Significance of Data Centres and Cloud Usage for Employment and Gross Value Added is Growing Significantly

• AI is a central enabler for digital transformation
• Data centres are the backbone for the effective use of AI
• Cloud usage boosts innovation and productivity in the German economy
• 5.9 million employees depend on the ecosystem of digital infrastructures
  - with an additional 126,000 every month
• 250 billion Euro in gross value added is triggered through data centre use
• Data centres compensate for the disadvantages of rural areas
• Alliance for the Strengthening of Digital Infrastructures in Germany calls for priority for the construction of data centres

Berlin, 11 October 2024 - The use of artificial intelligence (AI) will be crucial to Germany's competitiveness and future viability of Germany's economy in the coming years. New digital business models are opening up dynamic growth opportunities across all industries through productivity increases and innovations, according to a recent study by the Institut der deutschen Wirtschaft Consult GmbH on behalf of the Alliance for the Strengthening of Digital Infrastructures in Germany, founded under the umbrella of the eco Association.*

According to the study, a high-performance ecosystem of digital infrastructures is essential for this development. Data centres, for example, enable the processing and storage of large amounts of data that are generated by the advance of digitalisation, particularly by high-performance technologies and AI-based applications across all sectors of the economy and society. In this study, data centre users are defined as companies that utilise public cloud, private cloud, or colocation services.

Cloud and AI usage boosts innovation and productivity

Innovative companies that use AI generate 32 per cent of their revenue from new products or services. The digital infrastructure ecosystem serves as a particular driver here: when the AI tools are used in the cloud, the share of new products and services account for around 40 per cent of revenue. For innovative companies that do not use AI, the share is just 25 per cent. In contrast, for the companies that do no use data centre infrastructure, only 8 per cent of their revenue from new products or services is generated.

Companies that use data centres are therefore even more innovative than those that rely solely on local IT infrastructure within their own company. In addition, data centre users experience twice the productivity growth through the application of generative AI.

Currently, 48 per cent of companies use either a public cloud, a private cloud or both. Colocation services are currently directly used by 11 per cent of all companies. The importance of colocation data centres for the entire ecosystem of digital infrastructures goes far beyond this, as cloud services are currently provided almost exclusively in colocation data centres.

The significance of data centres for employment and gross value added is growing

"For Germany's economy, whose success largely depends on the innovative strength of its companies, data centres are a key driver of digital innovation," says Dr. Béla Waldhauser, Spokesperson of the Alliance for the Strengthening of Digital Infrastructures in Germany in the eco Association. "The importance of data centres for Germany's international competitiveness can hardly be overestimated," Waldhauser continues.

The study results confirm this: 55 per cent of the companies report that the use of cloud technology has a positive impact on their innovation activities for new products and services. This higher level of innovation also makes cloud users more economically successful: 72 per cent of these companies state that improved processes through cloud use lead to additional sales.

5.9 million employees depend on the cloud - with an additional 126,000 every month

These improvements at the company level are also reflected from a macroeconomic perspective. According to the representative survey results of 500 companies in Germany, and taking into account the indirect effects on other companies, data centre usage generates an additional gross value added of around 250 billion Euro for the German economy. This is also reflected in the high significance of data centres for employment in Germany: In 2024, a total of around 5.9 million people are employed in companies whose business model would not be possible without the cloud. Two years ago, this figure was just over 2.8 million employees. This represents a monthly increase of 126,000 employees in companies whose business model would not function without the cloud.

Alliance for the Strengthening of Digital Infrastructures in Germany calls for priority for data centres

"The macroeconomic productivity effects of digitalisation can only be realised with a suitable infrastructure landscape," says Volker Ludwig, Managing Director DACH at the colocation provider Digital Realty. Political framework conditions are also crucial for this. "It can take up to six years for a planned data centre to be approved and built. Given the associated productivity losses in the user industry, this is simply too long. We need more speed in planning and approval processes to build the necessary computing capacities for digital transformation in a timely manner." This also includes a new land use and approval policy, as further explained by Ludwig.

Data centres compensate for distance disadvantages of rural areas

"Especially for rural areas, data centres play an important role in terms of the competitiveness of companies based there," adds Carsten Kestermann, Director Public Policy at AWS. While 24 per cent of companies in cities already use generative AI, only 17 per cent of companies in rural areas do so. However, when rural companies use the services of data centres, they use AI at a similar rate (35 per cent) to companies in cities that use data centres. Accordingly, the rural digital avant-garde can use data centres to compensate for their geographical disadvantages compared to cities. "To counteract the disadvantages of rural areas, the digital infrastructure must be rapidly expanded, especially where economic activity is concentrated. Regional actors, such as the 'Mittelstand 4.0' competence centres, should in particular draw the attention of small and medium-sized enterprises (SMEs) to the advantages of using data centres and work to dispel any reservations," Kestermann urges, speaking on behalf of the Alliance for the Strengthening of Digital Infrastructures in Germany's eco Association.

The study will be available for download from 20 October 2024 at the following link: https://www.eco.de/studie_spillover-effekte-von-rechenzentren.

*The study is based on a survey of 499 randomly selected companies in Germany, conducted in August 2024. The study results were extrapolated to be representative of the German economy.

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