What is Data Center Infrastructure? – Data Center Fundamentals

[00:00:00] Speaker 1: All right. Welcome to Hockey Podcast 33. We're continuing our data center fundamentals series. This is our fourth one. Today we're talking about data center infrastructure. David, so all of the things that make a data center what it is. Yes. So if I were to ask you in one simple short phrase, what is data center infrastructure? [00:00:36] David: All of the components that make the data center. No, I mean, this is the brilliant answer. Yeah, no, this is the, you know, the electrical, the mechanical systems that, you know, allow data centers to function properly. And we'll talk about it here in a little bit of how those have changed. But if you're starting in the industry, and this goes back to our intro to our data center fundamentals course that you can get online, you know, these are the things you need to understand at a high level to understand, to grasp how data centers function so that you can, you know, see why the industry is moving around, you know, things like data center design and why these things are changing, you know, data center, like facility size, all these things that come into the envelope of a data center are part of the infrastructure. [00:01:26] Speaker 1: Great. So, you know, when we were talking about this the other day, you said you like to think of this from an outside in approach. I do. So I think, yes, starting with I mean, the extreme outside, like starting with you're at the street view of data center. Yeah. Right there. What's going to be different than, you know, a different type of facility, an office building, a retail building? Like, what are we going to see right off? [00:01:45] David: Yeah. Yeah. I mean, you'll typically see and this is I think we've talked about this before. It's not really within the infrastructure side, but you will see some sort of security perimeter security, like before you get to the building. But I think actually one of the interesting as we kind of work outside in, you know, when I started in like the real estate space, one of the things that drew me to the data center industry was the amount of capital that it takes to to build a data center because of the the expense in the infrastructure. And, you know, if you take the data center facility, that's one hundred thousand square feet and compare that to an office building, it's traditionally like 10 times more expensive to build that data center building than it is the office side. And so it's it's a fast. That's what makes the data center industry really interesting is it's a smaller commercial real estate market, but it's so much more it's there's so much more money in it. So, you know, you'll typically see the security. And then as you, you know, kind of work your way in, the first thing you really have to come to grips with is the power infrastructure. And that is what, you know, companies, when they are leasing data center infrastructure from a from a data center operator, when they are building this themselves, it is the need for power to support their servers that they have to figure out what to do with. And so this is, you know, this is in essence what makes these buildings so expensive is you've got to figure out from a power perspective, you know, how to bring that power to the building. You know, that's typically from like transmission lines on the outside to substations, substations to transformers, transformers then to, you know, your utility power coming into the building. And then that will bring you into things like the UPS systems. You know, there's backup generators that support the power systems within a building. So if the power goes out, the generators will come on and support the building, even if they don't. Yes, I've been. Yeah, no, you're great. [00:03:42] Speaker 1: So, you know, I think a great way to that I understand this is like you think of it like a laptop like I've got here where you've got you plug something into the wall. There's that little box which changes the type of power either from 120 volts, whatever's come out of the wall to something that your laptop can use. And then subsequently, you've got a battery in here as well. So if that power gets disconnected, it's going to automatically switch over. It's the same thing that happens in data center. Like you've got power at some voltage and amperage rating that comes from the utility, comes in, change it to a format that the servers can use. And then in addition to that, everything that's set up that if that power for whatever reason fails, and sometimes they've got multiple of those or two of those, and if any of those fail, there's an immediate cut over to either battery or generator or whatever. And they're all set up for like certain loads and certain amounts of time. Yeah, and it's power. So that there is always power to the server. [00:04:35] David: Yeah, and it's broken down basically from big to small so that it can serve what, you know, it's essentially what you do in your home too. You know, your power comes into the city at X and it just gets broken down so that you can use it at your home. And so that's what's happening from a data center perspective. One of the things that makes it so capital intensive is the redundancies that are placed, which you mentioned. And, you know, I would tell you if you've been in the industry, if you're listening to this, you've been in the industry for a long time, I think you would agree that redundancy, the importance of that has changed over time. You know, 10 years ago, you would hear the term like tier four data centers. You know, there's a tier ranking typically. Tier one is your lowest redundant data center all the way up to tier four. And tier four is your highest redundant data center. So there was a long period of time where companies were really trying to build those tier four data centers, most expensive, most redundant. And then they realized that, you know, we can really get by with like tier three, that a tier three redundant data center from a power perspective, from a Cooley perspective, which we'll get to really satisfies our need for redundancy. But it is that infrastructure that is so expensive and really understanding how to build that and to deliver it in a timely manner is what's changed the market in the last several years. [00:05:50] Speaker 1: Yeah, you touched on something that's interesting, like, like at the data center operators core business, they are providing for you a secure space with reliable power and reliable connectivity. Right? Yeah. And so, you know, jumping back to, you know, the physical security of a building, talk a little bit more about some of the measures that these companies put in place and why they're there as far as why the customers need that security. [00:06:13] David: Well, you know, a lot of it is perception, you know, the reality is there's not a lot of people breaking into data centers from a, from a physical standpoint. But these are the most critical operations for companies today and, you know, the more important, I think we'd all agree that data is becoming more and more important. What you do with data, how you use it, your company's internal data is like, as our world grows, technology grows, that's becoming more and more valuable, more and more important. So, you know, the levels of authentication to get into an actual, you know, area where servers are kept and the IT infrastructure is running, you know, typically it'll take like seven checkpoints to get in, you know, outside security, inside security, card key access, biometric scanners, all these different measures in place to make sure that whoever is physically in these servers rooms should, should be there. And that's really the point of the physical security. [00:07:13] Speaker 1: You know, one of the, one of the more unique features of a data center facility is called a man trap. Talk a little bit about one of those are and, and what happens if somebody maybe accidentally sets off an alarm in a man trap. [00:07:23] David: That's really funny, Mike. This has happened one time in my life. Okay, here's, so essentially a man trap, you know, is, is a, is a area where, you know, there's a, there's an entrance and an exit. And you basically can't open one without the other, uh, what, well, you can't open one while the other is open. So basically they, you know, you open the door or it allows you in, you're in, the door shuts behind you. Then you can go in from, you know, the other area. And there was a time one time about three or four years ago, were you with me there? And I, okay. Where did I thought I got the, okay, come on. And it was a push door and I pushed it. And I mean the loudest piercing noise, like it's still to my soul. Uh, I will never, you know, do that again. [00:08:11] Speaker 1: Yes, it worked. It was an appropriate deterrent. Yeah. And again, I think you hit on it with the data piece of like, you know, talking about like a bank, uh, or a, you know, uh, online retailer. Sure. With credit card information, they have hundreds of millions of credit cards. Yeah. Or social security numbers or health records that, you know, that are on a server somewhere. Sure. And you have to be able to protect the sanctity of that server. So I think, you know. [00:08:36] David: And there's also this like cyber security piece, which to be honest, is a much more harder, you know, nut to crack as it relates to making sure that you have that protected well. [00:08:46] Speaker 1: Way above the pay grade of this podcast. Sure. And that's, I'm not looking to get in. But it exists and it's a real thing and operators have to address it. [00:08:52] David: Yeah. And I think, I guess what I want to make is there's probably people listening that are in the, in the space that are saying like, Hey, physical security, but there's also cyber security. Which we recognize. Uh, but we're really just talking about the physical infrastructure from a data center perspective. [00:09:07] Speaker 1: All right. So we touched on power and anything else to talk about on the power side, as far as its delivery, you know, any of the infrastructure, the pieces that are, that make up that system. [00:09:17] David: No, I just as a, you know, it is, it is kind of the bedrock for the data center. And, and I think if you're in the real estate business and you're trying to understand the data center space, one of the very important things to realize is like, it is not the space. That's what is being sold. It is the power. Yeah. It is the, it is the access to the infrastructure that is what is most valuable. You can put any amount of power to a degree in any amount of space, as long as you can cool it. Yeah. That's your limiting factor. [00:09:44] Speaker 1: That's a great segue. Well, let's talk about cooling. I'm all about segues. What is needed. So again, thinking back to the laptop analogy, I think we ascribe human emotions to computers quite frequently. But when your computer is thinking a lot and a little fan starts to spin and a little part where your hand goes gets real hot. [00:09:59] David: Yeah. [00:10:00] Speaker 1: So that same thing that happens to data centers on a much larger scale when server ramps up and it's doing its server things, it generates heat. Yeah. Got to get the heat out of there. Yeah. So talk about how data centers do that and why that's complex. What's some different approaches that companies have taken to do that? Yeah. [00:10:13] David: And this is another part, you know, very important part of like the data center infrastructure is the cooling. How will you cool all the heat that you're bringing in? And, you know, there's a number of like different technologies and ways to approach this from just an infrastructure side. You can really cool things from an air-cooled perspective or a water-cooled perspective or using air to cool things or using water to cool, you know, the servers and the heat or, you know, reject the heat in the data center. And each one comes with, you know, more efficiencies on the front end. One is more expensive than the other. So there's pluses and minuses to each. We've seen, you know, companies really utilize like air-cooled, the air-cooled approach over the last, you know, five to ten years. There are companies that still do, you know, water-cooled systems. But that, and that infrastructure that comes along with that, you know, typically is what takes up space, you know, within a data center on the outside of, like in a data center equipment yard. Yeah. [00:11:15] Speaker 1: If you walk through any given data hall, you'll have an aisle that you walk down. Yep. Commonly referred to as the hot aisle. [00:11:21] David: Yep. [00:11:22] Speaker 1: Or the cold aisle and then space on either side. So if you look at, you know, 10,000 square feet of a data hall, probably less than half. Yes. Physically occupied by servers. The rest is airflow. [00:11:32] David: Yeah. And there's amazing, I think, technology or innovation that's happening right now within that space. That's the word I was going to use. [00:11:40] Speaker 1: The number of ways people are trying to tackle this specific problem. I think power is more or less what it is. Sure. On the cooling side is where you see some really innovative, was the word I was going to use, approaches, you know, people putting data centers underwater. [00:11:52] David: Yeah. [00:11:53] Speaker 1: Or weird cooling configurations or putting the servers in cooled water. Yeah. In the facility. [00:11:58] David: Yeah, there's different approaches. I think one of the biggest changes that has created a need for that innovation has been the very large workloads that are now being placed into multi-tenant data center facilities or single-tenant data center facilities that, you know, a large hyperscale user would go to a data center operator and say, hey, we want to take 30 megawatts over a 5, 10-year period, place them in this facility, and we need you to cool it. And so it's, the data center operator community has become much more, I would say, advanced and innovative in the ways that they're trying to cool things. One, because there are certainly environmental benefits to doing this in a more effective way. Two is because a lot, there's been a lot of extra cost wrapped up into a lot of this infrastructure. And so if you can figure out ways to be more innovative, more efficient, and take some of that equipment that's not as efficient out, those cost savings can be passed directly to the end user. And so that is what we have seen. I think we'll continue to see it, you know, in the next 5 to 10 years. But it, you know, the cool, you know, I think about the data center infrastructure, I mean, I think power, I think cooling, and I think connectivity. So this is obviously a very key component to making sure that data centers run effectively. [00:13:20] Speaker 1: Yeah, and this isn't exactly an infrastructure comment, but talk about how, you know, when we see small retail deals, like single-cabinet deals, it's typically like, you know, it might be like 2208, you know, a little over 4kW per cabinet. And so, but we know that there are plenty of folks who are putting 20, 30, 40kW in a cabinet. So how are, what's driving that density, you know, because as it relates to cooling, there's going to be some challenges there. But what goes into the decision to put 30kW in a rack versus 10 or 5? [00:13:51] David: You know, I would say philosophy, like how a company wants to, you know, design their infrastructure to work effectively. You know, typically what we've had is like enterprise, you know, companies that have built their data center IT infrastructure, and then having to transition to that, it's really hard. Because you have to, you know, you have to get new systems, you have to see how they work with one another. You know, you have to, it can be a challenging approach. So, you know, one thing is to shrink your footprint. You know, so like the data center operator world, they want you to be more dense because they can sell more within their space the denser your cabinets are. You know, typically they, they don't, they run out of space before they run out of power. So, you know, if you can be more dense in your environment, you typically can get a more, you know, sometimes a cheaper cost. And you can also, you know, then that the data center operator will be able to sell more in their facility. So, but, you know, what's, I mean, what's driving it is typically like the maturity of an organization. You know, can your, the, the, actually IT infrastructure cool up that amount of, you know, density is really the, you know, the biggest challenge. And so you'll see a lot of like creativity as it relates to, hey, we're going to put, you know, 500 KW in this many cabinets in this specific area of the data center. And we're going to use different cooling methods to do that. And that can work. It just depends on the organization and what they do and what they feel most comfortable with. [00:15:25] Speaker 1: And will that typically be like a back and forth discussion between the customer and the data center operators? Hey, we need, here's what our requirements are. Here's what we think we can make it happen. And then can you make, make that work for us in this space? [00:15:36] David: Yeah, absolutely. Like if you're a co-location user and you're going into a data center for the first time, there is, you know, you're going to work with their sales operational team or their engineers to make sure that your IT infrastructure matches their ability to cool what it is that you need to do effectively. So, you know, you've got to communicate with them. And that's what we talked about before. You can see some of our other content, but it's like you have to pick a partner or someone that you really feel like. You can work well with because you will be working with them. And the idea that like you're just going to put your infrastructure in a space and be done is that's just not how it works. So, you know, there's certainly communication back and forth on. Here's our plan. There's what's called CFD modeling, computational flow dynamics that show how the space is intended to work. And so the data center operator will say, hey, what do you have? They'll basically sketch that out for you and then show you how they'll bring the air in and out to make sure that the environment is cooled appropriately. Gotcha. [00:16:41] Speaker 1: All right. So last piece is on the connectivity side. So it can be great. Have all the power in the world. Totally reliable. It's cooled. But if you can't get the information out, what good is it? So talk about the connectivity piece and how that works from a redundancy standpoint or from an infrastructure standpoint within the facility. [00:16:58] David: Yeah, you bet. Typically, like fiber is, you know, how that information is, you know, carried in and out of a data center facility. And you have multiple fiber providers coming into a data center facility. Depending on where the site is located within the city might determine how many providers are actually coming in. And so typically you'll have two places within a data center facility where those data center or where those fiber providers are coming into the building itself. And those are called Meet Me Rooms or MMRs. So the data center world loves acronyms. So there's one for you. CFD. I gave you another one. That's two today. I'm sure we'll get to a few more before the end of this. But and then typically you will connect with the fiber provider if you're a user based on, you know, who's in the building. And then that fiber will be run from that Meet Me Room to your actual, you know, cage location or data hall or whatever it is. So that's how the infrastructure works. Like stepping back, that has become a much more important part of the data center industry over the last several years. You can if you want evidence of that, look at the value of the carrier hotel, which is located, you know, strategically in different areas like one or two per city. And that's where like almost all the connectivity comes to. And that just speaks to the richness of, you know, these ecosystems that are formed when not just fiber providers, but cloud providers and, you know, different network and peering areas are created. And the more connectivity that is available there, you know, the better it is for different organizations. So, you know, that that is a very important piece of things moving forward. And, you know, I think it will continue to be like the rest of this year, three years from now, five years from now, especially as like companies are looking to be more sophisticated with their IT infrastructure and how that serves their business today. [00:19:01] Speaker 1: And talk about like the different types of fiber that the company might need. They might there are different types of fiber for different uses that they would need to have multiple kinds, not just from a redundancy standpoint in case one goes out, but to optimize different workloads that they're doing. [00:19:15] David: Yeah, I mean, some could be I mean, some just have to do with like, I mean, mostly it has to do with how much, you know, bandwidth you would need to serve certain types of applications. It probably depends on, you know, seasonal spikes in traffic. So if you're thinking of if you're a retail provider and you, you know, see traffic go up in November and December, there might be allocations needed to be made to meet those requirements. You know, the financial industry is another good example of this. If you're thinking of like launching an online banking system that needs to be spread out to different users, you know, how you connect to them and how they connect to your platform is, I mean, it's key. You know, we both have kids. They love to play Fortnite and other games. And so any type of, you know, connectivity issues that that application has to the end user, which in this case is our kids, you know, their patience level is about this. And so, you know, companies like that are going, hey, we have to meet the expectations of our users. And and so, you know, those are a couple of examples. But it's real time. It makes sense when you kind of step back and think about like, oh, yeah, man, you know, the more I see the wheel of death on a YouTube video or whatever, I go, I don't want to watch that anymore. And so I'm going to be done with it. [00:20:35] Speaker 1: You know, it's funny when you start up Fortnite. I know you haven't played yet. [00:20:38] David: I have not, but I've watched. [00:20:40] Speaker 1: It has a little logo and it's like checking your connection. This is checking connection to data centers. It says right there. It's like, oh, that's fascinating. [00:20:47] David: That's right. That's what we do. Yeah, so I think the key here is if you're listening, you know, really understanding the connectivity aspect of data center facilities is really important. And it's not just, you know, the number of fiber providers coming in, but it is things like the redundancy, you know, how many providers are in a building. A lot of end users will have one or two relationships with different fiber providers, and that will be the key driver for their decision. Like, hey, we use this fiber provider in four locations, and so we need to make sure that they're in this. So you might have to understand how far that fiber provider is to that data center facility because they're going to need to be there by the time the end user gets there themselves. [00:21:33] Speaker 1: All right, so one of the concepts that's a big point for data centers is the concept of redundancy. So redundancy is not a binary concept. So talk a little about redundancy. You talked earlier about tier ratings and how those are related, you know, specifically around the concept of like N plus one or two N plus one. So talk about what that means and why does it matter? Yes. [00:21:54] David: When I, when I, this is like 2009, gosh, and I was working on a, this is back when I was doing actually like brokerage for, for the data, for a data center client. And, you know, I had to fill out this spreadsheet. And, you know, I had to fill out this spreadsheet. So I had to look facility by facility. And one of the words was like redundancy. I didn't know anything, man. I didn't know kilowatt, megawatt. And I think we've talked about this before. But one of the things was redundancy and I was just basically copy and pasting what the thing said. And so it was like, you know, mechanical or electrical redundancy, you know, at the UPS, like two N. And then it was, you know, cooling redundancy N plus one. And, and so it took a while for it to click, but, you know, basically. So if it, if it seems foreign, you know, there's a reason. [00:22:40] Speaker 1: Just think back to ninth grade algebra. Sure. Or eighth grade algebra, whenever that was. Yes. So it's just very strange. [00:22:44] David: But basically, yeah, the, the N stands for basically like the need, the original need of what you, what it is to support the requirement. And so then as you start to layer on like N plus one, you know, that is basically you have a backup behind the need. [00:23:02] Speaker 1: So you may have five generators required to power this facility if it goes down. Yeah. If you're an N plus one configuration, you've got a sixth one. [00:23:09] David: Yes. [00:23:10] Speaker 1: And the assumption then is that probably not all five of these are going to go out at once. Right. It'd be probably one of them likely will go out and we've got a backup. Yes. [00:23:17] David: We're going to handle it. Yes. Now at two N, you would. Go ahead. [00:23:22] Speaker 1: Two times five is 10. [00:23:23] David: That's right. You would have 10. So you'd have the five that are serving and then each one of those would have one behind. And so, so this is, so that costs, costs money. And so, you know, typically the two N facilities like that cost gets passed to the end user. So if you're, you know, it's, it's, I wouldn't call it an amenity, but it almost is because it's just something that, Hey, we'll, we'll put it in there for you if you want, but you're going to pay for it. Yeah. And so what the data center user came back to the provider five, seven years ago and says like, Hey, that's great and all, but like, we don't need that. And so we're not going to pay for it. So if you want to keep building it, that's great. But that does no, that no longer serves the needs that we have. And if you look at like, if you listen to some of our other content, we are talking about how the building is changing, the data center operators are building today. It's no longer one story. It's two, it's three, it's four. You know, the, the data center redundancy requirements now are no longer two in at the, at the electrical level. They're more of like N plus one, N plus one at the cooling side of things. And the technology is getting better and better, more efficient, more efficient. And those cost savings are getting passed to the end user. And that's, that's been this process of the enterprise and the hyperscale world trying to figure out what they need, going to people, going to people that build it and saying, this is what we need. Can you do it for cheaper? And can you do it more efficiently? It's not just cheaper, but more efficiently. And that is what we've seen. And because the data center operator world has changed, that's what's growing the market. So if you look at our statistics from 2015 to today, you've seen the market grown. You, if you look at that commission power number and it goes in, you know, Dallas from 200 megawatts to 350 in Northern Virginia from, I don't know, 600 megawatts to whatever it is now, 1.2 gigawatts. The reason why is because of what I just described. And, and that's only continuing to grow. [00:25:10] Speaker 1: Yeah. And I think you hit on it. Like this is true in any industry that, uh, providers or vendors or whatever it is, people who are serving the market are going to try and get more and more efficient, even if their customers weren't demanding, which in this case they are, they're trying to maximize their profits. So it makes a lot of sense, uh, that there, there's going to find, there's going to be a continued optimization of those efforts. And so, as we've seen, you know, it's generally trended in that M plus one region. Uh, so. [00:25:35] David: And the market's gotten more competitive. You've got more players. You've got, there's a lot of smart people in our space. So when things like when people come out with new technology or something that's going to change things significantly, you know, I'm normally a bit skeptical. Cause we have some very smart people from an engineering perspective that are building that are, you know, and they've done this for a long time. And so, um, so I always think, you know, and they're looking to change things at this point, almost on like the micro level that'll have some big macro changes moving forward. So it's, you know, from an infrastructure standpoint, this is one of those things that you have to understand at a high level, um, because this controls the capital and the money behind, you know, if you're investing in the space, you know, you want to have a good rough understanding of this, because this is why your investments will be much more expensive on the data center side than on the office or the industrial or the retail or whatever it is that you do. [00:26:31] Speaker 1: You know, you made me think of one more bonus question. That's great. I love bonus questions. P-U-E. Yes. I see that. Another acronym for you. Yes. Tell me what it means. Yeah. And why is it important? [00:26:40] David: Yeah. It's, it's a, it's a, as Mike mentioned, an acronym power usage effectiveness. This measures the efficiency of the air, the efficiency of the cooling in a, in a facility. Um, so when we, I would tell you today, this is your, the number here is less important than it was five, 10 years ago. I'm going to explain, um, the, you know, 10 years ago, data centers were probably in like the 1.7, 1.8, 1.9. 9 range, which means they weren't, they weren't efficient. [00:27:10] Speaker 1: So tell me what, how that number is actually. Yeah. [00:27:12] David: So it's cooling. It's taking a lot more, um, infrastructure and energy to cool the entire facility than just like the raised floor. So you're just being, you're being inefficient today. PUEs are in the 1.1, 1.2. [00:27:26] Speaker 1: Um, this is a measure of, of all the power that's required to run the facility. How much is, you know, powering the servers versus powering the correct. Correct. Yes. [00:27:35] David: And so, um, and so this is just a very, you know, just looking at that efficiency number. So from that standpoint, I would say that, um, as data center construction and facility operations has improved, you know, that number has become more consistent among more people. So they've kind of figured, the industry has figured out, Hey, if we do X, Y, and Z, we can get the most efficient data center, um, you know, power perspective. And so that, that's what we've seen, um, over the last, I would say three to five years. So you, you are seeing like new facilities a day, you know, they're going to be when they are fully commissioned and, and, you know, fully, uh, leased or, uh, occupied. You know, they'll be in that 1.1 to 1.4 number, and that's pretty healthy. [00:28:24] Speaker 1: And as an end user, you know, it's important to note that that's, that's going to be a cost that they're going to bear. Yeah. Right. Cause they're paying typically for actually the capacity that they're renting. Sure. Plus the actual energy that they're using. Yeah. So those, you know, the difference between 1.7 and 1.4 is huge or 1.3, the difference between 1.2 and 1.18, not as much. [00:28:43] David: Yep. [00:28:44] Speaker 1: But if you're a large user, if you've got 10 megawatts of space, you know, that could be very, could have a huge impact on your bottom line. [00:28:50] David: Yeah. The, the, you know, I think if you're a really small user, what this matters to you is just kind of like, Hey, what type of part, what type of provider am I working with? How important is facility operations and them efficiency kind of at a higher level? Cause to your point, the costs, the differences aren't that, um, crucial to them. As you talk about, you know, the bigger your requirement is, the more those things impact, you know, cause it's direct cost past, past to you and make no mistake about it. This is a cost that the tenant will pay, uh, over time. [00:29:22] Speaker 1: All right, Dave. Well, thank you so much for all of your insights on data center infrastructure. So if, uh, we said this before, you can get this information all through our blog, just go to daycenterhawk.com slash blog. And then there's a dropdown for fundamentals and that's all that content there. You can also get that delivered to you via email. I'm sure there's a signup that's very apparent if Austin has done his job well, which I know he has on the site, um, or just stay tuned for this, more of this content to come out in a video format. All right.