The UK is by far the largest data centre colocation market in Europe, a long way ahead of Germany, which is in itself way ahead of France and the Netherlands – but can we expect this to continue? Is the UK data centre sector still a force to be reckoned with and is the top position in jeopardy following Brexit? James Hart, CEO at BCS (Business Critical Solutions) looks at the future of the UK data centre market.
The digital economy in the UK already accounts for over 7% of the country’s GDP and this upward trend is set to continue following the move to working more from home creating demand for enterprise cloud and Software-as-a-Service (SaaS) utilities as well as e-commerce, social networking, search, streaming video services, gaming and mobile apps that are becoming ubiquitous in today’s society.
With over 250 operational colocation data centres, the UK was already leading the colocation services market and with London, followed by Manchester, Slough, Birmingham and increasingly Wales expected to see increased investment in the near future, the growth is likely to continue for at least the next five years. Added to that are the numerous ‘Smart City’ initiatives going on around the whole of the UK such as Manchester’s Triangulum Project, Future City Glasgow, Bristol is Open and Smart London Together, all creating further home-based demand.
Brexit has created some uncertainty among cloud providers, as although during the Brexit transition period they are subject to the EU GDPR (General Data Protection Regulation) and the UK Data Protection Act 2019, the future rules for data storage and the retrieval of customer data are unclear. This has caused some mainland European companies to migrate their data requirements to Germany, Netherlands, France and other EU locations, but the reverse is also true as UK businesses are relocating their data to UK-based data centres. When you consider that cloud adoption among UK enterprises is over 50% and that leading cloud providers such as AWS, Microsoft, Google, Alibaba, IBM and Oracle already have a presence in the UK, it is clear that the shuffling of data between countries is unlikely to have a major detrimental impact on demand for UK colocation data centres.
However, the availability and sustainability of power supply are a big challenge for all data centre providers across Europe and nearly three-quarters of the respondents in our recent survey cited this as the single most important factor when choosing a new data centre. Frankfurt has followed the lead of Amsterdam in announcing plans to ensure that any data centre development can grow sustainably without consuming too many resources, in particular; power. This presents the unique challenge of accommodating more and more demand for data centres while ensuring there is adequate capacity in an electricity grid that has not been built to sustain such a high demand in a sustainable way. This is an issue across all the leading hubs and is being monitored by the Irish, a big location for hyperscale operators, data centre operators and energy companies as this could provide the blueprint for development across Europe and the UK.
As the demand for data centres increases, a concern among data centre developers, designers, providers and users is the availability of skilled staff, in particular in the fields of design and build. Not only will demand for staff increase as demand for new data centre stock increases, there is a universal expectation that next year will see a fall in the supply of staff. It is true to say that existing staff appear to have taken up some of the challenge, but it is also clear that many data centre businesses are reporting an increase in labour costs and worryingly a large proportion suggest they are having to delay new products and innovations. The upside, in the UK at least, is that more end-users are likely to seriously consider outsourcing options and it is encouraging to see that fewer businesses are struggling to resource the existing workload than in 2020. Perhaps the higher wages and nationwide recruitment drive targeting engineers is beginning to bear fruit.
One thing is for sure, the UK data centre market is thriving due to the increased digitalisation, strong connectivity with other markets and the adoption of advanced technologies, the Internet of Things (IoT). Spend in the UK is already estimated to be over US$25 billion in 2021 and UK PLC has a level of data centre expertise unparalleled in Europe with a development track record that is second to none. This will always be attractive to investors and developers in what continues to be a very risk averse sector.
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