Key Trends in Data Center and Cloud Services for 2024

As we progress through 2024, the landscape of data centers and cloud services is undergoing transformative changes. Through extensive conversations with our customers, suppliers, and thorough research in the marketplace, we have identified key trends shaping the industry. This blog post aims to equip IT leaders across diverse industries with the knowledge to navigate and leverage these developments effectively.

The Evolving State of Colocation

AI-Driven High-Density Demands

Artificial Intelligence (AI) is revolutionizing enterprise IT infrastructure, significantly increasing high-density computing demands. The need for High-Performance Computing (HPC), AI, and GPU workloads is causing a supply shortage in data center space, necessitating innovations like liquid cooling in high-density deployments.

Migration from On-Prem to Colocation

Despite the rise of cloud solutions, a substantial 47% of enterprises still maintain on-premises infrastructure. This trend is driving a steady migration towards colocation, where enterprises find a balance between cost efficiency and performance reliability. Hyperscalers are also rapidly acquiring available inventory in key global markets, further impacting the supply and accessibility for enterprise clients.

Cloud Services: Current State and Challenges

Licensing Changes and Cost Optimization

The recent changes in VMware’s licensing model by Broadcom are compelling businesses to reassess their hosting strategies. This shift is prompting a move towards optimizing cloud costs, as hyperscale consumption costs, particularly for storage, are driving trends in cloud repatriation and transformation.

Talent Shortages in Cloud Engineering

There is a notable scarcity of skilled cloud engineers, which is pushing enterprises to rely more heavily on managed and professional services. This talent gap highlights the need for strategic partnerships with service providers who can offer the necessary expertise and support.

Predictions and Strategic Moves for 2024

Proactive Space Acquisition

Enterprises are increasingly buying data center space ahead of time to lock in supply and manage costs predictably. Secondary data center markets are gaining traction over premium cloud-adjacent locations like Ashburn, Silicon Valley, Portland, and Chicago.

AI and Colocation Demand

AI will continue to drive colocation demand, particularly from enterprises hesitant to place critical workloads in the cloud. This trend, combined with data center scarcity and VMware’s licensing impacts, is propelling the adoption of Bare Metal and Infrastructure-as-a-Service (IaaS) solutions.

International Expansion

The data center and cloud market is expanding internationally, with growing demand for both data center and cloud services in new regions. Enterprises are exploring opportunities beyond traditional markets to meet their expanding global needs.

Focus on Cloud Savings

Cost efficiency remains a major focus, with a growing interest in Storage-as-a-Service (StaaS) models. Enterprises are also investing in 100G to 400G interconnections to support higher capacity workloads and ensure robust performance.

Security and Compliance

As industries like financial services and healthcare migrate to the cloud, the importance of cloud and application security is becoming paramount. Ensuring compliance and protecting data are critical priorities that will drive demand for advanced security solutions.

Preparing for the Future

The trends we’ve identified underscore the dynamic and rapidly evolving nature of the data center and cloud services landscape. For IT leaders, understanding these trends and strategically planning for their implications is essential. By proactively addressing high-density demands, optimizing cloud costs, navigating talent shortages, and securing data, enterprises can position themselves for success in 2024 and beyond.

We invite you to reach out to our team at CCG for tailored advice and strategies to navigate these trends effectively. Let’s collaborate to turn these insights into actionable plans that drive innovation and growth in your organization.