Data Centers: History and Economics

Many executives are under pressure to develop successful data center strategies that work for their organization, according to industry-specific criteria. While data centers have been in use for decades and began as largely in-house centers for proprietary data, they have evolved. In the 2020s, they are more likely to be remote facilities or networks of facilities owned by cloud service providers housing virtualized infrastructure for the shared use of multiple companies and customers. This note offers an overview of the types of data centers, including enterprise, cloud, and colocation; a brief history of data centers; and data center statistics, including especially costs and energy efficiency. With the rise of artificial intelligence, the Internet of Things, and edge computing, among other innovations, data centers are in high demand and evolving to meet it. This note includes video of Jim Miller, a tech industry executive and an expert in the field, discussing hyperscalers, the early days and evolution of data centers, and what’s involved in scaling a data center. Along with related notes, this technical note is updated regularly in response to changes in the technology and industry. At the Darden School of Business, it is taught in an MBA course on “Digital Operations.”