Dive Brief:
- Johnson Controls has announced the creation of a new data center-focused organization, Global Data Center Solutions.
- The organization will focus on operationalizing Johnson Controls’ scale to provide integrated solutions to data center customers across the world. Todd Grabowski will serve as its president, reporting to Chairman and CEO George Oliver, according to a June 5 release.
- “Todd and his team will prioritize offering our full suite of smart building technologies — coupling our unique set of energy-efficient, sustainable, and safe data center solutions with unmatched service — to meet increasing demand and drive Johnson Controls' continued growth and value creation,” Oliver said in the release.
Dive Insight:
Johnson Controls has been experiencing strong sales and revenue growth due to the massive surge in the data center market. The company’s data center orders in the first half of fiscal year 2024 have surpassed last year's totals, Oliver said on a May 2 earnings call, noting its expectation of similar growth in the coming years.
Sales for Johnson Controls’ North America building solutions segment rose 8% organically year over year, to about $2.74 billion. Johnson Controls Executive Vice President and CFO Marc Vandiepenbeeck said that continued demand in the data center market drove nearly 50% growth across the company’s HVAC controls platform in North America.
The company said in its June 5 release that its products and solutions are already widely used in “the most demanding data centers in the world.” It added that it has a portfolio of integrated solutions that will help “minimize costs, maximize efficiency, and optimize timing for data center owners.”
Data centers are responsible for about 1% to 1.5% of the world’s electricity use, according to the International Energy Agency. Over the past few years, these facilities have demanded ever more energy, with data center energy use growing by 20% to 40% each year. The IEA expects that energy use to continue growing moderately in coming years.
According to a study by Forrester Consulting that Johnson Controls commissioned in August 2023, only 7% of 305 smart building strategy leaders at data centers believed their systems and equipment were fully integrated.
The report states that data center leaders need smart building partners with “breadth and depth of expertise.” It notes that operators seek partners who can enable smart building platforms used by cross-departmental stakeholders, offer one digital platform across all sites and use cases, and can enable integration into all building systems.
"Our global footprint allows us to scale and deploy these solutions wherever they are needed and earn long-term connection with those customers through our unparalleled service offerings,” said Grabowski. He most recently served as vice president and general manager of the firm’s HVACR business and will continue to lead that portfolio in his expanded role, according to the release.
Johnson Controls says it is “well-positioned” to capitalize on this rapidly increasing demand due to ongoing innovation efforts and strategic advantages.
The advantages the firm cites include its broad range of air- and water-cooled chillers that can support cooling demand growth; investments in test laboratories where equipment can be designed, tested and demonstrated to accelerate the pace of innovation; and domain expertise that enables it to provide “complete package solutions that drive outcomes while providing service for the entire life cycle of the asset.”
This echoes Oliver’s comments during the Q2 earnings call, when he said that the company had been investing in the industry “over the last few years, because we saw this coming. We are well-positioned with the cooling technologies and solutions, and a lot of that is working directly with each of the key hyperscalers and [colocation operators].”
At the time, he noted that Johnson Controls had engaged almost 100% of data center operators and is partnering with them to understand how to deploy cooling technologies at the chip level and how these systems need to be configured to ensure technology investments are complemented with its go-to-market strategy.
“We are providing more than just chillers. As we go in with our customers, we have got strong capabilities across air handlers, as well as [computer room air handling], and now we are including the full solution, including controls, building controls, fire and security,” OIiver said on the call.
“We have optimized our investments and solutions to ensure we are uniquely qualified to provide the differentiated outcomes data center customers need and expect from an industry leader like Johnson Controls," Grabowski said in the June 5 news release.
