The biggest changes in the cloud and data centers in 2023

14.06.2023 920 3

Martin Deshev

The cloud and data center markets are often viewed as the same thing. Whereas both are separate and very different despite relying on each other a lot. The cloud can’t exist without data centers and cloud is a big revenue stream for the data center market.

We’re already almost halfway through 2023 and it feels like it passed by in the blink of an eye. The year so far seems relatively calm considering the previous three. Yet, it has its fair share of challenges and changes that are happening in all markets. The same is valid for the cloud and data center segments, too. We will take a look at both of them together as a lot of the changes and challenges are related and shared between the two at the same time.

Some of the challenges aren’t new. They are more like a continuation of what’s already being worked on, b.ut there are some new realities that are also coming in and needing attention. Thus, cloud and data center operators must tackle them at the same time which can make achieving the desired results even more challenging. Let’s see what’s happening in the worlds of the cloud and data centers.

The market is still dynamic

Despite all the economic challenges, the cloud computing market is still doing quite well – especially some regions; for example, IDC forecasts that the India public cloud market will grow to $17.8 billion by 2027 at a CAGR of 23.4%. The main reasons are familiar and similar to in other markets. Whilst the pandemic has passed, its effects are still looming. One of them is the fact that many companies and organizations realized the potential and benefits of digital transformation and as such are now racing to complete the process.

This drives growth in all areas of the public cloud and related services, IDC notes. The main component is SaaS followed by IaaS. Both segments hold over 40% of the entire public cloud market services in India. The fast adoption and growing interest in artificial intelligence (AI) is also a driving force for the market. Of course, all of this “motivates” the increase in data center expansions and construction, too.

And that’s not all. Some specific sectors of the cloud market are also showing great results that surpass the rest. Reports and Data for example says that the global finance cloud market has been showing robust growth since 2020. This trend will continue worldwide for the next five years between 2023 and 2028. “Key drivers of this growth include the increasing adoption of cloud-based services across various industries and the growing demand for improved operational efficiency and transparency in processes,” says the report. It adds, that “factors such as enhanced security, reduced infrastructure costs, improved compliance, and efficient data management are expected to contribute to the demand for finance cloud solutions and support the growth of the market.”

The cloud loves AI

As mentioned, AI has a strong case within both the data center and cloud segments. AI has a transformational power that can and already does change a lot of niches. Hardware providers are racing to offer specific AI-focused chips and equipment. Nvidia is one of the leaders in this area and the company has been investing a lot of time and resources into it for the past few years. This is now paying off as it has a firm grip on a big portion of the market which recently propelled her to the “Trillion-dollar club” – the companies with market caps above that sum. And it’s all thanks to the interest in AI which drives data center operators to buy specific hardware for their facilities – and that hardware is quite expensive.

AI is also a big seller for cloud services. Big names like Microsoft have already started to offer AI services to the clients of their cloud platforms. Some of these services are very basic and can help optimize regular daily tasks like emails, billing, etc. Others are more involved and use generative AI features (similar to ChatGPT) to help businesses communicate better with their clients, offer personalized services, etc.

AI in the cloud and data centers is already opening up many opportunities and it’s just getting started. This technology is still in its infancy, and it has a lot more potential to develop. That is, if it makes it past two major challenges which have nothing to do with IT: regulations and public acceptance. So far both are mostly skeptical of AI. Institutions are already working on regulatory frameworks to govern the development and usage of AI. People seem to like the idea of having AI helping them with their work, but obviously they don’t want to be fully replaced and end up unemployed. It’s a fine line for AI to navigate and it’s going to be a tough challenge.

Those loud data centers

This is one of those challenges that isn’t obvious or known to most people, but data centers can be quite loud. This is mostly due to their cooling systems which often rely on big fans and other relatively loud equipment. The hardware itself is quiet, but the systems it needs to support it and provide suitable working conditions aren’t.

Meanwhile data centers these days are all about sustainability and reducing all types of pollution, and this includes noise pollution, too. At first glance, noise pollution isn’t the main issue with a data center. Most of the big facilities are far away from neighborhoods for that to matter, and smaller ones inside the cities are usually already well isolated when it comes to noise.

But let’s not forget the people who work in data centers, too. Some facilities can reach 96db sound levels which can cause hearing loss, DataCenterKnowledge reports. That can happen if the person is exposed to such levels for an extended period, which is what happens to workers there. So, reducing noise is needed to provide good working conditions and keep employees happy, healthy, and safe.

There are several ways to make a data center quieter. The cheaper and fastest option is to provide noise dampening earplugs, but of course, other approaches are also recommended. For example, some basic soundproofing, although you would have to be careful with it to not impede cooling. Another method is switching to liquid cooling

where possible. It’s quieter and can be less energy intensive, however this brings its own complcations. There no one perfect solution, but it’s something data center providers should really take notice of.

Sustainability, of course

Sustainability is the good old ever-present challenge. Data centers need a lot of power for all their servers and cooling. Achieving the perfect mix of power efficiency and sustainability though is a tough challenge. This can be achieved through a variety of means, including a mixture of “green” energy sources, optimizing cooling and improving the overall work efficiency of the hardware and software.

Obviously, this is a challenge that’s not going to be done anytime soon. Or maybe even ever. It’s a constant pursuit of improving each and every detail. It has to be so, because the demand for computing power and cloud services will only go up for the foreseeable future. This means data centers will also continue to expand and grow. This will result in an inevitable rise in energy consumption, so each component must be as efficient as possible, to make that rise minimal.

Data center operators are already on top of this and are working on a variety of solutions down to the last detail. Even things like the average temperature in the server room and raising it by a couple of degrees can have a big effect on the overall results. Plus, energy is a big part of the running costs for data centers, so the less of it that’s used and the cheaper it is – the better.

Security is as important as ever

It’s not a surprise for anyone that security is a major priority for cloud and data centers. As more and more organizations use both and rely on them for their entire critical business processes, securing them becomes incredibly important. Threats change constantly and hackers can be very creative, so this forces cloud and data center providers to be very fast and agile with their efforts.

They must combine multiple practices and approaches to make sure their services are as secure as possible. Key practices usually are role-based access control, encryption and zero trust architecture. The last one means that the system assumes not one user, device or network is trustworthy and thus they must continuously validate and verify their permissions and requests. It can be a bit annoying for the regular user, that’s why there are some solutions that automate parts of this process.

Constant monitoring is also important and it’s not only for the activities inside of the network. Data centers need proper physical security, too. AI helps with both aspects to detect cyberattacks and/or physical attempts at accessing restricted areas in the data center. This means constant improvement of systems for them to be able to be up-to-date with the latest trends. Different developments here also force additional changes in services and even regulations.

Cloud and data centers are going to continue to be an irreplaceable part of the digital world, and as more and more aspects of our lives become increasingly dependent on the digital, they will also need the cloud and data centers to be at the top of their game on a continuous basis. It’s going to be a tough challenge, but luckily the IT industry thrives thanks to such challenges.