Datacenters Face Double Dilemma Of Supply Issues And A Need For Speed

The datacenter industry is caught between conflicting demands: the pressure to deliver projects faster, while product and skills shortages lead to delays.

These are some of the findings from a report published by UK datacenter biz Keysource, based on a survey of more than 250 IT directors and datacenter professionals.

The company's sixth annual State of the Industry Report claims that companies are spinning three plates: meeting sustainability targets; managing the risks of trying to complete projects faster to meet demand; and delivering to the same standards when facing supply chain and skills shortages.

Despite perceptions that supply chain woes have receded since the days of the pandemic, Keysource found 62 percent of its survey respondents being negatively impacted by product shortages. A similar recent report on the datacenter real estate market found much the same, that completion dates had often been pushed back because of delays in the supply chain.

A desire to rapidly spin-up projects on a relatively short timescale is what is apparently worrying those in the industry most, according to Keysource chief operating officer Jon Healy.

"The pressure to speed up project delivery is perhaps the most concerning finding of the report with 75 percent of those surveyed identifying quality issues which could reasonably have been identified or better managed earlier as a result," he said.

Healy claimed some organizations are now "prioritizing speed above all else" and said this approach is risky, considering the respondents' concerns about getting the correct expertise and advice with the skills shortage continuing to bite.

Respondents also said they'd noticed greater hesitancy in the decision making process, yet once the decision has been made, they then found themselves under pressure to deliver the project more quickly.

One factor that does seem to have changed since last year's survey is budgets. The report notes that budgets in 2022 significantly expanded in response to increased demand and continued digital transformation. This year, 37 percent of respondents indicated that their budgets would either remain unchanged or even shrink.

Keysource's interpretation is that organizations have a better handle on the actual level of investment required, but across the board increases in costs driven by inflation make it more likely there is an acceptance of market constraints on capital spending.

On the skills shortage, Keysource reckons respondents have found they are facing "client side" demand as well as demand from within the supply chain for the same engineers.

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On sustainability targets, 69 percent of respondents said they had a seat at the table when discussing sustainability, while over half indicated they had access to a separate "green budget" to be used for sustainable good, services and initiatives.

Just 17 percent, however, consider sustainability to be a high priority, and fewer than a third said they were making significant progress, with more than half saying there was no strategy at all.

More worryingly, 64 percent of respondents said their organization has not evaluated the carbon impact of existing datacenter services, and 57 percent are not intending to evaluate future investments.

This seems surprising in light of concerns raised over the European Commission's Energy Efficiency Directive, which looks to bring in reporting requirements for all but the smallest datacenters. This may be EU legislation but is also likely to have a major influence on the way datacenters operate in the UK as well.

Despite these challenges, Healy said the capital that has poured into the datacenter market is reflective of its promising returns in comparison with other sectors.

This perhaps echoes an earlier report, which claimed the first half of 2023 was the busiest on record for datacenter takeup in Europe.

Healy claimed the outlook was "very positive for the short and medium term of the industry" but said "regional conditions can quickly change given the influences this sector has from a range of areas such as technology, regulation, energy resources, corporate governance, and a lack of skilled people." ®