EDITOR ’ S QUESTION

MITCH FONSECA , CHIEF DEVELOPMENT OFFICER , CYXTERA

here are two primary factors driving demand .

First – many organisations are reevaluating their workload placement . Companies that moved to the cloud in droves to support remote work during the pandemic are now facing escalating costs from inefficient workloads , scalability challenges and high egress fees .

Public cloud is great for many things – like early experimentation , DevOps and seasonal workloads that burst up or down . But it ’ s not ideal for steady-state , resource-intensive workloads and can be very expensive for these use cases .

Several analyst firms are predicting a slowdown in cloud spending growth . A recent study indicates that 81 % of IT leaders say their C-suite has directed them to reduce or take on no additional cloud spending . Many companies are starting to move workloads into data centres that can provide the agility and flexibility they are used to in the cloud with greater cost-predictability , performance and control .

The second major driving factor is market fragmentation . Many regions in Europe – for example , London and Amsterdam

– have transmission infrastructures that need upgrades ( which are expensive and time-consuming ) and as such , can ’ t support large-scale data centre expansions . While upgrades are on the horizon , we won ’ t see material changes in these markets until 2025 or 2026 . In addition , in many regions , power costs have risen substantially , in some cases up to 18 – 20 cents / kwH .

Given these challenges , we ’ re seeing data centre interest in second-tier markets , like the Nordics , where power is less expensive and the grid has capacity for build-out . In these markets , data centre operators can often negotiate low-cost , long-term energy contracts , which make them an attractive venue for expansion .

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