Why Modular Data Centers Are the Solution Colocation Providers Need



Colocation data centers are becoming increasingly popular as the demand for off-site data processing and storage increases. But what is the right solution for colocation providers looking to keep costs down, meet demand, make the most of their space and strategize for both the present and the future?

The answer? Modular data centers. 

Considerations Facing Colocation Providers

Companies across the globe are turning to colos to either house the entirety of their computing infrastructure or supplement their on-premises functions.

There are a few major factors currently shaping the industry that colocation providers must consider:

  • Increased demand: The global colocation market size was valued at $44.42 billion in 2020 and is expected to grow at a compound annual growth rate (CAGR) of 13.3 percent from 2021-28. Colo providers must be quick and agile to meet demand and adhere to tight deployment deadlines.
  • Space limitations: Some colocation providers may want to expand their facilities to meet demand, but they are faced with a difficult real estate market in some data center hubs. Regardless of real estate availability and pricing, other colo providers want to add capacity to their existing properties. 
  • Cost concerns: Colocation providers bear the initial construction costs and ongoing costs for facility upgrades and maintenance. To keep rental rates competitive, colo providers must find ways to keep costs down (without sacrificing security, reliability or other priorities) to be profitable. 

Why Modular Makes Sense for Colocation Providers

Modular data centers help colocation providers meet demand and overcome traditional construction challenges. Let’s look at five reasons colo providers should consider modular design for their new data center build or expansion:

  • Scale Faster to Meet Demand

One of the biggest advantages of modular data centers over brick-and-mortar builds is a significantly shorter time to completion. Because modular data centers are built inside a controlled factory environment, these construction projects aren’t subject to variables like weather or staffing issues that can affect standard projects. 

Modular data centers are also fast and easy to install on-site because they’re essentially plug-and-play. They are quality checked and factory tested before shipping, so they are ready to go once they reach the site. Efficient build processes and simplified installation mean you can scale your data center faster and keep up with demand.

  • Keep Project Costs Down

With a modular design, project costs are kept down. In fact, modular data centers offer deferment of 20-30 percent of the costs of a typical stick-built data center. If and when future growth is realized, additional capacity can be installed at that time, making it convenient for almost any organization. Unlike construction projects—during which a variety of variables often lead to expensive and time-consuming change orders that can affect the end cost—you know from the start exactly what you will pay for your modular build.

Modular data centers are self-contained and easy to reconfigure or expand, meaning you can keep project costs manageable by only investing in the space you need right now. Compare that to a traditional brick-and-mortar facility, which requires you to build a facility that is large enough to house all the necessary infrastructure for future capacity needs.

  • Minimize Operating Costs 

It isn’t just project capital expenses you can keep down—you can also lower operating costs when you go modular. Because of their compact size and overall efficiency, modular data centers offer better power usage effectiveness (PUE), keeping operating costs impressively low.

To maximize profitability, colo providers must optimize their facility’s PUE, so this helps them ensure tenants don’t pay too much for overhead costs.

  • Customize the Ideal Solution 

Modular doesn’t mean cookie-cutter. Modular designs are completely customizable, allowing you to create the optimal design for your facility. Choose from numerous options for many aspects of your facility, including rack placement, cooling method and power capacity, distribution and backup. 

This flexibility also means that colo providers can maintain a high level of flexibility in meeting the diverse needs of multiple tenants, helping them attract and cater to companies that may otherwise consider one of your competitors or an on-premises setup.

  • Maximize Space Efficiency

Modular data centers are designed to be compact so that you can fit more in less space. For example, you could use outdoor space near your building, such as a parking lot, to deploy your compact modular data center— eliminating the need to purchase more land or expand your footprint.

When space is limited and real estate costs are high, adding capacity without taking up too much room is a plus.

Embrace the Future with Modular Data Center Design

The colocation market is booming. For colo providers, this market is not only rich with opportunity, but also fraught with challenges. The answer colo providers need is the modular data center—an option that offers numerous advantages over traditional builds, from faster deployment to cost savings and more. 

Want to learn more about how colocation providers can take advantage of modular data center construction? Check out our Modular Colocation: Building Flexible Data Center Infrastructure for the Future webinar.

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