Data centre network trends for 2023

Author: Beatrice

By Andreas Rüsseler, CMO, R&M

The need for easily operable, efficient infrastructure continues to drive demand for (hyper-) converged data centre solutions. Drivers include a fast-growing need for colocation and managed services. The global data centre market size is estimated to grow by $615.96 billion from 2021 to 2026, states a recent report from Technavio. Quadintel predicts a value of $6.0 billion by 2028. According to Research and Markets, the global data centre market is forecast to grow by 73% over the next four years.

This growth is based on familiar factors, such as a rise in streaming, remote work and learning, analytics, IoT, machine learning, AI and digitisation of industrial and business processes. What’s more, a growing number of small and medium enterprises are increasingly adopting digital technology. Data Centre as a Service (DCaaS) is widely seen as the next step from Infrastructure as a Service (IaaS).

Driven by bandwidth demand, 100G and 400G might be standard sooner than we think

As the move to 400G/800G continues, data centres are evaluating infrastructure and determining its future-readiness. 40G/100G require eight fibres in parallel pairs, but higher speeds require 16 or 32 pairs, which further boosts cable density. Data centre architectures are rapidly moving toward spine-leaf and fibre-dense mesh networks, and EoR/MoR and ToR solutions that help simplify data centre network and deliver higher capacity. Smart migration paths, high-density-friendly products, preconfigured solutions and monitoring/asset management will be needed to support 400G/800G. As racks become increasingly densely packed, cables become more difficult to manipulate, and it becomes harder to see what you’re doing. This is boosting the need for solutions that significantly reduce handling and installation time and guarantee functionality, such as pre-term cabling and new push-pull fibre connector types. Preconfigured cabinets fitted with power, cooling, security, and connectivity that allow infrastructure elements to communicate offer a neat solution for modular data centre approaches.

Data centres are joining the convergence trend

Countless applications require real-time data processing on-site or close to where the action is in order to realise the required speed and reliability. Hybrid data centres can provide this by offering a combination of virtual, physical (on premise), and cloud infrastructure. Depending on their needs, businesses can use edge data centres combined with main and local data centres. This introduces considerations related to infrastructure compatibility, energy, modularity, management and security. Latency-related drivers such as 5G and IoT will push further growth in this area. On-premise physical servers are converging into virtual network-based data centres, supported by multi-cloud computing developments. Today’s data centres communicate with multiple cloud, on-premise and edge. Furthermore, digitalisation is driving the ongoing convergence of IT and operational technology. Edge data centres often end up in areas where fewer trained support staff are available. Furthermore, smaller data centres might not have dedicated managers for facilities, IT, or infrastructure. Automated workflow can guide technical staff through processes and make MACs easier.

Unlike copper, fibre allows data centre operators to migrate to higher speeds relatively quickly and easily. Local networks can establish long-distance connections via a fibre backbone providing fast, high-capacity connectivity between data centres, edge data centres, and end users. Some data centres are even developing their own optical point-to-point optical networks to realise cost savings while accommodating bandwidth growth and increasing flexibility. More enterprise micro data centres are being linked via fibre-based access and backbone networks. To realise the required speed and reliability, countless applications require real-time data processing close to where the action is. Hybrid data centres can provide this by offering a combination of virtual, physical (on premise), and cloud infrastructure. Depending on their needs, businesses can combine edge data centres with main and local data centres. This approach introduces vast scalability and flexibility.

As data centres become more complex, provide more functions, and demand greater flexibility, up-to-date, accurate knowledge of available infrastructure is a must. The ability to demonstrate the lifecycle of data centre assets, such as switches or servers, for compliance purposes is also essential. Operators want to know how fast new services or functionalities can be switched on, and that these will work as intended right from the start. Installation managers also need to be absolutely sure each port is connected exactly how they think it is to prevent security issues.

Data centres have become far more energy-efficient

However, the growing use of data centres means that they still consume vast amounts of power. The market for data centre power is being driven by the growing popularity of cloud computing. According to Cisco Systems, cloud data centre IP traffic will hit 19,509EB per year by 2023. For traditional data centre traffic this is expected to be 1,046EB per year. The global data centre power market size was valued at $11.2 billion in 2021, and is projected to reach $24 billion by 2031, according to Allied Market Research. Power consumption of network equipment is being closely monitored.  Impact of data centre builds or expansions on local power grids may also become a key factor in planning approvals. As more private equity and government funding is being raised, the demand for demonstrably environmentally friendly and energy-efficient solutions is paramount. 

Worldwide, organisations are working on reducing or eliminating their CO₂ emissions with more energy-efficient infrastructure and best practices. This requires ongoing measurement of energy usage, and factors such as temperature. Furthermore, besides traditional divers such as shortening mean-time-to-repair, predictive maintenance, energy efficiency and optimising utilisation, data protection is now also an important consideration for DCIM. By 2025, global data generation should exceed 180ZB – an annual growth of 40%. This increases vulnerability to security breaches, making monitoring of physical infrastructure and ports essential. According to Future Market Insights, the global DCIM market will reach $13.5 billion by 2032, an increase of $2.8 billion in 2021. Global DCIM market revenue is estimated to hit $10 billion by the end of 2031, states Research Nester. As more functionality is moved to the cloud, we’re also seeing more cloud-based DCIM systems are appearing. A key driver for DCIM is the need for information required to forecast capacity requirements. 

FTTH is no longer the only fibre driver

As all communications networks continue to converge onto a single, unified fibre backbone, data centres are helping drive fibre rollouts. AltNets, incumbents, and governments are continuing to invest, and demand for fibre cable will remain consistently strong. According to Future Market Insights, global fibre revenue will reach a valuation of $20,641.8 million in 2022 and US$ 53,898.7 million by 2029. Reportlinker figures indicate that the global FTTx market is projected to reach of $24 billion by 2027, from $12.9 billion in 2020. By reusing infrastructure in smart ways, such as sharing networks, service providers will be able to reduce operating costs.