Understanding the Irish Data Centre Ecosystem

We are in the midst of the Fourth Industrial Revolution, where a blurring of the boundaries between the physical, digital, and biological worlds is occuring. Data is the engine of this revolution, similar to what steam was to the first Industrial Revolution nearly 300 years ago. Article by Garry Connolly, Founder of Host In Ireland.

Data and digital tools are enabling new types of innovation, communication and creativity. Where would we be without data over the last few years? Zoom calls to friends and family, virtual classrooms for remote learning and online shopping to clothe and feed us have all been critical components of our shared global experience.

The Growth of Data and the Centres

In 2020, every person in the world generated 1.7 megabytes of data per second. For critical industries, such as healthcare, an exponential amount of data is being generated every day. The compound annual growth rate in healthcare data will reach 36% by 2025, making it the fastest growing industry in terms of data generation. 

All of this data needs to live somewhere and that somewhere is a data centre. However, there is still much that is misunderstood about these buildings. Data centres are sometimes thought of as secretive and austere grey “boxes’’ that are disconnected from their local communities. There is a misperception they add little value to the communities they reside in despite the economic benefits they provide. 

A data centre is so much more than a building on the side of the road. It is the heart of a digital infrastructure ecosystem that touches dozens of different industries. Everything from construction, real estate, engineering, architecture, telecommunications, energy, software, IT hardware, security, legal, marketing, finance and more. It’s not just about what happens within the data centre, but also the critical role data centres play supporting their customers who come from every industry, including medical, research, automotive, manufacturing, financial services, travel and many more.

From Floppy to Fibre

Ireland has had a six decade relationship with “data” and a decade plus relationship with the “centres”. From mainframes in the 1960s to world-leading software exports via floppy disk in the 1990s to data exports via data centres and fibre today. Irish companies have a long history supporting and partnering with global multinational organisations. Nine of the top ten global ICT companies have a home in Ireland as do more than 1,000 data-driven digital infrastructure organisations, which have grown up alongside the global tech giants. Through this experience, the knowledge acquired by Irish companies has helped Ireland evolve as a leading data hosting nation, as well as a supplier of skills and services needed for data’s global expansion. 

Benefitting the Irish Economy

That translates to a real economic benefit for the Irish economy. According to Enterprise Ireland, €2bn of global Irish sales exports can be attributed to data centres. This year, in 2022, will be the first year where export of services and products related to data centres will be larger than the domestic spend of €1.68bn. This includes exports from construction and digital technology firms, both of which export a total of €2.89bn and €1.53bn, respectively. IBEC’s Cloud Infrastructure Ireland group also estimates the technology sector, which is underpinned by the data centre industry, contributes €52 billion to the economy and employs approximately 150,000 people. All of which is happening amongst a very active global data centre market. In 2021, deal activity in data centre infrastructure reached unprecedented levels, with transactions more than doubling to US$59.5 billion.

Exporting I.R.I.S.H.

What has made Ireland an intrinsic home to digital infrastructure and Irish companies so successful? There are common threads that run throughout companies who work from and within Ireland no matter how big or small they are – Ingenuity, Relentlessness, Integrity, Strength and History – I.R.I.S.H. But being I.R.I.S.H. is not about nationalities, but rather how and why digital infrastructure coming from Ireland – with global and Irish companies – plays a unique role around the world. This ecosystem has been built on the 60 years of knowledge and experience accumulated by Irish companies supporting Foreign Direct Investment (FDI) companies both domestically and globally over the years. 

An ecosystem at its most basic biological definition consists of organisms and the physical environment with which they interact. A business ecosystem is typically defined as a network of organisations involved in the creation and delivery of products and services. For an ecosystem to flourish, cooperation and competition – or “co-opetition” – needs to exist. A diverse group of partners all interact and collaborate to bring the most innovative ideas and products to the forefront and raise the playing field for the industry as a whole. 

This ethos has been at the heart of Host in Ireland since our inception. Although many of our partners are competitors, they have historically come together as a collective to promote the capabilities of Ireland as a centre of data excellence. Today, many of our partners are location agnostic and building robust businesses from Ireland across Europe, the Middle East, and making inroads to Africa and the rest of the world. Given the fact the data centre market opportunity in Europe is expected to grow to $66B by 2030, and the domestic Irish market represents 10% of that opportunity, the focus is now just as heavily focused on promoting Irish companies in the global data centre market. 

What’s Next

There’s no doubt the Irish data centre industry is facing tough challenges ahead. Power availability and sustainability are at the heart of every discussion. The de facto moratorium on data centres in the greater Dublin area is going to force changes to the industry. While operators will face limitations, continued growth is still to come. Many of the current projects will continue to be completed. Existing facilities will refresh equipment and retrofit buildings to become more energy efficient. The scrutiny on sustainability will drive a meticulous approach to creating sustainable solutions on everything from equipment manufacturing to construction to operations. All of which will see Ireland continue as a major data centre cluster in Europe. 

There is experience to fall back on as well. For construction service companies – builders, contractors, engineering, professional services, infrastructure suppliers – the 2008 economic downturn created a necessity to diversify their business. As they were evaluating how their breadth of knowledge supporting pharmaceutical or semiconductor companies created a unique selling proposition, the burgeoning data industry was seeing the arrival of multinational hyperscale operators in Ireland. By taking that same approach, there is a tremendous opportunity ahead for the Irish data centre ecosystem as it confronts today’s challenges. 

© Civil & Construction 2023