What is a data center?
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.
Data centers started out as privately owned, tightly controlled on-premises facilities housing traditional IT infrastructure for the exclusive use of one company. Recently, they’ve 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.

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History of data centers
Data centers date back to the 1940s. The US military’s Electrical Numerical Integrator and Computer (ENIAC), completed in 1945 at the University of Pennsylvania, is an early example of a data center that required dedicated space to house its massive machines.
Over the years, computers became more size-efficient, requiring less physical space. In the 1990s, microcomputers came on the scene, drastically reducing the amount of space needed for IT operations. These microcomputers that began filling old mainframe computer rooms became known as “servers,” and the rooms became known as “data centers.”
The advent of cloud computing in the early 2000s significantly disrupted the traditional data center landscape. Cloud services allow organizations to access computing resources on-demand, over the internet, with pay-per-use pricing—enabling the flexibility to scale up or down as needed.
In 2006, Google launched the first hyperscale data center in The Dalles, Oregon. This hyperscale facility currently occupies 1.3 million square feet of space and employs a staff of approximately 200 data center operators.1
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.2
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Types of data centers
There are different types of data center facilities, and a single company might use more than one type, depending on workloads and business needs.
Enterprise (on-premises) data centers
This data center model hosts all IT infrastructure and data on-premises. Many companies choose on-premises data centers. They have 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). The company is responsible for all deployment, monitoring and management tasks in an enterprise data center.
Public cloud data centers and hyperscale data centers
Cloud data centers (also called cloud computing data centers) house IT infrastructure resources for shared use by multiple customers—from scores to millions—through an internet connection.
Many of the largest cloud data centers—called 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. For example, IBM operates over 60 IBM Cloud Data Centers in various locations around the world.
Hyperscale data 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 they can sometimes be as large as 60,000 square feet.
Cloud service providers typically maintain smaller, edge data centers (EDCs) located closer to cloud customers (and cloud customers’ customers). Edge data centers form the foundation for edge computing, a distributed computing framework that brings applications closer to end users. Edge data centers are ideal for real-time, data-intensive workloads like big data analytics, artificial intelligence (AI), machine learning (ML) and content delivery. They help minimize latency, improving overall application performance and customer experience.
Managed data centers and colocation facilities
Managed data centers and colocation facilities are options for organizations that lack the space, staff or expertise to manage their IT infrastructure on-premises. These options are ideal for those who prefer not to host their infrastructure by using the shared resources of a public cloud data center.
In a managed data center, the client company leases dedicated servers, storage and networking hardware from the provider, and the provider handles the client company’s administration, monitoring and management.
In a colocation facility, the client company owns all the infrastructure and leases a dedicated space to host it within the facility. In the traditional colocation model, the client company has sole access to the hardware and full responsibility for managing it. This model is ideal for privacy and security but often impractical, particularly during outages or emergencies. Today, most colocation providers offer management and monitoring services to clients who want them.
Companies often choose managed data centers and colocation facilities to house remote data backup and disaster recovery (DR) technology for small and midsized businesses (SMBs).
Modern data center architecture
Most modern data centers, including in-house on-premises ones, have evolved from the traditional IT architecture. Instead of running each application or workload on dedicated hardware, they now use a cloud architecture where physical resources such as CPUs, storage and networking are virtualized. Virtualization enables these resources to be abstracted from their physical limits and pooled into capacity that can be allocated across multiple applications and workloads in whatever quantities they require.
Virtualization also enables software-defined infrastructure (SDI)—infrastructure that can be provisioned, configured, run, maintained and “spun down” programmatically without human intervention.
This virtualization has led to new data center architectures such as software-defined data centers (SDDC), a server management concept that virtualizes infrastructure elements such as networking, storage and compute, delivering them as a service. This capability allows organizations to optimize infrastructure for each application and workload without making physical changes, which can help improve performance and control costs. As-a-service data center models are poised to become more prevalent, with IDC forecasting that 65% of tech buyers will prioritize these models by 2026.3
Benefits of modern data centers
The combination of cloud architecture and SDI offers many advantages to data centers and their users, such as:
- Optimal utilization of compute, storage and networking resources
- Rapid deployment of applications and services
- Scalability
- Variety of services and data center solutions
- Cloud-native development
Optimal utilization of compute, storage and networking resources
Virtualization enables companies or clouds to optimize their resources and serve the most users with the least amount of hardware and with the least unused or idle capacity.Rapid deployment of applications and services
SDI automation makes provisioning new infrastructure as easy as making a request through a self-service portal.Scalability
Virtualized IT infrastructure is far easier to scale than traditional IT infrastructure. Even companies that use on-premises data centers can add capacity on demand by bursting workloads to the cloud when necessary.Variety of services and data center solutions
Companies and clouds can offer users a range of ways to consume and deliver IT, all from the same infrastructure. Choices are made based on workload demands and include infrastructure as a service (IaaS), platform as a service (PaaS), software as a service (SaaS) and more. CSPs offer these services for use in a private on-premises data center or as cloud solutions in either a private cloud, public cloud, hybrid cloud or multicloud environment.
Other data solutions include modular data centers—pre-engineered facilities designed for use as data centers that are also pre-piped and equipped with necessary cooling equipment.Cloud-native development
Containerization and serverless computing, along with a robust open source ecosystem, enable and accelerate DevOps cycles and application modernization, and they enable develop-once-deploy-anywhere apps.
Data center infrastructure components
Servers
Servers are powerful computers that deliver applications, services and data to end-user devices. Data center servers come in several form factors:
- Rack-mount servers are wide, flat, stand-alone servers the size of a small pizza box. They are stacked on top of each other in a rack to save space (versus a tower or desktop server). Each rack-mount server has its own power supply, cooling fans, network switches and ports, along with the usual processor, memory and storage.
- Blade servers are designed to save even more space. Each blade contains processors, network controllers, memory and sometimes storage. They’re made to fit into a chassis that holds multiple blades and includes the power supply, network management and other resources for all the blades in the chassis.
- Mainframes are high-performance computers with multiple processors that can do the work of an entire room of rack-mount or blade servers. The first virtualizable computers, mainframes can process billions of calculations and transactions in real time.
The choice of server form factor depends on many factors, including available space in the data center, the workloads running on the servers, the available power and cost.
Storage systems
Most servers include some local storage capability—direct-attached storage (DAS)—to enable the most frequently used data (hot data) to remain close to the CPU.