Facing up to the energy and climate crises with colocation

Facing up to the energy and climate crises with colocation

Mark Pestridge, Senior Customer Experience Director at Telehouse, discusses why data centre leaders – particularly in Europe – should tackle the energy and climate crises head on with outsourced services such as colocation, which offer cost savings, efficiency and scalability in times of economic pressure. 

Previously unseen levels of volatility in the energy market has created immense pressure on businesses, with European governments earmarking as much as €500 billion last year to shield both citizens and companies from soaring gas and power prices. The urgency for change has escalated. IT decision-makers must pivot their sustainability and business strategies to accommodate spending, reduce the risk of downtime and meet net zero targets.

In fact, Telehouse’s Climate Crunch report discovered that almost four-in-five IT decision-makers (79%) are worried about the impact of the current energy crisis on the future of their sustainability strategies. Considering more than two-thirds (69%) say that sustainability is at the heart of their business culture, it’s perhaps unsurprising that rising costs have induced fear. In a time of difficulty for businesses to know what’s coming next, more are looking towards solutions such as colocation as a remedy to this dual challenge. 

Navigating the energy crisis

Colocation not only provides an opportunity for businesses to safeguard mission critical infrastructure under the roof of a trusted data centre provider, but it helps solve one of their biggest challenges – saving on costs. Almost seven-in-10 (69%) organisations have increased IT spending during the crisis as energy providers pass on increased prices from escalating wholesale costs. Some have even absorbed these rises to enable customer retention, but this strategy risks turning customers away.

Instead, shifting environments off-premise can be beneficial. The forward-thinking data centre operators will likely have secured competitive forward hedged rates and are already utilising renewable energy. This makes it an attractive proposition for enterprises looking to keep expenditure to a minimum while ensuring customer relationships are maintained. Telehouse research shows that almost nine-in-10 (89%) organisations with outsourced infrastructure or plans to outsource are confident in controlling costs during the energy crisis, with over a quarter (27%) exuding high levels of confidence.

Energy is a crucial element of Business Continuity plans. Loss of network access can be detrimental financially and lead to tarnished reputations and lost business opportunities. Today’s IT systems can be impacted by external temperatures, and escalating climate change is likely to make extreme weather incidents more frequent. In Europe, the EU stated in October that it was actively preparing for power cuts and other emergencies over the course of the winter due to energy shortages. 

With the possible scenario of power cuts taking place, more organisations are looking towards colocation facilities. These have stringent continuity arrangements in place, such as backup generators and emergency fuel supplies to ensure uninterrupted power in case of disaster. Data centre operators are also bound by stringent SLAs and therefore undertake proactive measures to ensure operational stability.

Supporting sustainability strategies

As well as the cost and peace of mind benefits, outsourcing IT infrastructure with a specialist provider can also enable secure and sustainable operations at scale. Colocation can be key in meeting Environmental, Social and Governance (ESG) goals, such as leveraging renewable energy and making use of power-saving technologies such as cooling and monitoring systems. 

Currently, over a third (34%) of organisations haven’t made any progress on their sustainability goals or haven’t yet defined them. In addition, over half of businesses aren’t yet fully optimised to contribute to net zero targets (57%), are not using renewable energy sources (52%) and don’t closely monitor their footprint (52%). Despite this, 59% of organisations believe that they’re ahead of competitors in adoption of sustainable practices.

This highlights an emerging disparity between the perception of organisational decision-making to be driven by sustainability and the lack of practical steps taken to enable it. It’s likely that this stunted progress is due to a shortfall of in-house expertise to drive green initiatives. Data from a 2022 Digital Economy and Society Index report revealed that only just over half (54%) of Europeans aged between 16-74 have at least basic digital skills.

Colocation services also provide a detailed level of reporting into areas such as energy efficiency and water usage. As per the leading GHG Protocol, the greenhouse gas emissions of businesses are classified into three different scopes: Mandatory Scopes 1 and 2, and voluntary Scope 3 emissions. Scope 3 emissions, while usually making up around 70% of an organisation’s carbon footprint, are only a key focus for 20% of businesses in Telehouse’s research and are only being tracked by a third of EU companies. 

Utilising resources from an effective colocation service will provide the visibility that organisations need to measure emissions outside of their own premises. Detailed reports allow organisations to decipher the impact that their operations are having on their sustainability goals and take required action. As regulatory requirements become ever stricter in the near future, visibility into this data can’t be compromised on.

Grasping the opportunity

Many organisations are missing out on the opportunity to immediately adopt cost-effective and sustainable measures in the midst of the energy and climate crises. As maintenance of on-premise infrastructure becomes infinitely more challenging due to rising costs and failure to control and report on sustainability, outsourced services such as colocation bring cost savings, efficiency and scalability in times of economic pressure. 

The providers at the forefront will be working in close collaboration with businesses to achieve their ESG goals, such as leveraging power-saving technologies and meeting carbon reduction targets. By facing up to these crises with confidence, businesses can future-proof their operations and meet customer expectations head on.

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