking equipment are housed in a third-party data centre, meaning that users rely on the data centre’s security infrastructure. Some of the cybersecurity risks associated with data centres include unauthorised access to hardware, or lacking security measures which could result in data loss, service disruption and reputational harm for businesses.  

Despite this, there are ways that colocation providers can expand their services to ensure both safety and efficiency. As Lewis explains: “Colocation providers should be working with reputable companies who can supply them with solutions that meet various international requirements, while still servicing their needs locally.

“These companies with high installation standards and good processes will help the build go efficiently and safely.”

John adds: “Ultimately you should keep the perspective that it is your responsibility to run the colocation facility safely and efficiently as part of your integrated IT operation rather than solely relying on the colocation provider.” 

Systal is a great use case example as it works to protect both its business and client data. John explains how the technology solutions company has heavily invested in its cybersecurity capabilities to better protect its customers from unprecedented levels of cybersecurity threats and vulnerabilities.

“Our team of industry experts work closely with our customers to design and implement security techniques, hardware and software for the protection of their data, networks and systems,” he says. “This tailored and detailed approach gives them increased confidence in their security response and recovery capabilities.”

Operating sustainably is “even more important” for data centres

As demand for AI and high-performance computing (HPC) continues to grow, more businesses are seeking consolidated colocation facilities. The implications of this, however, mean that data centres end up using more energy and electricity to keep up with demand.

Research suggests that certain countries could experience shortages as a result of such high needs for power.

The solution is that sustainable strategies for data centre providers and colocation services will be even more important moving forward. Data centres can switch to renewable energy, but will also need to innovate in an environmentally-conscious way. 

“Not only will data centre providers need to think even more about backup generators, which historically have tended to use diesel fuel, but they will also need to think overall about the net emissions they generate because of traditional data centre designs for power and cooling,” John explains.

Lewis adds: “Always work with high-quality responsible suppliers and partners and ensure that they comply with the international standards that are serious about supporting sustainability initiatives. 

“ISO 14001 is an environmental management system that organisations can put in place to help reduce the impact of their operations on the planet. Organisations that follow this system demonstrate their commitment to sustainability by continually measuring and improving their environmental performance.”

All things considered, the data centre industry must change the way its facilities are located and designed to reduce cooling and power demands.

John says: “Sustainability for data centre providers will be even more important and certainly, a harder challenge than it is today.”


Make sure you check out the latest edition of Data Centre Magazine and also sign up to our global conference series - Tech & AI LIVE 2024


Data Centre Magazine is a BizClik brand


Featured Articles

Ada Infrastructure to build AI-ready 210 MW Data Centre

Sustainable data centre company Ada Infrastructure will build a 210 MW data centre campus in East London’s Royal Docks, with a focus on AI & sustainability

Colt DCS Sustainability Report Shows Decarbonisation Advance

Colt Data Centre, a global provider of hyperscale and large enterprise data centre solutions, has released its 2023 Sustainability Highlights Report

Dell & Super Micro to support Musk’s xAI Supercomputer

Elon Musk teams up with Dell and Super Micro to build xAI's supercomputer. Dell's server racks organise servers & networking equipment in data centres

€50m Investment for new Equinix Data Centre in Lisbon

Fengate to Amplify eStruxture’s Hyperscale Data Centres

Penta Infra: Acquisition of Carbon-Neutral Nexus Data Centre