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The misbehaving data centre industry

Posted by on November 18, 2013

On the 20th of November, I will be speaking at DatacenterDynamics Converged London. If you want to catch my talk, it will be at 14:30 in Hall 5. Over the last few months, I have beentaking a long, hard look at the data centre industry, and my talk will focus on how, as an industry we’ve been letting our customers down.

How do I believe we have been falling short?

Well, put simply, I feel data centre outsourcing is out of step with the IT that it serves. It has become a disproportionately expensive part of the total IT stack, and data centres have remained large, long-term investments in a world of pay as you go IT. Data centre outsourcing needs to become more relevant to enterprises. I’m not one for scaremongering but I believe that we’re in grave danger of letting a massive opportunity slip away because of the way we’re behaving as an industry. The good news is, that it’s within our capabilities to change and to deliver a new kind of value to customers.


IT is EVERYWHERE

An increasing number of businesses (from our supermarkets to our transport companies) are fundamentally technology-led, and we know this is going to continue at an ever-accelerating pace. As many of you may know, Infinity is the parent company of iCITY, a new, digital hub being created in the Queen Elizabeth Olympic Park that will support technology focused enterprises in east London. As Gavin Poole, CEO of iCITY, says:

“London is becoming the epicentre of technological enterprises. It is now the home of hundreds of successful technology-focused businesses. Other cities, like New York, are now looking to London as a model.”

Does this mean that the data centre outsourcing industry is thriving in the UK? Well, not exactly. Data centre outsourcing is certainly growing, but roughly 80% of the UK’s data centres are still in-house. We know businesses are seeking out every possible means to do more with less by refreshing, consolidating and virtualising their infrastructure and looking at creative solutions for end-user devices. But the most obvious answer to doing more with less — outsourcing the data centre itself — isn’t always appealing. Looking forward, BroadGroup projections suggest that in two years more than 70% of organisations will still be managing their own data centres.

 

Why is this?

Clearly, when it comes to the data centre, our industry is not meeting the needs or expectations of enterprises.

IT has changed unrecognisably in the last two decades. There has been an inexorable increase in capability and flexibility matched by a continual downward trend in unit cost.

Data centre operators have done little to demonstrate any real understanding of the varied roles that IT plays in the business of our customers. As a result, the service offerings and commercial models that we’ve developed simply don’t appeal to the majority of organisations for their IT needs. As data centre operators, we’ve consistently behaved like inflexible, landlords, rather than IT partners looking to forge long, mutually beneficial relationships with enterprise customers

Currently, we only really appeal where an organisation needs its infrastructure to be near the infrastructure of another organisation: the hint is in the word ‘colocation’. Today’s colocation data centres are good for managed service providers and others who need lots of connectivity options. They’re an established solution for latency-sensitive use cases such as financial trading, and operators have seen good growth among businesses with significant ecommerce and content distribution needs who want to reduce latency for end users.

However, for that 80% of IT that’s still in-house, colocation isn’t what it’s about. If data centre operators don’t change to meet a much wider range of enterprise needs, a huge market will remain untapped. Enterprises will turn to data centre outsourcers begrudgingly and only as a last resort.

 

The need for change

At Infinity we’ve decided it’s time to change. It’s time to stop behaving like landlords and start behaving like partners providing an integral part of the IT stack. It’s time to become value-driven and workload-focused.

We are introducing three new products to provide more value and flexibility:

1. Burst

Burst provides a genuine pay-as-you-go offer. It’s common for enterprises to have systems and workloads that are well understood but variable in demand, whether cyclically or more erratically. We can no longer look them in the eye and tell them that the only way they can cater to variable demand is to pay for power they don’t always need.

So for Burst we have introduced a pricing model with a standing charge and a per-unit charge based on actual power consumption.

 

2. Dynamic

Enterprises undergoing IT transformation don’t know what their future estate will look like. They’re consolidating here, deploying new systems there, trying cloud services but unsure how that will pan out. It’s all change, all the time, and for many, this change drives a re-evaluation of the requirements and value of different parts of the IT estate. These enterprises don’t need Tier-3 quality for everything, and if we are not flexible about this, we shouldn’t be surprised if they only ever consider us for a small part of their IT infrastructure.

So, we are helping this type of enterprise customer to match the cost and features of their data-centre space and power to the value and requirements of the IT being hosted. We’re offering them four types of platform — High Availability, High Density, Economy and Service Provider Zone. We will also work with our customers to make it painless to change between these platforms more-or-less instantly. They’ll commit to a fixed power capacity but be able to change, how much of that power is being drawn at any point in time from each different platform, each at a different price point. We intend to offer the same quality of service across all the platforms.

 

3. Agile

Burst and Dynamic require a minimum power commitment. However, our third model completely removes the requirement for any kind of commitment. Our Agile model is specifically designed for the all-too-common scenario where an enterprise has a high degree of uncertainty about the space and power use of specific systems 1, 3, 5 or 10 years down the line. A typical example would be an enterprise embarking on a virtualisation and rationalisation initiative. Another would be an enterprise expecting to grow but not knowing how fast or by how much. Agile lets such customers shrink their space and power use freely, and grow it, as necessary, to meet new needs that come along. Theoretically a customer can tell us on day one that they want 100kW, then on day 2 change their minds, use 50 or 0, and only pay for 50 or 0. If, on day 3, they need 100 again, that’s what they get. It’s not a very realistic example, but that’s the kind of flexibility the model supports.

 

Service Provider Zone

Infinity isn’t a managed service provider, and we intend to remain a pure-play, neutral data-centre operator. However, we think that to meet enterprise needs, we need to make the neutral data centre a welcoming service provider zone: a place where all kinds of service providers can offer all sorts of services to the data centre’s enterprise customers.

 

Relationship-building

Burst, Dynamic, Agile are intended to show enterprise customers that an outsourced data centre can understand and meet their needs. We’re signalling as loudly and clearly as we can that we want to be their partner and support them whether they’re growing or shrinking, consolidating or trying new things.

We hope they see that a data-centre outsource decision doesn’t have to wait until IT transformation is complete (which it never is); or until they have some kind of certainty over every bit of IT (which they never will). Something else we’re leaving behind is the 5-10-year contract. Many enterprises can’t predict their IT architecture requirements 1 or 3 years down the line, never mind 5 or 10. When we tie organisations into long leases they react in two ways: 1: they stay away; or 2: they play it safe and buy space or capacity they don’t need, just in case. Across the industry, many data centres are fully sold, but terribly under-utilised. It’s a waste of money and space and we’d like to see it stop.

Of course we’re hoping that customers will stay with us for 10 years or more. However, we’re going to make that happen by really understanding their IT strategy, being consultative, and delivering the kind of flexible service that lets their IT strategy drive data-centre provision.

We’re also going to get better at customer service and ensure that our service is tied into our customers’ business realities, not designed for our convenience. By which I mean that if the run-up to Christmas is a busy time for a customer, we should not be planning maintenance that goes anywhere near their systems at that time. It sounds obvious, but it’s not actually easy to do, especially when you’ve got lots of customers with different requirements. But it’s what we should be working towards.

I’d like to think that Infinity will be the first Data Centre operator in the UK who creates a product offering that is capable of meeting the changing landscape that is Enterprise IT. For too long, those organisations who own and operate their own compute infrastructure have been burdened by property-style relationships with Data Centre operators, and we want to see this transformed into a service led partnership that is flexible to the ever changing needs of the client.