As defined by IBM, a data center is a physical room, building or facility that houses IT infrastructure for building, running and delivering applications and services. It also stores and manages the data associated with those applications and services.

Historically, data centers were privately owned, tightly controlled on-premises facilities housing traditional IT infrastructure for the exclusive use of one company. Recently, they have evolved into remote facilities or networks of facilities owned by cloud service providers (CSPs). These CSP data centers house virtualized IT infrastructure for the shared use of multiple companies and customers.

Managed data centers and colocation facilities are options for organizations that lack the space, staff or expertise to manage their IT infrastructure on-premises, and used by those who prefer not to host their infrastructure by using the shared resources of a public cloud data center. Companies often choose managed data centers and colocation facilities to house remote data backup and disaster recovery (DR) technology for small and mid-sized businesses (SMBs).

• In a managed data center, the client organization leases dedicated servers, storage and networking hardware from the provider. The provider handles the client’s administration, monitoring and management.
• In a colocation facility, the client owns all the infrastructure and leases a dedicated space to host it within the facility. In the traditional colocation model, the client organization has sole access to the hardware and full responsibility for managing it. This model is ideal for privacy and security but can be impractical, particularly during outages or emergencies. Today, most colocation providers offer management and monitoring services to clients who want them.

There are different types of data center facilities:

• Enterprise (on-premises) data centers— The user organization is responsible for all deployment, monitoring and management tasks. These centers offer users more control over information security and can more easily comply with regulations such as the European Union General Data Protection Regulation (GDPR)or the US Health Insurance Portability and Accountability Act (HIPAA).
• Public cloud data centers and hyperscale data centers—House IT infrastructure resources for shared use by multiple customers (from several to millions) through an internet connection. Many of the largest cloud data centers (known as hyperscale data centers) are run by major cloud service providers (CSPs), such as Amazon Web Services (AWS), Google Cloud Platform, IBM Cloud, and Microsoft Azure. These companies have major data centers in every region of the world. Hyperscale centers are larger than traditional data centers and can cover millions of square feet. They typically contain at least 5,000 servers and miles of connection equipment, and can be as large as 60,000 square feet.
• Edge data centers (EDCs) —Cloud service providers typically maintain smaller data centers that are located closer to cloud customers and their customers as well. These centers form the foundation for edge computing, a distributed computing framework that brings applications closer to end users. These centers are useful for real-time, data-intensive workloads like big data analytics, AI, machine learning, and content delivery.

A study from McKinsey & Company projects the industry to grow at 10% a year through 2030, with global spending on the construction of new facilities reaching USD49 billion.