Economic Blues Could Slow Data Center Construction

20.03.2009
Data center construction requires a massive investment in time and cash before a facility is completed.

It's no wonder, then, that companies who have embarked on have not halted their projects. In interviews with more than a dozen companies, each with $100 million in information-technology investments, Joseph Pucciarelli, program director of technology financing and executive strategies for market researcher IDC (a sister brand of CIO), found that not one planned on scaling back their projects.

"You are talking projects that have been in the works for years," Pucciarelli says. "These are complex multi-cycle construction efforts."

Yet, the future is a different matter, he says. In the past six month, new orders for data center construction have essentially halted, Pucciarelli says. "Everyone is waiting to see in which direction this period of economic volatility is going to pan out."

Data centers typically require three years or more to finish and cost tens of millions to hundreds of millions of dollars. Just planning a project can take from two to four years, the analyst says. One of the 14 companies he interviewed in February has embarked on a $200 million enterprise resource planning (ERP) project, which the firm aims to continue.

"They're doing it because they are going to of a new IT infrastructure," he says.