So, the leading international name in the data centre industry has declared that the ‘Data Centre is Dead’. A pretty damning headline as we move into 2019, but as their report goes on to explain, it’s far from the case for some – the use of data centres is evolving and customer demands are shifting. If, as a data centre provider, you have the quality, the agility and understand your market place enough to meet the shift then you’re very much alive.
The data centre industry, in terms of how it is ‘used’ by the client is shifting and that’s only natural to keep pace with the rapid evolution of technology, IT services and the way in which data services and infrastructure are being consumed by the technology provider and the end user.
What is and will always be the case, is that quality of service, infrastructure and management are absolutely key. Users need guaranteed power supply, cooling, security, network and support – this hasn’t changed in the last couple of decades and it won’t in the next.
But, if we look at the traditional customer base of a typical colocation data centre– and we’re talking your regional mid-sized data centre here rather than the x00,000 sqft facility - then there have been huge shifts more recently, but these haven’t happened overnight.
Many of the typical end users, or mid to smaller colocation space users of 2-5 years ago are quite rightly moving towards more cloud hosted or IaaS solutions due to the minimal capital outlay required, lower touch maintenance requirements, flexibility of such platforms and the future proofing offered when compared to the standard server hosting/colo alternative. It’s not suitable for all, but its suitable for many and this has seen swarms customers of this type absorbed into cloud providers’ infrastructure – hosted within your traditional data centre, or data centres.
But, at the same time, and intrinsically related to the above, growth of cloud and similar hosted services has grown astronomically over the same period – both in number and in size, and they aren’t all Google, AWS and Azure!
There’s still huge value for small to medium and many large firms in having that close interaction with their technology provider which the likes of the big three aren’t able to offer – and we’re seeing such providers thrive within our data centre as their own customer take-up continues to grow at a rapid rate within our data centre facility.
So, ours is far from dead – we’ve got some serious providers delivering solutions to more customers than ever before. Being truly provider agnostic, extremely well connected to cloud focused connectivity providers and other data centres, and offering advantages that these providers truly value means our data centre is alive and kicking – but, we still offer the same ‘old’ high levels of power protection, cooling, security, network and support as we have done since 2007.
Having said all this, if a data centre is not recognising that their customers are spreading their workloads ‘cross-technology’ and are not enabling this by offering a range of interconnects and a strong mix of technology providers within an immediate ecosystem, and, crucially, getting the message that this exists across to their customer base effectively then they could be very well on the way to being dead in the water in 2019.
The Brexit Effect
We’re not going to discuss the ins and outs of Brexit itself here as its clear no one actually knows what that means yet. That’s the very point – the uncertainty around Brexit is impacting buying behaviour before we can even consider the implications of any ‘deal’. The uncertainty could well be worse than the eventual reality – at least then we will know what we are dealing with.
What we’re seeing at close quarters, is an impact on both customers buying behaviour and supplier investments within the UK.
From a data centre customer point of view, the appetite to secure data centre space for speculative growth plans and future proofing has fallen sharply in recent times and we expect this to carry on into 2019 as we all wait to see what it will mean for our businesses and our customers – generally, forecasts are being reigned in, just in case – which is affecting spending on data centre space.
We’re also seeing a greater focus on consolidation and cost reduction of existing data centre space, often resulting in a data centre relocation to a smaller provider and far less focus on fitting out new environments to accommodate new large scale IT estate – unless that IT estate is needed at that particular point in time.
It’s a trend that we see affecting the larger wholesale providers more than the relatively smaller data centre provider, such as TeleData. For ourselves, we generally sell space according to need rather than expectation, so we’re in a more comfortable position than many may be. Our rack by rack growth remains strong.
It’s very similar for data centre suppliers. New entrants in the data centre market are few and far between anyway due to the huge capital requirements and the time to profit reality, and again the uncertainty seems to have put a real brake on new providers coming to the data centre market place.
What we’re seeing instead is a change of tact – with providers-to-be and those seeking expansion mopping up independent providers at a premium to be sure of an immediate return. So, the providers are getting larger, fewer and customer choice is unfortunately being eroded. We expect to see more of this in 2019, but this will also lead to potential capacity shortage at the smaller end of the market unless some of the smaller independent providers find the appetite to spend and build.
As we talked about at the beginning, data centres are evolving and this is being driven by customer selection criteria.
Data centre customers are now looking at their potential 5-7 year requirements and asking their providers how they can accommodate their potentially unknown future demands. Not an easy task to offer these assurances, but again the ecosystem and a dynamic offering comes into play. Customers cannot be restricted as a time where technology trends are moving faster than ever.
What is very much here and now is the idea of multi-cloud and hybrid-IT, mixing clouds and mixing hosting types. The traditional ‘colocation only’ facility is too small in terms of its service offering for the majority of providers – but those providers could potentially be too far behind the curve to evolve into the provider that they need to be – especially with the current low levels of investment and uncertainty.
Relationships and partnerships are more important than ever. It’s a trust business, and in 2019 we expect to see more customers basing buying decisions and who they are working with and how they can help them on their hosting journey. A rigid approach is not acceptable ay more – things change and everyone involved needs to be adaptable – including contracts and services.
Data Centre Power Concerns and Costs
As the power grid continues to creak due to its capacity constraints and power costs continue to rise, 2019 could be a tricky year for data centres – unless they have some plans in place to mitigate against the risks these facts present.
For this reason, you will struggle to find a successful data centre provider out there who hasn’t invested heavily in people to manage their commercial energy relationships, power efficiencies and to keep their finger on several pulses to predict the future of the power market.
The impact this has on customer of data centres is likely to increase in 2019, but just how much impact depends heavily on how much focus the data centre provider is placing on minimising this impact, which is a question that any data centre customer should be asking of their provider.
If you look at the typical electricity bill for a data centre with x MW power reserved from the grid, It could surprise you that only around 30-40% of that bill could be related to power consumption on the meter. The remaining 60-70% is generally made up of green charges, reservation charges, charges for losses between the grid and the data centre transformer and a range of other elements that also come into play – so when a provider seems to focus heavily on how much power you need and prices against that, they do so with very good reason.
In 2019 we have some big plans to fight back against some of the above. We’re planning to invest over £1.5million into on site energy storage – which will give us multi-megawatt battery storage capacity – upstream of the standard UPS systems that any data centre has in place. What this enables us to do is to draw power from the grid at off-peak (cheaper) times, and draw power from these batteries at peak (more expensive) times, thus lowering our metered charges. This storage capacity will also see us assist the grid and feed power back into the grid at the peak times where they are struggling to supply, and again there is financial benefit to us for doing this.
As well as helping with energy charges and supply, this will also give us another layer of UPS, which I’ll explain in another blog!
This investment into new technologies is just one of a number of projects we’ll be undertaking in 2019 to turn the challenges of power supply and cost into a potential opportunity – it’s going to be a big year for us, and we’re looking forward to it.