Published on October 29, 2023, 9:27 pm

  • Data Center Transformation Market to Reach $15.45 Billion by 2026
  • The data center transformation market is projected to reach a value of US$15.45 billion by 2026, with a CAGR of 12.88%. This growth is driven by the need for data centers to modernize and increase efficiency while reducing costs. One of the main challenges is minimizing power consumption and improving cooling efficiency. Key trends include the colocation of data centers with major cloud players, placing workloads strategically, opportunities for new market players, and the continued relevance of on-premises data centers. It is crucial for CIOs and IT professionals to stay updated with these developments and adapt their strategies accordingly.
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The data center transformation market is projected to reach a value of US$15.45 billion by 2026, with a compound annual growth rate (CAGR) of 12.88% during the forecast period of 2021-2026, according to industry experts at Mordor Intelligence[^1^]. One of the driving factors behind this growth is the need for data centers to modernize and increase overall efficiency while reducing operational costs.

A significant portion of the operational costs for data centers comes from the energy required to power and cool the extensive amount of equipment housed in these facilities. Ciena, a networking systems, services, and software company, estimates that as much as 40% of total operational costs can be attributed to energy consumption[^2^]. To address this challenge, data center operators are looking for ways to minimize power consumption and improve cooling efficiency.

The rapid growth of the data center market has been recognized by industry leaders like Kei Furuta, President of Digital Edge[^5^]. As more enterprises and digital service companies rely on cloud-based solutions, the demand for hybrid infrastructure continues to grow. Furuta predicts that the colocation of data centers with major cloud players will be a prevailing trend moving forward.

In an interview with FutureCIO, Furuta discussed some key challenges that data center operators must overcome in their transformation journey[^6^]. He highlighted the following points:

1. The evolving nature of data centers: The data centers of today differ greatly from those of previous years due to advancements in technology and the increasing emphasis on digital transformation.
2. The impact of digital transformation: Over the past decade, digital transformation has reshaped how businesses operate and how IT supports their operations. This shift has led to changes in data center requirements.
3. Emerging trends in data center evolution: Furuta believes that CIOs and IT professionals will focus on placing specific workloads and infrastructure strategically to enhance customer experience and minimize risk exposure.
4. The trend of colocation: Despite the growth of cloud services, Furuta sees the continued relevance and importance of colocation as a way to optimize data center operations.
5. Opportunities for new market players: The expanding data center market creates opportunities for new entrants to bring innovative solutions and services to meet the evolving needs of businesses.
6. The future of data centers: While Gartner predicts that more workloads will move to the cloud, there will still be a role for on-premises data centers in supporting systems that are economically efficient or unable to migrate to the cloud at present.
7. Potential risks: Furuta acknowledges the potential risks associated with market trends but believes that informed decision-making can help mitigate them.
8. Highly distributed workers and data-intensive applications: According to IDC, digital infrastructure architectures and management strategies optimized for highly distributed workers and data-intensive applications will support business success in the future.

It is clear that the transformation of data centers is an ongoing process driven by technological advancements, changing business requirements, and evolving customer demands. As we move forward, it is crucial for CIOs and IT professionals to stay abreast of these developments and adapt their strategies accordingly.

[1]: https://www.mordorintelligence.com/industry-reports/data-center-transformation-market
[2]: https://www.ciena.com/insights/articles/Twelve-Mind-blowing-Data-Center-Facts-You-Need-to-Know.html
[5]: https://www.linkedin.com/in/kei-furuta-7892371a/
[6]: https://futurecio.tech/podchats-for-futurecio-the-digital-transformation-of-the-data-centre/

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