When "Dark" NOCs are a Good Thing

Not so long ago, a phrase such as "dark network operations center" might have been a huge problem, implying the NOC has gone down. These days, some use the phrase in a different way, to denote an automated NOC.

“Zero touch” operations have been a desired process goal for most connectivity firms for many decades.

The "dark" network operations center is one expression of the desired outcome. It implies an operation whose surveillance capabilities are so advanced the NOC does not require people to monitor what is going on.

To be sure, automation and other ways to  reduce friction and manual processes generally are desired in virtually all data center and communications network operations and processes these days

Beyond that, the same general push towards automated operations arguably applies to most other retail-related or end-user related processes. 

Websites and customer self-provisioning are expressions of those objectives. A frictionless business might use artificial intelligence or machine learning to achieve:

• 100 percent efficiency and knowledge of buyer demands, preferences, and tastes

• complete understanding, in real-time, of the state of a firm’s supply chain

• as-good-as-can-be-expected employee productivity, based on knowledge of actual behavior

• full effectiveness of all information technology systems, devices, and software

• real-time knowledge of any legal or regulatory compliance issues

• robust feedback loops and intelligence gathering that aids in the development process for new products and features

Data Center Value Now Hinges on Connectivity

In the cloud era, when remote computing is the norm, processing and storage have value only when end users and content, app or platform suppliers can reach each other. Hence the need for robust data center connectivity to the internet and IP networks generally. 

Sustainability as Storytelling

Data centers spend quite a lot of money on electricity and power, so reducing consumption makes excellent business sense. But “storytelling” about sustainability also is aimed at regulators who need to be pacified, as well. 

Operating costs aside, data centers need to assure potential regulators that they are doing everything they can to reduce carbon footprint and energy consumption. The trick is to do so without undue damage to the operating business and financial performance. 

source: Eaton 

The point is that all sustainability, diversity or inclusion goals have an implied cost. The trick is to succeed without sacrificing basic business performance. 

It is the same sort of fundamental logic CxOs have to apply to the rest of their operations. Those information technology initiatives that promote and protect the current business get deployed first. Other initiatives that promise benefit, but over a longer time horizon, are deployed in a measured way.

Initiatives that promise future benefit get less attention and funding. Sustainability (energy consumption and carbon footprint) are most often somewhere in that middle ground, unless regulators threaten to make it an immediate business issue. 

source: Eaton 

When that happens, the financial impact of compliance on the business becomes secondary. Data centers simply must do enough, and spend enough, to convince regulators to leave them alone.

LAN Versus WAN Traffic Volumes: 80-20 Rule Probably Still Holds

Historically, more data has moved on local area networks of all types than across public and private data networks. That was true in the client-server era and arguably remains true in the cloud computing era. Even looking at consumer data consumption, which one might arguably claim is 80-20 in favor of WAN-delivered content versus local on-premise data sharing, most of that end-user-consumed or sent data is over private Wi-Fi--hence local area networks--even if the access connection implies that most data is device to cloud and cloud to device.

Given wide use of Wi-Fi as the LAN medium, device-to-cloud and cloud-to-device data transfers usually feature nearly-identical amounts of data movement "across the LAN" (Wi-Fi) as "across the WAN" (device to cloud to device).

The point is simply that growth of public network data volumes is a reflection of internet app use overall, and hence derivative of that use. That, in turn, has made data centers the focal point of data transfer requirements.

By some estimates there are 8,000 data centers globally, looking primarily at public (multi-tenant) and other large data centers supporting cloud computing. Of course, that only enumerates the big public and hyperscale data center sites. Forecasts suggest we are headed for more than 1,000 such centers by perhaps 2026.  

If we include all private enterprise and other entity data centers, there could be as many as seven million data centers operating globally. We sometimes forget how those facts have shaped global data networks. 

Some 50 or 60 years, global data traffic largely moved between telephone company central offices. Data network traffic was logically and often physically distinct, moving between private data centers on dedicated facilities and logical networks. 

source: Cisco 

These days, data moves between data centers and to end users of data from data centers. Central offices still function, but their contribution to volume is negligible. 

source: Statista 

Electricity consumption is one example of footprint, but the bigger implication for much of the connectivity business is the shaping of data communications volume. Traffic volume moving between data centers is just about equal to data served up to, and coming from, actual end users globally. 

Internet workloads in the cloud computing era drive traffic across networks, both between data centers and to end users who are the ultimate consumers. Far more traffic moves within each data center. 

source: IEA 

Edge computing might eventually shift some traffic off wide area networks and confine it locally. Just how much impact edge computing will have on WAN traffic is hard to determine right now. It might be quite fair to predict that cloud WAN traffic will continue to grow even if edge computing moves some workloads off remote data centers.  

At a high level, traffic moves between places where internet use is highest. Up to this point, that has meant east-west between Europe, North America and Asia. South-to-South and Europe-to-Africa are growth areas.

How Big an Issue is Macro Economic Uncertainty?

Challenging is the way some might characterize 2022 data center industry trends, if looking at issues such as sustainability or security, mergers and acquisitions or capacity issues. Growing investor demand also has boosted asset prices, with predictable impact on transaction markets. 

Macro economic conditions are another mattrer. If economic activity contracts, dafa center services demand shouild see some negative pressure. The issue is that nobody seems to have a clear view of where we are or where we are headed, in that regard.

So far, edge computing has been arguably less controversial, as it drives a minimal amount of revenue for data center providers at the moment. Sure, it is coming, but the revenue impact remains slight, so far.

Others will point to steady demand growth as positives, even if 2022 saw headwinds in terms of growth rates. 

source: Statista   

But economic conditions probably are weighing on the business, in addition to supply chain issues, war, inflation and economic recession fears. In short, the macro environment is volatile. 

source: Cushman Wakefield 

How much an issue macro economic issues might play is a bit unclear. Underlying demand growth might be the key trend, but economic slowdowns will affect spending by enterprises on information technology. And technology suppliers seem to be preparing for more-challenging conditions in 2023. 

Hyperscale app providers are reducing headcount, which provides some evidence of their expectations about their own fortunes in the near term. But uncertainty might be higher than usual as monetary officials battle high inflation with higher interest rates intended to slow the economy down, raise unemployment, reduce asset prices and wage demands under conditions that seem in some ways stubbornly resistant to those policy moves. 

So to the extent that macro economic conditions matter for the data center business and other industries in technology and communications, asset trends before and after any typical recession provide something of a Rorschach test: what do you see in the economic picture? 

Perhaps more to the point, where in the economic cycle are we? In recession or pre-recession? And how deep might any recession be? How likely is a “soft landing” that breaks the inflation cycle without plunging economies into negative growth?

source: Bloomberg, Yahoo 

 Uncertainty ls the watchword in financial markets at the moment and volatility is the result. How much that can, or will, affect data center markets also is a bit unclear. 

Cloud Repatriation Partially Explains Hybrid Cloud Growth

“You’re crazy if you don’t start in the cloud; you’re crazy if you stay on it,” Andresssen Horowitz has said, talking about company use of public cloud computing. So observers have talked for some time about cloud repatriation, the shift of workloads from public cloud back to private cloud. 

Workload migration back to private cloud should not really come as a surprise. In virtually all other areas of enterprise information technology, total cost of ownership changes as volume grows. When any workload is light, buying a service almost always costs less than when workloads are heavy. 

That is why hosted voice services offer value to smaller businesses and entities: the cost of renting lines generally provides higher value and lower cost than owning a business phone system. But in high volumes, the cost of renting lines will exceed the cost of owning a phone system. 

The same trade off arguably exists for virtually every other IT product. The economics favor renting at low volume and owning at high volume. So we see the paradox: public cloud computing spending seems to climb every year, but enterprises also are moving some workloads back to their own private clouds.

source: Verified Market Research

That is why forecasts for hybrid computing also are predicted to increase.