Research article

Covid-19: a tipping point for the data centre industry?

As a result of Covid-19, we have seen first-hand the importance of continued network investment, and the exponential increase in companies moving solely to remote working has proved just how fundamental the sector is to keeping the working world afloat

With the enforcement of mobility restrictions to contain the spread of the Covid-19 virus, internet traffic increased substantially. In March, internet service providers (ISPs) reported varying rates of traffic growth ranging from 35% to 90% within the EMEA region. While despite the congestion, the internet has held up surprisingly well overall, the number of outages recorded on the continent rose steadily from March to June and latency increased, as reported by ThousandEyes Cisco.

As connectivity became the X factor for health, education and business continuity, the capacity and the resilience of broadband and data storage infrastructures came to the fore, as never before. The fear of a potential network breakout particularly caught public bodies' attention leading to intervention measures. Mid-March, the European Commission asked streaming providers to cut back on quality definition to avoid infrastructures’ saturation. The Commission also set up special reporting to monitor the internet traffic situation in each member state to be able to respond to capacity issues.

More generally, the Covid-19 situation underlined the importance of continued network investment. In September, the Commission Recommendation on Connectivity, invited member states to work together to accelerate the rollout of 5G and fibre networks. The deployment of 5G technology is calling for some restructuring of the data centre network architecture. Many of the IoT applications that 5G will enable, require a huge volume of data to be processed at the edge to avoid latency and work efficiently. Hence, the need to bring computing power closer to the point of connectivity and the end-user will drive demand for edge data centres in secondary and tertiary markets.

Since the start of the Covid-19 pandemic, the World Health Organization reported a fivefold increase in cyber-attacks on its workforce

Savills European Research

Cloud infrastructures also played an important role in enabling businesses and governments to quickly apply solutions to respond to the crisis. According to Snow Software, who surveyed 250 IT leaders globally in June this year, 82% of respondents said they had ramped up their use of the cloud to enable remote working. Although three-quarters of the poll reported a direct increase in spending on cloud infrastructure services, 66% will continue to use cloud services once employees return to the workplace. Furthermore, 45% of respondents plan to accelerate the pace of their cloud migration. With the unprecedented cloud shift likely to become pivotal for many companies and institutions, demand for cloud data centre facilities will continue to grow for the foreseeable future.

The massive increase in the online population, including children and first-time internet users, opened large gateways for cyber-attackers to exploit. Since the start of the Covid-19 pandemic, the World Health Organization reported a fivefold increase in cyber-attacks on its workforce. European policymakers, including the European Commission, the EU Agency for Cybersecurity (ENISA), the CERT-EU and Europol joined forces to guarantee safer cyberspace. While cybersecurity has always been a major concern for data centre managers, it will certainly escalate into the top operator considerations.

Rising online population, rising outages, government intervention, 5G and edge growing cloud appetite, and cybersecurity concerns are trends that were already well underway before Covid-19. However, the exacerbating factor of the pandemic has brought the data centre industry to a tipping point, which will require rapid restructuring, organisation and coordination amongst all market players.

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