With an end in sight to the major public health measures associated with the COVID-19 pandemic, recovery and renewed development is high on every business agenda.
The data centre sector in the Middle East and North Africa is poised to take advantage of the recovery in economies across the region, as businesses and consumers adapt to new realities, while also looking forward to new opportunities.
With forecasts of significant growth in spending, there is an unprecedented opportunity for the sector to achieve digital transformation goals, incorporate new technologies and build a base of sustainability that will see it thrive into the future.
Growth momentum
According to a recent report from IDC, after a contraction of some 4.9% in 2020, IT spending across the Middle East, Turkey, and Africa (META) will make a return to growth this year, increasing 2.8% to $77.5 billion. Furthermore, spending on digital transformation is set to accelerate in the post-pandemic period, increasing from 25% of total IT spending in 2020 to 37% by 2024.
Within that spending intent, the analyst reports that public cloud services spend will grow 26.7% to $3.7 billion, with SaaS, PaaS, and IaaS spend growing 24.5%, 30.6%, and 30.7%, respectively. Attendant with this is a professional cloud services spend growth to a total $1.6 billion.
The spend is reflective of the growth in demand for cloud services generally, combined with the pandemic effect that drove many consumers and business increasingly online for all manner of services.
Technology opportunity
From a data centre operator perspective, the pandemic has had many distinct effects. Not only is there a growth in demand, but it has been combined with limited access for hands on operations, a general skills shortage and an increased requirement for resilience and availability.
To adapt to the increasing complexities of the industry, data centers and providers are shifting their priorities to meet the unique needs of these facilities who are facing numerous challenges from these growing, complex environments.
Data centre infrastructure vendors, builders and operators are focusing on increased instrumentation, through the deployment of Industrial Internet of Things (IIoT) technologies, to provide greater transparency, insights and controls on all aspects of operations, facilitating the use of sophisticated integrated management systems. The increasing adoption of data centre infrastructure management systems (DCIM), incorporating artificial intelligence (AI) technologies and automation, will allow more efficient operations that will also contribute significantly to sustainability goals. This is supported by the IDC figures on AI spend which predict growth of 23% to top $540 million.
Preventative measures
The general skills shortage in the technology sector across the region, combined with the desire for increased availability and resilience, is also driving renewed interest in preventative maintenance for the data centre. With the new levels of instrumentation available and greater capacity to monitor and manage infrastructure, preventative maintenance will be more effective than ever in reducing downtime, increasing availability and improving total cost of ownership, allowing operators to best leverage what specialist skills are available.
For the required growth in capacity to be met quickly, modular approaches to data centres are being widely adopted, further reducing the demand for skilled technicians on the ground. It is expected this approach will also deliver benefits for energy efficiency and operational costs, while bringing capacity online quicker.
Linking silos
New approaches to enterprise architecture are being adopted too, in the form of cloud-based integrated digital platforms to span silos of data and services. IDC had highlighted siloed initiatives as a potential stumbling block for digital transformation efforts in the region. It had reported that 44% of organisations in the region said their digital transformation initiatives are not integrated, and more than half (51%) highlighted siloed data as a challenge, driven by limited understanding of existing data assets and a lack of enterprise-wide data management. Almost two thirds (62%) of organisations reported concern over siloed technology environments.
Sustainability investment
According to market data firm Arizton, there are 29 announced, planned, and under construction data centre projects in the Middle East and North Africa region, that will be operational within the next two to three years. This is a significant level of investment, reflecting the overall growth and demand trends. However, as has been pointed out by major investment firms, much, if not all, of future investment funds will come with a requirement to demonstrate sustainability in building and operation.
To continue to attract investment in the sector, data centre operators will need to have sustainability at the core of activities, with transparency and standardised reporting. A key factor in these sustainability efforts will be energy supply and consumption. Recent information from market data firm MEED Insight has found that so far in 2021, renewable energy project contract awards in the region have surpassed those for conventional power plant projects.
Power purchase
Building on this momentum, it will be possible for data centre operators to engage in power purchase agreements (PPA) for energy from renewable sources. PPAs will contribute significantly to reducing carbon footprints overall, while driving the development of RES generally in the region, with wider benefits for all from an increased supply of clean, renewable energy.
Challenge and opportunity
Despite challenges such as skills shortages, siloed initiatives, and changing patterns of usage and demand, the advent of new technologies, increasing supplies of renewable energy, and targeted investment, mean that the data centre sector in the MENA region will have the resources and the demand to grow significantly, while building in the latest technologies to achieve new levels of service and sustainability.
As the market for data services becomes increasingly global, the unique characteristics of the region can build a vibrant industry, leading in digital transformation. The widespread availability of digital platforms and services can spur further economic development and drive innovation generally, ensuring a more prosperous future for all.
