Japan Viewpoint - Data Center Demand Expected to Grow with DX Promotion

Digital transformation to accelerate data center demand

The role of data centers in supporting corporate digital transformation

• Companies are increasingly looking to overhaul their businesses through digital transformation. With data centers being essential for the implementation of digital transformation, demand for this asset class is expected to grow significantly in the coming years.
   
• While an increasing number of Japanese companies are implementing digital transformation initiatives, their progress lags that of their U.S. counterparts, largely as a result of the ageing legacy systems still being used in many Japanese corporations.
   
• The efficient usage of data center services will be crucial for Japanese companies if they wish to break the shackles of their legacy systems and implement effective digital transformation processes. These services can be largely divided into two types; cloud and colocation.
   
• The supply-demand balance for data centers in Greater Tokyo is tight, with insufficient capacity for the necessary digital transformation initiatives. Data center usage costs are also on the rise as a result of surging electricity prices.
   
• In contrast, regional areas possess significantly more available data center space than Greater Tokyo. This may lead to the regional dispersal of system operations, depending on specific objectives.