Pierre Havenga, the Managing Director of Vertiv, speaks about opportunities to look out for in 2022
How was 2021 for the industry and your company?
Globally, 2021 has been a year of transition and learning. The pandemic upended most industries and businesses in the year 2020 bringing in an unprecedented era of digitalization. Businesses are still tackling the side-effects of the pandemic, adjusting, adapting, and embracing this wave of change. The data center industry has been no exception to this, the disruption caused by the pandemic has pushed the industry to embrace newer innovations and trends that are adept to tackle the current landscape of global transformation.
Undoubtedly, 2021 can be called the year of hyper-digitalization as the hybrid work culture rose to prominence paving the path to futuristic trends such as Automation and Robotics, Edge Computing, Roll-out of 5G, rise of Green data centers, and more. Even though the industry went through an upheaval in the past two years, the future certainly looks bright with the data center colocation market by investment expected to grow at a CAGR of 4.40% from 2020-2026, according to the ‘Data Center Colocation Market – Global Outlook & Forecast 2021-2026’ report.
2021 has been unlike any for Vertiv, while we as a company were also impacted by the pandemic, I am proud to say that not only did we navigate these choppy waters but also accomplished some big wins setting milestones for the company. Despite the disruption, Vertiv continued to provide critical solutions and services needed to manage data and keep people connected – especially as we are all working remotely. Our data center, IT, and telecommunications infrastructure technology provide the best services and solutions to our customers. Last month was monumental for the company as we completed the business acquisition of E&I Engineering Group, a global leader providing switchgear and power distribution systems. When combined with Vertiv’s industry-leading UPS products, this completes the power chain and gives us the capability to be the one source for customers, managing their entire power infrastructure, as integrated systems, safely and efficiently.
What sort of opportunities did 2021 bring along?
The year 2021 has pushed businesses beyond the technology tipping point in embracing digital adoption to build business resilience and continuity. As a result of the pandemic, we have seen major disruptions in ways of working such as shifts in capital availability, evolving social and environmental priorities, and rapid urbanization, and more. Data center infrastructure has played a pivotal role in the current boom of digital business demands as cloud-native applications took the spotlight and supported businesses in transitioning efficiently to the remote and hybrid working cultures.
The advent of stringent data privacy laws coupled with the escalating digital transformation led the enterprise to shift from on-premises legacy IT to more agile cloud technologies in third-party data centers. The evolution of the edge, the advent of 5G, and pandemic-driven investment in IT across various verticals have reformed our industry and presented extraordinary levels of demand into our customers’ networks, whilst increasing the pressure on telecom and IT networks to keep us connected.
At Vertiv, we are constantly innovating and striving to seek the solutions of tomorrow, to meet technology demands of hyper-scalers and SMEs alike, to provide solutions that are bespoke for different businesses. Take, for instance, our all-in-one offerings like our Micro Data Centres that are designed to be a customizable and flexible entry point for SMEs to deploy data center capacity at speed, while allowing room for scalability as the businesses grow. 2021 also taught us the power of collaboration, of working with our partners to meet the ever-increasing demands from newer markets. Vertiv partners support digital evolution in new markets around the world, our Vertiv Partner Programme (VPP) enables our growing reseller base to meet and stay ahead of demanding customer requirements around Edge computing, digitalisation, and other disruptive trends in the data centre and wider IT landscape.
Did you face any challenges in 2021?
As the pandemic skyrocketed the growth and consumption of data across industries, the demand for capacity went through the roof as well. Some of the challenges faced by the industry, in general, included unprecedented demand from customers, shorter time-scale, and implementation times for projects. As a company, Vertiv was already on a steadfast mission of being a front-runner in providing holistic technology solutions that bring together hardware, software, analytics, and ongoing services to enable continuous and optimal running of vital applications for data centers, communication networks, as well as commercial and industrial facilities.
After the successful execution of our IPO in 2020, we embraced our 75-year legacy but still move the company in the direction of meeting modern goals and market demands leveraging our global scale and reach. Throughout the company, we have been able to create a thriving culture that lets us operate with the agility of a start-up and keeps us on our toes when it comes to innovative thinking. So, I’d say even though 2020 and 2021 may have been difficult chapters in our book, we have managed to convert these challenges into opportunities for future growth.
What were your key achievements in 2021?
Vertiv reported a net sales growth of 5.8% and organic net sales growth of 3.9% in 2021’s third quarter versus the prior year third quarter. Additionally, our Year-to-date net operating cash flow of $174 million increased $160 million, and year-to-date free cash flow of $128 million increased by $140 million from 2020 year-to-date. Our portfolio enhancements continued with E+I acquisition and announcement of the sale of heavy industrial UPS business expected to close in fourth-quarter 2021.
We also launched our million-dollar hub in Morocco to enhance our supply chain in the region as well as escalate our digital infrastructure. We recently introduced the Vertiv NetSure Inverter series, a space-saving system that powers AC and DC loads in a single sub-rack with a common battery bank. The system provides DC and AC power from a common platform using a single control unit, eliminating the need for separate controllers for the DC power system and the inverter. The 230 VAC system is available in Asia, EMEA, and Latin America, and a 120 VAC system will be available in the Americas in early 2022.
We fortified our channel partner program that allows us to provide local support through technology expertise to end customers, contractors, and channel partners. This year also saw us becoming a lead sponsor of the Sustainable Digital Infrastructure Alliance (SDIA), to support the SDIA’s mission to bring together key players from across the critical infrastructure arena to meet sustainability goals. This month is also very special to all of us at Vertiv as it marks the 5 year anniversary of Vertiv, which is certainly a significant milestone in the 75-year history of our organization.
What promises does 2022 bring along?
The year 2022 will be imperative for companies to reconfigure their operations whilst providing them opportunities to integrate seamlessly with digital ways of working. We anticipate hyper-acceleration in the adoption of digital technologies across large, medium, and small-scale industries. In 2022, we see the industry increasingly adopting sustainability and climate-conscious strategies, while also positioning to tackle the challenges of speed to market, cost containment, and latency with a focus on artificial intelligence (AI), edge, and hybrid data centers, along with increased interest in integration.
Do you see opportunities in the regional markets with new markets opening up?
Absolutely, the pandemic has demonstrated market readiness to integrate with digital technology to enhance efficiency and productivity whilst tackling disruption. As the digital revolution continues, there will be newer markets that will be created in the process. These markets will require data and colocation services available to them at a lightning speed. In fact, our decision to establish the new hub in Morocco was based on Vertiv’s focus on providing superior services to existing and new clients, improving availability and access to our disruptive technology. The hub should improve lead times and create more opportunities, thus allowing us to cater to new markets at the same time accelerating the pace of business in the EMEA region.
According to you, which technologies will be in demand in 2022?
As a result of the ground-breaking digital transformation occurring globally, lower latency has become a rising need to support healthy buildings, smart cities, distributed energy resources, and 5G. 2022 will see increased investment in edge computing to support this new normal (remote work, increased reliance on e-commerce and telehealth, video streaming) and the continuing rollout of 5G. Furthermore, the augmented and virtual reality demands of the metaverse are becoming more prominent, thereby making the need for real-time computing and decision-making more critical.
AI and machine learning will be key to optimizing the performance of networks. The data center industry has become active in initiating climate-friendly practices in recent years, but operators will join the climate effort more purposefully in 2022. On the operational front, Vertiv experts envisage some organizations will embrace sustainable energy strategies that utilize a digital solution that matches energy use with 100% renewable energy and ultimately operates on 24/7 sustainable energy. Fuel cells, renewable assets, and long-duration energy storage systems, including battery energy storage systems (BESS) and lithium-ion batteries, all will play a vital role in providing sustainable, resilient, and reliable outcomes.
Thermal systems that use zero water are in demand, and we will see refrigerants with high global warming potential (GWP) phased down in favour of low-GWP refrigerants. When it comes to embracing integrated systems such as integrated racks and rows, the trend for 2022 seems to be steering towards data centers working with providers to better integrate larger systems resulting in manifold benefits such as reduced construction and deployment costs, and flexible capacity management. Rack-based power solutions are early accelerators of integration momentum and will gain vast popularity in 2022.
What will be your key focus areas for 2022?
Undeniably, the key focus area for 2022 for us will remain sustainability. It is more than imperative now for organizations and companies to involve the sustainability angle in everything that they do. Being a pioneer in the industry, we consider it our responsibility to create and deliver sustainable solutions. From improving product performance to helping customers meet their objectives for conserving energy and water and reducing carbon footprint to implementing processes and innovations in our facilities to conserve energy, water, and other resources and reduce greenhouse gas emissions, we are putting our best foot forward in enhancing sustainability.
Our products for critical infrastructure power, cooling, and management are designed to help our customers optimize their use of energy, water, and space, however, we are constantly striving to innovate beyond the conventional barriers in a bid to deliver truly holistic sustainable solutions. For instance, we spearheaded the IT industry’s development of Energy Logic, a 10-step roadmap for driving improvement in IT efficiency and support systems. We will be focussing more on such efforts that allow companies to remain ‘green’ while building and scaling their businesses.
What milestones have you set for 2022?
We want to remain dedicated to our customers and fulfil their data infrastructure needs at each and every step of their journey. As a company with a global footprint, we are very well positioned to deliver the best-in-class critical products and services that are needed to manage data and keep people connected, especially in today’s day and age of remote working. Our commitment to providing unparalleled support to our customers whilst conducting our business with honesty and integrity, prioritizing sustainability and corporate citizenship remains a priority.
The investment in the Partner Program includes new global channel oversight and a new global partner relationship management system that allows partners to interface with Vertiv for deal registrations, configuration tools, and anything they might need to initiate, manage, or complete work with Vertiv. We expect the IT sector in the EMEA to grow leaps and bounds in the coming decade itself as the current trends are projecting it. We are investing in new sites across EMEA to better facilitate infrastructure needed to keep up with the upcoming IT trends, as well as to ensure that we are contributing to the development of information and technology in the region
What would you like to do differently in 2022, when compared with 2021?
Like I mentioned before, we would like to shift a lot of our focus on enhancing sustainability and going that extra mile in providing ‘green solutions’ to our customers. We want to initiate actions that spring from the sustainability thought-board enabling us to deliver solutions that are a win-win for the environment, business as well as our communities. Having said that, our relentless efforts are always focused on offering best-in-class products so innovation is always a priority for us.
Do you plan to enter new markets or add new products/applications to your portfolio in 2022?
We have some key products lined up for 2022 as we are currently in the last stages of execution before we launch them. Entering new markets is always on the agenda for us especially in the hyper-digitalized post-pandemic world of today. We are always on the lookout for channel partners who can support us in taking our avant-garde solutions to the local markets in their region.
We recently launched single-phase uninterruptible power supply (UPS) systems with lithium-ion battery models, expanding our portfolio of line-interactive UPS. With capacities ranging from 1500 – 3000VA in the tower and rack-mount convertible designs, the highly-efficient single-phase Vertiv™ Edge Lithium-Ion UPS family is now available across Europe, the Middle East, and Africa (EMEA).
Furthermore, we also released the results of an in-depth research project to identify edge infrastructure models to help organizations move toward a more standardized approach to edge computing deployments, with the intent to improve costs and deployment times. The report, Edge Archetypes 2.0: Deployment-Ready Edge Infrastructure Models, builds on the edge archetypes research and taxonomy Vertiv introduced to the industry in 2018. The new research further categorizes edge sites based on factors including location and external environment, number of racks, power requirements and availability, site tenancy, passive infrastructure, edge infrastructure provider, and number of sites to be deployed.