In this article, learn about:
What data center development is
How data centers are developed
What data center development means for industrial distributors
Summary: Data center development is the process of planning, building, and managing the infrastructure that stores and moves business data. For industrial distributors, understanding this process is essential—whether you are evaluating in-house infrastructure or choosing a technology partner to handle it for you. This guide explains the data center development process, its core components, and what distributors should consider before committing capital.
Industrial distributors run on data. Purchase orders, inventory records, shipment confirmations, and supplier communications flow constantly across systems and trading partners. Keeping that data accurate, secure, and accessible requires a foundation of digital infrastructure—and data center development is how that foundation is built.
Whether you manage your own technology environment or rely on third-party platforms, knowing how data centers work—and what it takes to develop one—helps you ask better questions, make smarter investments, and evaluate vendors more critically.
What Is Data Center Development?
Data center development is the end-to-end process of designing, constructing, and managing a facility or virtual environment that houses an organization's computing resources, networking equipment, and data storage systems. These resources power every digital function a business runs—order management, inventory tracking, electronic data interchange (EDI), and e-commerce transactions.
EDI, or electronic data interchange, is the computer-to-computer exchange of standard business documents—such as purchase orders, invoices, and advance ship notices—between trading partners. It is one of the most data-intensive processes in distribution, and reliable infrastructure is what keeps it running without interruption.
Data centers can take three forms:
On-premises: Physical servers and equipment housed in a facility owned or leased by the organization
Cloud-based: Computing resources hosted and managed by a third-party provider, accessed over the internet
Hybrid: A combination of on-premises infrastructure and cloud services, often used to balance control with flexibility
Regardless of the model, the data center development process covers the same fundamental lifecycle: assess needs, design a solution, build it, configure it, test it, and manage it over time.
What Does the Data Center Development Process Look Like?
1. Requirements and Capacity Planning
The first phase of any data center development project is capacity planning—the process of estimating how much computing power, storage, and network bandwidth the organization will need now and in the future.
For industrial distributors, this requires accounting for peak order volumes, the number of active EDI connections to retailers and suppliers, and the data generated by warehouse management systems (WMS). A warehouse management system is software that controls and tracks the movement and storage of goods within a warehouse. WMS platforms are high-volume data producers—every pick, pack, ship, and receive event creates records that the data center must store and process reliably.
Underestimating capacity at this phase is one of the most common and costly mistakes in data center development. Systems that cannot handle peak load fail at the worst possible time: during peak selling seasons.
2. Site Selection and Design
Physical data centers require careful site selection. Decision criteria typically include proximity to reliable power grids, access to fiber-optic networks, local climate (which affects cooling costs), natural disaster risk, and applicable zoning regulations.
The design phase determines the facility's physical layout, cooling strategy, power redundancy, and security architecture. Redundancy—building duplicate systems so that a single failure does not take the operation offline—is a central design principle for any production data center.
3. Infrastructure Build-Out
Once the design is finalized, construction begins. This phase covers the installation of servers, networking hardware, power distribution units (PDUs), uninterruptible power supplies (UPS), and cooling systems.
A UPS is a device that provides backup power when the main power source fails. It protects equipment and gives systems enough time to shut down safely or switch to a generator. Cooling is equally critical: servers generate significant heat, and even brief overheating events can damage hardware and corrupt data.
4. Connectivity and Integration
After hardware is in place, the data center must connect to external networks and integrate with the software systems the business depends on. For industrial distributors, that includes trading partner networks, e-commerce platforms, ERP systems, and WMS platforms.
An ERP system—short for enterprise resource planning—is software that centralizes core business processes including finance, inventory, procurement, and supply chain management into a single platform. Getting EDI data flowing accurately between the ERP and trading partners is one of the most technically demanding parts of this phase.
5. Testing and Validation
Before any production workloads move to a new data center, teams run extensive testing to confirm that systems perform as expected under load. This includes testing data backup and recovery systems—the processes and tools that create copies of critical data so the business can restore operations if a system fails, is corrupted, or is compromised by a cyberattack.
Skipping or rushing this phase creates risk. Errors discovered in production are significantly more disruptive—and expensive—than errors caught in testing.
6. Ongoing Management and Optimization
A data center is not a one-time project. Ongoing responsibilities include hardware monitoring, capacity management, security patching, compliance audits, and equipment refreshes. For organizations that build on-premises data centers, this work continues indefinitely and requires dedicated personnel.
What Are the Core Components of a Data Center?
Whether you build on-premises or configure a cloud-based environment, the same foundational components are required:
Compute: Servers that run applications, process transactions, and execute business logic
Storage: Systems that hold structured data (like order records and product catalogs) and unstructured data (like documents and logs)
Networking: Switches, routers, and firewalls that control how data moves within the facility and between external systems
Power: Primary and backup power systems, including UPS devices and generators
Cooling: HVAC and liquid cooling systems that keep equipment within safe operating temperatures
Security: Physical access controls, surveillance, and cybersecurity tools that protect hardware and data
What Does Data Center Development Cost?
Data center development costs vary significantly by scale, location, and design complexity. For organizations building enterprise-grade, on-premises facilities, the capital outlay—the upfront investment required before a system goes live—is substantial. Construction, hardware procurement, electrical infrastructure, and cooling systems represent significant one-time expenses, and are followed by ongoing operational costs including power, cooling, staffing, and hardware refreshes.
Beyond direct costs, there are indirect ones: the time and expertise required to design, build, and operate a facility competently. Data center engineering is a specialized discipline, and organizations that lack internal expertise typically engage data center development companies or data center development services firms to manage design and construction.
For distributors evaluating this path, the more meaningful question than "What will this cost to build?" is "What will this cost to run—and what am I actually buying?" Data center infrastructure is a means to an end: what matters is whether business systems stay online, data stays accurate, and operations scale as the business grows.
Why Does Data Center Development Matter for Industrial Distributors?
Industrial distribution is increasingly digital. Retailers expect automated order fulfillment driven by EDI. Supply chain optimization depends on accurate, real-time data exchange between distributors, suppliers, and logistics partners. E-commerce platforms add transaction volume that legacy systems struggle to handle.
All of that activity requires infrastructure. And the question distributors face is not whether they need infrastructure—they do—but whether they build and own it or access it through a partner that has already built it.
The case for building in-house has traditionally rested on control: the ability to configure systems precisely to your needs and keep sensitive data on your own hardware. The case against it rests on cost, complexity, and risk. Data center development is a capital-intensive, expertise-intensive discipline that sits outside the core competency of most distribution businesses.
For distributors evaluating whether to build or buy, the elastic scalability of cloud-based alternatives is worth serious consideration. Elastic scalability refers to the ability to automatically increase or decrease computing resources in response to demand—so systems can handle peak order seasons without requiring you to provision for worst-case loads year-round. On-premises infrastructure cannot do this without significant over-investment in hardware that sits idle most of the time.
What Should You Look for in Data Center Development Companies?
If your organization is pursuing an on-premises or hybrid build, selecting the right data center development company is one of the most consequential decisions in the project. Look for:
Relevant industry experience: Has the firm worked with distribution or logistics operations before? Do they understand the data exchange requirements that come with EDI and supply chain integration?
Design-build capability: Can the firm handle both design and construction, or will you need to coordinate separate vendors?
Certifications and compliance experience: Does the firm understand compliance requirements relevant to your industry, including data security standards?
References and proof points: Can they show completed projects of comparable scope?
Ongoing support: Will they provide managed services after go-live, or does their engagement end at handoff?
How Can Industrial Distributors Modernize Without Building Their Own Data Center?
For most industrial distributors, the better path to modernizing operations is not a data center development project—it is connecting to a cloud-based network that has already built the infrastructure for you.
SPS Commerce Fulfillment gives distributors access to a pre-built, cloud-based trading partner network that handles EDI, order management, and data exchange without requiring you to build or manage the underlying infrastructure. That means no capital outlay for servers, no data center engineering staff, and no risk of being caught underpowered during peak season.
The SPS network connects more than 120,000 companies across retail, grocery, distribution, and logistics—so the trading partner connections you need are already there.
Scale Industrial Distribution with SPS
With SPS Commerce, distributors can manage the full journey from item setup to sell-through performance, getting new partners live faster, keeping warehouse operations running smoothly, and ensuring billing reconciles cleanly with receipts before issues arise.
