What are data centers and how do they work?

A data center is a specialized facility that houses large amounts of IT infrastructure, including servers, storage systems and networking equipment. Its purpose is to process, store and protect data used by businesses, cloud providers and digital services.

What are data centers by definition?

Put simply, a data center is a physical facility—often a dedicated building—designed to store and manage large volumes of critical data and digital services. It brings together computing and storage resources such as servers, routers and switches in a network to deliver those services reliably. This combination of systems allows businesses and internet providers to run their IT infrastructure efficiently while keeping data processing secure.

Data center infrastructure has evolved rapidly in recent years. The computing power of traditional on-premises servers is now combined with the flexibility of virtual networks. Today, data flows between multiple data centers as well as public and private clouds. Another major trend is edge computing, where data is processed close to where it’s generated. This reduces latency and eases network traffic, while smaller local data centers complement large cloud facilities.

Why are data centers important for businesses?

Nearly all business software and processes generate data that must be stored somewhere. Examples include:

• Emails and file sharing
• Productivity software
• Websites
• Online transactions
• Data in CRM systems
• Enterprise resource planning (ERP) tools
• Databases
• Big data and artificial intelligence tools
• Virtual desktops
• Communication and collaboration tools

In large companies, huge amounts of data are generated every day, requiring extensive server capacity and storage. A simple server room is often no longer enough to handle this workload, and ongoing maintenance can be time-consuming and complex. Rising energy costs and the need for around-the-clock monitoring to prevent server outages or protect against cyberattacks can quickly stretch in-house IT resources to their limits.

This is where data centers come in. They store company data in a secure, climate-controlled and continuously monitored environment. Backup power systems keep operations running even during outages, helping ensure data stays available and protected. Depending on the data center model, companies usually pay only for the space and power they use. This saves time and resources on infrastructure management, allowing teams to focus on their core business.

What are a data center’s tasks?

The role of a data center depends on its location, ownership and purpose. Even in managed service or colocation facilities, clients still have access to a broad range of IT resources and services — from data backup and storage to running core business processes.

Some data centers act as networking hubs, linking different colocation environments. This is especially important for activities like video streaming, where a content delivery network (CDN) within a colocation facility connects directly to an Internet Service Provider (ISP) to deliver content efficiently.

Hyperscale and wholesale data centers, by contrast, are designed to meet the specific needs of individual organizations. They are also particularly well suited to large enterprises.

What are the basic components of a data center?

For a data center to function efficiently, its different systems need to work together effectively.

IT equipment

One of the core elements of a data center is its IT equipment, which includes everything needed to keep the network running and store data securely. This equipment is typically divided into four main categories:

• Server hardware: From high-performance CPUs and fast RAM to large hard drive and dedicated graphics cards (as used in GPU servers), server hardware covers all the technical components installed in individual machines.
• Active network components: Devices such as routers, switches, firewalls and other controllers make up the active network infrastructure. These elements require a power connection to operate.
• Passive network components: Data centers also rely on passive components such as cabling, plugs and sockets. Unlike active network components, these do not require their own power supply.
• Server racks (enclosures): Server hardware and network devices are mounted inside metal housings known as racks or enclosures. The 19-inch rack format follows international standards, ensuring compatibility across components and manufacturers.

Personnel

Although most data centers today are highly automated, skilled staff remain essential. Servers, networks, and supporting infrastructure must be monitored around the clock to prevent outages and quickly resolve issues when they occur. Data center teams typically work in two main areas: system engineering and system administration.

• System engineering covers all electrical and technical operations within the data center. This includes installing new equipment, replacing or repairing faulty hardware and managing cabling between components.
• System administration handles the configuration and monitoring of server systems. Administrators are also responsible for maintaining data security and protection within the data center.

Infrastructure components

The last key element that keeps a data center running smoothly is its infrastructure components. Depending on the building design and technical setup, these systems can vary widely.

• Cooling and climate control: Maintaining the right temperature inside a data center is essential. The large number of servers produces a lot of heat, which, if not managed properly, can cause overheating and hardware failures. Advanced cooling systems and architectural design features help ensure efficient air circulation and stable temperatures throughout the facility.
• Power supply: No data center can operate without electricity, meaning a reliable power source is essential. Redundant power connections, backup batteries and on-site diesel generators all help keep operations running even during power interruptions.
• Security systems: To protect sensitive data, physical access to the data center is limited to authorized personnel who must identify themselves using a keycard or biometric scanner. Modern video surveillance can also allow continuous monitoring of the premises. For the protection of both staff and equipment, facilities also use advanced fire detection and suppression systems.

What types of data centers exist?

Data centers come in many forms, and each one is managed differently depending on its purpose and setup. Several factors determine the type — for example, whether it’s used by one company or shared among several, what technologies handle data processing and storage, and how efficiently it uses energy. Broadly speaking, there are four main types of data centers:

• Enterprise data centers: These data centers are built, owned and operated by a single company to support its internal operations. These facilities are often located on company premises, and the organization is fully responsible for maintaining both the IT infrastructure and physical systems.
• Managed service data centers: These data centers are operated by a third-party provider on behalf of a client company. The provider manages and maintains all hardware and infrastructure, allowing the business to focus on its core operations without the need for in-house maintenance.
• Colocation data centers: In these facilities, companies rent space for their own servers and equipment while sharing the building’s infrastructure — such as cooling, bandwidth and security systems. The client remains responsible for managing and maintaining its own hardware and software.
• Cloud data centers: These data centers are operated by cloud service providers like Amazon Web Services (AWS), Microsoft Azure or IBM Cloud. These off-site facilities host client data and software systems, while the provider handles all maintenance, upgrades and infrastructure management.

How do data centers differ from server rooms?

A data center typically refers to an entire facility equipped with servers, storage systems and supporting infrastructure. A server room, by contrast, is usually a single room within a larger building that houses a small number of servers. For small and medium-sized businesses with limited data and simpler workloads, a server room can be a practical and cost-effective alternative to a full-scale data center. Many modern server rooms now offer similar features, but security, maintenance and uptime remain the responsibility of the building’s owner or tenant.