Moving Forward, Looking Ahead: 2023 Data Center Industry Predictions

While 2022 proved to be a challenging year for the data center industry, 2023 is poised to bring exciting changes to the sector. Based on data from some of the world’s top research firms, including Dell’Oro Group, Forrester, and Gartner, here are five data center predictions for 2023.

Increased SASE Adoption

Security — particularly network security — remains top of mind for data centers in 2023. According to a report from market research firm Dell’Oro Group, Secure Access Service Edge (SASE) experienced a 33% revenue growth during the third quarter of 2022 and is projected to sustain this upward trajectory in the coming year.

“We expect the high investment priority will continue and lead to the SASE market eclipsing $8 billion in 2023,” said Mauricio Sanchez, Dell’Oro’s research director for network security and SASE and SD-WAN.

Gartner made a similar prediction, with SASE topping its list of trends impacting infrastructure and operations (I&O) for 2023. “Hybrid work and the relentless shift to cloud computing has accelerated SASE adoption,” said Gartner research vice president Jeffrey Hewitt. “SASE allows users to connect to applications in a secure fashion and improves the efficiency of management. I&O teams implementing SASE should prioritize single-vendor solutions and an integrated approach.”

A Heightened Focus on Sustainability

Next to SASE, Gartner predicts enterprise executives will put a higher premium on sustainability and embrace sustainable technology in the year ahead. A recent Gartner survey found that 87% of business leaders plan to invest more in sustainability — especially to meet their environmental, social, and governance (ESG) goals — in 2023 and 2024.

“From improving the sustainability of data centers and the cloud to embracing the IT circular economy for devices, I&O can promote sustainable technology by improving efficiency and performance of infrastructure assets,” Hewitt said.

Cloud Computing Goes Native and Industry-Specific

Cloud-native technologies and industry cloud platforms are set to shape the world of cloud computing in the coming year.

For its 2023 cloud predictions, Forrester forecasts tech leaders will zero in on cloud-native. “While virtual machine technology boosted the productivity of the traditional data center, cloud-native technologies such as Kubernetes and containers and various iterations of serverless technologies now span the public cloud and data center alike,” wrote Forrester principal analyst Lee Sustar, noting that the benefits include swifter at-scale application development and deployment as well as improved use of IT resources.

“Add 5G and emerging edge technologies into the mix, and there is plenty of incentive for enterprise-class organizations to move forward with tech modernization based on cloud-native infrastructure,” Sustar added.

Meanwhile, Gartner predicts that industry cloud platforms will gain momentum in 2023, with over 50% of enterprises adopting these platforms by 2027 to advance their businesses. Gartner defines industry cloud platforms as “a combination of traditional cloud services with tailored, industry-specific functionality” that could serve as “an alternative to enterprises purchasing a variety of cloud offerings, as they provide a pre-integrated solution that coincides with specific vertical market needs.”

The Growth of Data Center Automation

While the global data center automation market was valued at $7.6 billion in 2022, it’s expected to reach $20.9 billion by 2030 — a compound annual growth rate of 13.5% based on data from Grand View Research.

For 2023 and beyond, Grand View Research anticipates that a boost in cloud-native server users and enterprise spending on cloud services, to name a few, will stimulate further growth in data center automation.

The report cites the popularity of hybrid cloud architectures and the rise in the deployment of 5G networking technologies as some of the factors driving market growth in data center automation. Additionally, the demand for automation in data centers is fueled by the need for efficient servers, reliable infrastructure, resilient power systems, and balanced load management, among other aspects.

More Investment in Chip Manufacturing

The global semiconductor industry will continue investing in chip making, with 28 semiconductor manufacturing facilities starting construction in 2023, according to a report from SEMI, the industry association representing the electronics manufacturing and design supply chain. By 2024, over $500 billion will be spent in building new factories.

This investment will be aided by government funding, which “reflects the increasing strategic importance of semiconductors to countries and a wide array of industries worldwide” and “underscores the significant impact of government incentives in expanding production capacity and strengthening supply chains,” said SEMI president and CEO Ajit Manocha.

Countries will also be focusing on domestic production to give themselves a competitive edge and alleviate worldwide supply chain issues. Based on SEMI’s data, China, the U.S., and Europe are leading the way in constructing new chip manufacturing facilities, while other nations and regions in Asia, including Taiwan, Japan, Southeast Asia, and Korea, are not far behind