Ed Ansett, Chairman and Co-founder, i3 Solutions Group, Part of Ramboll, examines the benefits of data centres in business, governments and our everyday lives.
How people use data centres
Data centres continue to evolve, driving innovation and transforming how we live, travel and enjoy our leisure time.
Data centres are the unseen 21st-century utility with which people interact hundreds of times daily – mostly without any awareness that their financial transactions, communication, shopping, leisure and travel are passing through physical data centre infrastructure.
Smartphone apps are becoming the tools around which people build their routines for work, play, family interaction and an increasing number of ‘life management’ activities. Social media is one of the most obvious cases in point. Each interaction, be it a ‘like’ a post or a message creates data uploads and downloads.
The sheer volume of interactions tells its own story. Backlinko statistics show that Facebook has 3.03 billion monthly active users, with YouTube receiving 2.49 billion, WhatsApp and Instagram 2 billion each and WeChat 1.33 billion.
In the gaming world, it has been speculated by Elait that a single popular online gaming platform generates around 50 terabytes of gaming data due to its extensive user base. And, according to Statista, the anticipated user penetration rate for video streaming services is forecasted to be 18.3% in 2024, reaching 20.7% by 2027.
Travel has been transformed by the services enabled by data centres such as websites and apps designed to streamline booking (whether flights or accommodation) and make trip planning easier and more efficient.
For example, booking.com amassed approximately 556 million visits in 2024, with tripadvisor.com and airbnb.com receiving roughly 176 million and 101 million users respectively, as reported by Statista.
Beyond the booking of trips and holidays, travellers have greatly gained from GPS and its related apps, which require large amounts of data centre storage and processing power. A National Institute of Standards and Technology-sponsored study estimates that GPS has generated around $1.7 trillion in economic benefits for the USA. What’s more, digital translation tools and apps bridge language barriers, facilitating communication in diverse travel settings.
Businesses and consumers have both benefited from the increasing popularity of online reviews and recommendations.
The popularity of fitness apps soared with a user base of 368 million in 2023 with the apps being downloaded over 850 million times. Fitness apps and wearable devices track physical activity, provide workout routines and promote overall wellness through personalised guidance and monitoring. According to Business of Apps statistics, the fitness app industry saw a significant surge, generating a revenue of US$3.58 billion in 2023 thus marking a 9.1% increase from the previous year.
What many of these services have in common is what is commonly known as ‘the cloud.’ According to a recent study by the Institute for Business Value (IBV), 97% of enterprises have either piloted or integrated cloud into their operations.
How data centres benefit society
Data centres are fundamental to the digital infrastructure that powers modern life, from daily communication and entertainment to critical services like healthcare and finance.
Tools such as video conferencing, cloud storage and collaboration software make remote-work setups possible, allowing for flexible hours and a healthier work-life balance. This helps the company as well as the individual: a Connect Solutions survey found that 77% of individuals who work remotely at least a few times each month show improved productivity.
Data centres also help make people more mobile. According to a report from Ericsson, the average mobile data usage per smartphone is forecasted to rise from 21GB in 2023 to 56GB by 2029. Another report by Ericsson suggests that Fixed Wireless Access (FWA) is expected to reach 130EB per month at the start of 2024, with a projected 403EB growth per month in 2029. It is data centres that enable instant communication via email and messaging apps which we have come to rely on in our daily lives.
Our shopping, too, is increasingly reliant on data centres. The e-commerce market is expected to be worth US$6.3 trillion by the start of 2024, with China leading in online retail sales globally. Online sales are predicted to comprise over 21.2% of total retail sales in 2024, with studies in 2023 indicating that 218.8 million US residents regularly made online purchases, according to a report by Artois.
The smartphone has changed society. What is less obvious is that it can only operate as the endpoint device of a vast array of networked data centres.
What data centres do for business
Data centres also facilitate data analysis, meaning data-driven decision-making and better business. But the digital tools powered by data centres are not just a matter of corporate streamlining.
Data centres ensure the security and integrity of financial data. A study by the Boston Consulting Group found that 43% of customers are willing to switch banks due to a disappointing digital experience – highlighting the importance for Fintech companies of using modified technology.
Across the global financial markets high-frequency trading, algorithmic trading, risk analysis and other computationally intensive financial operations rely on the support of data centres, which also help financial institutions comply with regulatory requirements such as GDPR.
Work:
- Digital banking: 30% of banks have undergone a Digital Transformation report successfully implementing their digital strategy according to a report from McKinsey
- Data analysis: Digital tools enable organizations to gather and analyse data, leading to data-driven decision-making and improved business outcomes. Statista predicts by 2025 global data creation is projected to grow to 180 Zettabytes
- Global reach: Digital platforms enable businesses to reach global audiences, expanding market opportunities and facilitating international collaborations
Healthcare is becoming increasingly digital and so increasingly relying on data centres. They enable the secure storage and analysis of health records and imaging data such as MRI scans and X-rays. Data centres are integral to a hospital’s infrastructure as well as day-to-day management – the average hospital generates 50 petabytes of data annually, with healthcare data increasing by 50% per year, according to Becker’s hospital review.
As for individual healthcare, it is the telemedicine services, which depend on data centres, that enable remote consultations with healthcare professionals, improving access to medical advice and reducing healthcare barriers. Yahoo Finance has projected the value of the global healthcare predictive analytics market is set to hit US$34.1 billion by 2030, growing at a Compound Annual Growth Rate (CAGR) of 20.4% from 2024 to 2030. The UK’s NHS App has surged to nearly 28 million users, marking a substantial increase from approximately 2.2 million users in September 2020.
Data centres are also key to the transportation industry, whether supporting the real-time tracking and monitoring of vehicles in delivery services or processing and analysing data from traffic sensors, cameras and GPS devices to reduce congestion and improve traffic safety. This will play an important role in autonomous vehicle innovation, a market which will amount to US$27 billion by 2025, according to Omdia.
Autonomous vehicles will rely on data centres for the analysis of sensory data in predictive maintenance. NVIDIA DRIVE, for example, is a system for the creation of secure autonomous vehicles which combines data centre hardware and software.
Digital media content is delivered with low latency and high reliability to its users worldwide thanks to the content delivery networks (CDNs) supported by data centres. The vast amounts of user-generated data from social media and streaming platforms which is processed by data centres provide content creators and marketing strategists with useful information about user behaviour, preferences and trends.
International Data Corporation (IDC) predicts that this user-generated data will continue to grow at an annual rate of roughly 21% and exceed 221 Zettabytes by 2026.
IDC network functions virtualisation infrastructure (NFVI) will grow from US$12.9 billion in 2022 to US$27.3 billion in 2027 – and, in hosting telecommunications equipment, including servers, switches and routers, data centres are key to supporting those voice, data and video communication services.
Data centres also support Edge Computing solutions for low-latency applications as well as the rollout of 5G networks by providing centralised data processing and storage. According to Business Wire, North America will host over 335,000 5G small cells as Communications Service Providers (CSPs) by 2025.
Disaster Recovery, on which telecom companies spend 2-4% of their telecom budget (as estimated by Numeric Futures), is another domain of data centre support for the telecommunication industry. Data centres ensure the continuation of telecommunication services through backup systems and recovery plans which minimise downtime and maintain service reliability.
The most high-profile impact of data centres on business is the AI revolution. Much has been written about AI, data centres and energy requirement forecasts. The AI software market is going from strength to strength. In 2022 the AI software sector was calculated to be worth US$328 billion. According to a report from Blend, by 2029 the market is expected to be worth approximately US$1.3 trillion – almost as much as the entire IT industry is today.
What data centres do for government
Governments across the world are using data centres and cloud technologies to modernise services and meet the evolving needs of citizens and businesses.
The US, for example, has embraced cloud computing through the initiative Cloud First Strategy, which encourages agencies to prioritise cloud solutions for IT deployments. A similar initiative, the European Cloud Initiative was launched by the European Commission to promote cloud adoption, data sharing and digital innovation across EU member states.
Through the UK’s Cloud First Policy, several UK government departments have moved their services to cloud platforms (such as Amazon Web Services, Microsoft Azure and Google Cloud Platform) to improve scalability and efficiency. India’s Digital India campaign aims to do the same by transforming government services through cloud computing, data analytics and e-governance platforms.
Japan’s Smart Cities Mission, focus on leveraging data analytics and the Internet of Things to improve citizen services and keep urban development sustainable. The digitalisation of government services is increasing and accelerating.
Conclusion
Data centres have entered the public consciousness. Unfortunately for the sector, this has mostly been through media coverage that, with some justification, primarily focuses on the cost of energy and natural resources required to build and operate this new breed of 21st-century utility infrastructure.
And just as increases in demand do not absolve the energy industry of responsibility for providing clean, sustainable power (with which data centres are intrinsically linked) so the data centre industry must face the demand curve for digital services as a challenge by taking responsibility for communicating its benefits while accepting and continually tackling and reducing its environmental cost.
