Data Center Trends and Predictions for 2024 From Industry Insiders

Data center industry trends and predictions for 2024 as we move out of a record year for data center usage, thanks to growing artificial intelligence usage and huge multi-tenancy leaps.

Wendy Schuchart

December 28, 2023

9 Min Read
This photo received fifth place in the voting by members of Photocrowd Image Ian MiddletonPhotocrowdcom
Ian Middleton/

Here at Data Center Knowledge, we take pride in providing vendor-neutral journalism to the data center industry, while also giving vendors fair equal time and space to opine in our Industry Perspectives area. At the end of the year, however, the editors are often delighted by unsolicited and intriguing predictions for the upcoming year from the technology industry – and honestly, some of them are just too good not to share with our readers. 

The truth of this industry is that at one point or another, fantastic, brilliant minds often find themselves working for technology companies – myself included at one time, as I spent over a decade working in software development and business analytics at an enterprise big data company. I really find that perspective valuable, if not occasionally missed by journalists in pursuit of providing unbiased reporting.

With that in mind, what follows are a few intriguing prognostications and musings on 2024 to take in full transparency that they are coming from professionals who happen to also work for companies trying to sell IT services. These pieces are unpaid, unsolicited, and unsponsored – merely a curation that I found genuinely interesting, compelling, and perhaps a little provocative, touching on all manner of data center topics but it won't surprise you that AI and cooling are on everyone's mind for 2024.

Related:Top 10 Data Center Power and Cooling Stories of 2023

Data Center Job Skills Demand a Premium

Pressure on data center operators to upskill: Today the industry is anemic in terms of AI experts. As organizations gain more clarity about how AI is relevant to their business, we can expect they will invest in more AI-related training for their employees. Otherwise, in terms of data center operations, I don’t think that we’ve been experiencing a skills gap or a labor shortage. Due to the massive layoffs in the tech industry over the past year, the labor market is brimming with candidates with experience up and down the stack. (From Holland Barry, SVP and Field CTO, Cyxtera)

Quantum computing will get real:  While full commercial utilization of quantum technologies is likely still a few years away, there are an increasing number of solutions on the market that are solving real-world problems. You’re not going to find a quantum chip in your gaming laptop anytime soon, but in 2024, you should expect more quantum-based use cases to become a reality as this technology moves out of the lab environment and into the data center, where it becomes more accessible to enterprises. (From Holland Barry, SVP and Field CTO, Cyxtera)

Related:Top 10 Data Center Construction Stories of 2023

All AI, All the Time

Edge Adoption will Increase as AI Adoption Increases: To meet the data processing and compute needs for AI, we can expect to see more enterprises shifting their data center strategy toward edge computing in 2024. An edge infrastructure allows the AI computation to happen near the data center at the edge of a network instead of a private data center. (From Utpal Mangla, General Manager at Industry EDGE Cloud, IBM)

The defining element of data center design: Enterprises will learn that not all data centers need to be alike. Traditional data centers are limited in terms of bandwidth, while those capable of running large AI workloads require thousands of GPUs to work at very deterministic, low-tail latency. The future of enterprise data center connectivity requires separate management (aka north-south) and AI (aka east-west) networks, where the AI network includes in-network computing specifically designed for high performance computing, AI and hyperscale cloud infrastructures. (Gilad Shainer, Vice President of Networking, NVIDIA)

Barring the door to bad actors: AI, serving as both a formidable opponent and a valuable ally, will play a critical role in the cybersecurity landscape of data centers by the end of 2024. It will power defensive tools as well as potent instruments for cybercrime. Maliciously-trained large language models, capable of eerily accurate human impersonations, will significantly heighten the risk of social engineering. At the same time, AI will emerge as a deft cyber attacker, adept at uncovering and exploiting vulnerabilities to penetrate and navigate compromised data center networks. (From Aron Brand, CTO of CTERA)

Keep IT Cloudy

Shift toward cloud alternatives:  In 2024, the challenges of cloud computing will begin to eclipse the common sentiment that the cloud is the future, and we’ll see a shift away from non-cloud alternatives. Cloud costs are growing in line with inflation, climate-related data center outages are continuing to increase alongside increasingly severe heatwaves and storms, and cyberattacks are now often targeting the cloud. In response to these liabilities, some companies are making a return to on-premises applications, while many others will embrace edge computing because of increased resilience due to distributed infrastructure, plus the ability to protect apps directly on the edge with web application firewalls. (From Rafael Umann, CEO, Azion)

Slow but steady will win the race of cloud recalibration: In 2023, many organizations experienced the financial pain of having gone ‘all in’ on the public cloud over the previous few years. Now they’re realizing that they must get their arms around it and possibly make some changes, including migrating certain workloads to a private cloud or back to on-premises. (From Holland Barry, SVP and Field CTO, Cyxtera)  

We’ll see continued growth in cloud adoption as data centers look to stay cool. Power consumption has sky-rocketed over the past year due to GenAI adoption, which will only increase over the coming year. Data centers are already realizing the high costs associated with this, including cooling technologies and associated energy costs, not to mention real estate costs. We’re going to see AI continue to stay in the cloud for that reason. (Dirk Naylor, Senior Vice President and General Manager, USA & Global Accounts at WESCO)

Anti-predictions for 2024: While we are seeing a move toward cloud recalibration, I don’t think it’s happening at the volume or velocity that we thought it might, given the complexities involved. But we are starting to see big brands make the move, and they’re providing playbooks and measurable cost savings that other organizations can learn from and follow. It’s moved beyond a theoretical game. Public cloud will continue to grow, but adoption will be more selective in 2024 as organizations increasingly embrace hybrid solutions and cloud-like options, like Bare Metal-as-a-Service (BmaaS), that give them the flexibility and scalability they’re looking for in the public cloud with the cost predictability and control of a private offering.  (Dirk Naylor, Senior Vice President and General Manager, USA & Global Accounts at WESCO)

Greening of the Data Centers

Generating clean energy on-site is becoming a priority to reduce power loss during transmission. In the future, hydrogen might become another option, but it requires government support to be sustainable. Producing hydrogen in desert areas with abundant solar power and establishing hydrogen networks is a forward-looking strategy that can lead to sustainable steel and concrete production. The focus will be on using eco-friendly materials in data center construction. (From Mark Neufurth, Lead Strategist, IONOS)

Hybrid cloud sustainability is no longer a luxury; it’s a necessity As businesses rely more on hybrid cloud solutions for their IT needs, these technologies must contribute to a sustainable future. Data center infrastructure and data management practices will be overhauled to reduce unnecessary resource consumption. This may consist of eliminating hot spots and excess energy usage, enhancing cooling systems, and properly removing electrical waste. (From Monica Kumar, Chief Marketing Officer at Hitachi Vantara)

Computing resources affect the environment. The cloud has accelerated unparalleled innovation in AI. However, all that computing has a greater carbon footprint than the airline industry - up to 3.7% of global carbon emissions. For example, one day of running ChatGPT today costs $700,000, and that figure will only increase. As organizations continue investing in digital services and the cloud, the environmental cost of those services and the ESG policies of hyperscalers will play an increasingly important role in future investing decisions.  (From Spiros Potamitis, Senior Analytics Product Manager, SAS)

Liquid Cooling for Data Centers in 2024

Interest in liquid cooling technologies will rise, but short-term investments will be modest (for now): Air still meets the cooling needs of many implementations, and while the evolution to liquid cooling is certainly inevitable, rapid uptake may still be a few years out due to the upfront investment and complexities involved in deploying these solutions in current data center infrastructure. We’ll see definite growth in this category in 2024 but look for a steeper rise down the road once there is more technology standardization and OEM support.  (From Holland Barry, SVP and Field CTO, Cyxtera)

Liquid cooling will move from ‘futuristic’ plan to an immediate ‘must-have’. And it will become an increasingly important component to any data center design. Doing this right requires a complete data center redesign - so while we’ll continue to see “temporary fixes” over the next year, I predict the hyperscalers will be prioritizing and making the necessary moves to strategically implement liquid cooling into their data center builds. (Dirk Naylor, Senior Vice President and General Manager, USA & Global Accounts at WESCO)

Data Center Growth... More, Bigger, Faster

Technology will continue to outpace data center construction. Data center operators are still catching up from COVID and projects that were simply on hold during the pandemic. Couple that with AI driving a rapid rise in demand and power. 2024 will see data centers sprinting to keep up with AI and its technological demand, including an increase in modular data centers. (Dirk Naylor, Senior Vice President and General Manager, USA & Global Accounts at WESCO)

While we had predicted that data center racks would need more power in 2023, it happened even more quickly than expected due to the rapid rise of generative AI and higher density deployments, as well as more power-hungry general computing (CPUs) coming into the market. And rack density will only go up in 2024. Data center providers will need to leverage advanced cooling technologies and consider new design schemes to keep pace with next-generation technology. (From Holland Barry, SVP and Field CTO, Cyxtera)

Smart sizing the build paradigm: The pendulum for build versus buy is going to swing back to buy in 2024. For most of 2022 and 2023 organizations felt they could save money with a build strategy. But guess what, engineering effort is not free. And it does not have the security or availability of a buy. Hence the build strategy hurts productivity big time. (From Mark Van de Wiel, Field CTO at Fivetran)

About the Author(s)

Wendy Schuchart

Wendy Schuchart has more than a decade of experience writing about the IT landscape and has another decade’s experience working in enterprise IT as a coder, business analyst and software developer.

Before joining Data Center Knowledge she was the managing editor/executive editor at VentureBeat. Her work has been featured in many IT publications, including InformationWeek, Network Computing, Datacenter Dynamics, Green Data Center News, SDX Central and TechTarget. Follow her on Twitter  @wendyschuchart

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