Over the years, the data center industry has continued to evolve and has become a critical part of our world today. Beginning in the 1940s, as large computer rooms were often deployed for military and government purposes, costs were expensive due to the complexity of the computer systems. Roughly 40 years later, entering the era of the microcomputer boom, computers began to be more readily deployed throughout businesses. This led to the birth of what we now refer to as the common server. Companies began to house these servers in a dedicated location within their own facilities to support their business needs.
With the dotcom explosion that took place between 1997 and 2000, businesses began deploying new systems supported by the internet. These changes led companies to house servers off-site as their demands increased. Technology is ever-changing, and so are the processes and requirements that go into data center site selection.
Data center site selection is not only a critical decision, it can have extreme consequences for all departments. Having a process in place for the site selection team is imperative for success. The process should be viewed as the foundation of every project and every team will build off it.
We are all familiar with the standard review requirements: power, network, geography, and economic incentives. While these requirements have historically been a part of the process and will continue to be, there is so much more to consider now.
Power, as we all know, is a critical factor for all data centers and is also one of the largest operating costs. When evaluating power for a potential site, the team is closely investigating more than just the current power state. A thorough review is conducted on the transmission and distribution power and understanding the reliability and redundancy of both. Gaining a full understanding of the current capabilities along with future expansions is imperative.
Since power is the largest cost of operating a data center, a full diligence review of utility costs, tariffs, and reservations fees are essential. Many of the top data center markets are seeing delays in power delivery. With the industry growing at exponential rates, some utility providers are scrambling to keep up with the market demand.
Many of the top cloud providers have turned their focus to renewable energy and sustainability. Historically, this has not been a priority, but the industry is already beginning to see this change — especially in colocation facilities, as customers demand greener facilities.
Network is another key component within the industry. Latency is a big factor here, but diverse carriers, additional entry points to the site, and diverse paths have become important considerations as well.
Geography plays a significant role in data center site selection and covers a variety of criteria, including natural and man-made risks, labor force, development costs, building material costs, and land costs. This area seems to have the most modifications over the years. Some of the risks that were previously viewed as showstoppers are now seen as calculated risks. The tolerance of risks is contingent on the specific project and the individual market. For example, proximity to airports and flight paths — originally deemed intolerable for all data centers — seems to have become less of a priority in markets like Northern Virginia, where several large airports reside.
Economic incentives greatly impact the site selection process too. Data centers have a large amount of capital deployed for each of their developments. Tax incentives can lower total cost of ownership for a project and influence the decision of the next location. These incentives not only affect the company and its capital investment, many of these incentives allow the customers within the facility to take part in the tax incentives as well. As states and counties are recognizing the financial benefits of data centers, new incentives are being passed to entice owners to build their next campus.
The type of data center — colocation, enterprise, and cloud — determines which criteria take priority in data center site selection. What works for cloud data centers is not always going to fit into the strategy for colocation or enterprise sites.
It’s important to strategize and be familiar with the evolving requirements held by the targeted customers and progressive industry. While many customers are going to have similar site requirements, it’s vital to be aware of the differences.
