Data centers as the backbone of smart cities: principal considerations for the study of facility costs and benefits

Abstract

Purpose

As smart cities flourish amidst rapid urbanization and information and communication technology development, the demand for building more and more data centers is rising. This paper aims to examine the principal issues and considerations of data center facilities from the cost and benefit dimensions, with an aim to illustrate the approaches for maximizing the net benefits and remain “green.”

Design/methodology/approach

A comprehensive literature review informs the costs and benefits of data center facilities, and through a case study of a developer in Hong Kong, the significance of real estate costs is demonstrated.

Findings

Major corporations, establishments and governments need data centers as a mission critical facility to enable countless electronic transactions to take place any minute of the day. Their functional importance ranges from health, transport, payment, etc., all the way to entertainment activities. Some enterprises own them, whilst others use data center services on a co-location basis, in which case data centers are regarded as an investment asset. Real estate costs affect their success to a great extent, as in the case of a metropolitan where land cost forms a substantial part of the overall development cost for data centers.

Research limitations/implications

As the financial information of data center projects are highly sensitive due to the competitive status of the industry, a full set of numerical data is not available. Instead, the principles for a typical framework are established.

Originality/value

Data centers are very energy intensive, and their construction is usually fast tracked costing much to build, not to mention the high-value equipment contents housed therein. Their site locations need careful selection due to stability and security concerns. As an essential business continuity tool, the return on investment is a complex consideration, but certainly the potential loss caused by any disruption would be a huge amount. The life cycle cost and benefit considerations are revealed for this type of mission-critical facilities. Externalities are expounded, with emphasis on sustainable issues. The impact of land shortage for data center development is also demonstrated through the case of Hong Kong.

Citation

Lam, P.T.I., Lai, D., Leung, C.-K. and Yang, W. (2021), "Data centers as the backbone of smart cities: principal considerations for the study of facility costs and benefits", Facilities, Vol. 39 No. 1/2, pp. 80-95. https://doi.org/10.1108/F-09-2019-0103