Data centre spend high priority for Kiwi companies

Data Center spend is high priority for many CIOs according to Gartner. Heather Wright gets some industry view on the state of play for the channel.

When it comes to data crunching, Team New Zealand yacht designer and engineer Nick Holroyd has high demands.

So it's not surprising that three years ago the team found its computing requirements had outgrown the site infrastructure at its Viaduct building.

It wasn't so much the technology which was proving problematic – the team had invested in some significant Dell computing equipment capable of processing the huge amounts of data used to improve the design and set of the boat – instead it was the infrastructure required to support the technology, in particular, power and cooling.

There was only one power feed into the Viaduct building, creating a single point of failure, supply was inconsistent and there was a risk of maxing out that power feed. Benchmarking of the Dell machines at Cambridge Uni had also shown 25kW peak power per rack.

"Our power density was much, much higher than traditional users," Holroyd says.

"I had painted myself into a corner. We knew we needed this compute resource, but that meant we also needed [improved] power and cooling.

"There was going to be very high capital expenditure to install our own data center.

The crunchpoint, however, was the ability to have their own data center ready by the time Dell delivered the machines, something Holroyd didn't think could be done.

His priorities for a data center partner included high power and cooling density at 30kW per rack, a speedy installation and no downtime in operational outages, high bandwidth and a secure connection from The Shed in the Viaduct Basin to the cluster, and having regular access to the data center to enable Team New Zealand engineers to 'troubleshoot' in the early days.

Security too, was a high priority – notes Holroyd, 'We are reasonably paranoid about security'.

Vocus' Albany data center, with redundancy built in with separate transformers, 2N unlimited power supply – plus 2N diesel generators on standby in case the external power supply fails – and high security, fitted the bill. The deal was done 'within a couple of weeks' in time for the Dell delivery.

"It's our first real foray into high performance computing," Holroyd says.

"The up time is so much higher in a professionally run data center, and long term, having a really big piece of hardware in such a professional environment, which is so clean, temperature controlled... [is better for the hardware].

"The other thing that's really good for us is that it's very cost effective. We can completely lock in our cost structure, which is essential when you're raising money for a campaign up-front. You want to have spent your last dime as you turn the lights off after winning.

There's another benefit, too, says Holroyd. "At the end of the day, I'm a yacht designer. Now, I can forget about the technology side, and just concentrate on my core job of making the boat go faster.

While Team New Zealand's requirements were a little 'unusual' and very specific, they are indicative of more and more businesses needing to crunch serious data, and the increasing demand for data centers.

In fact, Matthew Boon, Gartner vice president and group team leader, says data center hardware alone is forecast to be a $90 billion/year market now, and Gartner expects that to grow to $110 billion by 2017.

And that's just hardware as it's very difficult to factor in everything else associated with data centers, he says.

Boon says a global survey of CIOs shows infrastructure and data center spend is now second on their list of priorities, with BI/analytics ranking number one, and mobile number three. Cloud comes in at number five with networking at six.

"And they're all really intertwined." Within the data center arena, he says security is a top concern – in fact, it's one of the top two areas of investments companies are looking to make with their data center expenditure.

Private cloud is also proving an area of 'high interest', along with integrated, or converged, systems where servers, storage and networking are integrated into a single solution.

While it offers greater efficiencies and a more effective way of managing IT, it comes with an upfront cost and an impact on how data centers are built, powered and cooled – and how the channel needs to sell the offerings.

"If you look at the big vendors – HP, IBM, Oracle, Cisco – most are moving much more towards converged offerings," says Boon.

"And for the channel, that has to be positioned differently to to the customer and there are different skill sets required to sell and support.

He says there will be a lot more focus from vendors over 2014 in helping the channel – and vendors' own sales people – to sell the offerings, saying through 2013 some vendors blamed poor results on poor sales execution, but he believes it was more a case of the channel and sales teams, 'not being empowered to sell effectively'.

"If you're used to selling infrastructure in the traditional way, when an organisation just needs servers for applications or storage for data, with the move to converged infrastructure you clearly need skills to sell an overall solutions to data center managers or CIOs. You have to sell much more broadly across the ecosystem," Boon says.

"It's not just about how to sell the technology. Many more CIOs are becoming much more business focused. They're reporting to the CEOs much more and need to be able to show the linkage between the investment and the value it brings back to the business – how will this reduce customer response times etc, and bring real value to the business.

Boon says while many in the channel are well aware of the need to align a sale with business benefits for the customer, many are 'not doing it as effectively as they might'.

"Typically, the business value still comes back to return on investment – you'll be spending X million and your return on investment will be in 12 to 18 months.

"I'm not seeing them getting down to the granular level and being able to say, we have examples where this investment reduced response times by five to eight seconds on average... and providing information like that, that the CIO can take back to the business.

"You're not always going to be able to get as granular as that, but the discussion needs to be had as to what the business is trying to achieve – improved retention, more customers... – its pain points, and then you map the technology to that.

Says Boon: "It's really important to keep on top of the changes that are coming. We're seeing some of the biggest changes in a long time in the way vendors are approaching infrastructure, with the likes of IBM exiting the x86 business.

"The channel needs to remain relevant in a much more commoditised environment, and to do that they need to offer a value proposition and ongoing services, and ensure they make IT relevant to the customer's business issues.

Meanwhile, Stephen Parker, NewLease head of cloud strategy, says data center providers need to focus on vertical alignment.

Parker says like any industry experiencing something 'new', over the past 10 years 'every man and his dog had tried to get into hosting'.

"It's the same with any new idea. But now we're definitely in the consolidation phase.

Parker says that means a squeeze on the mid market data center providers.

The big guys like Amazon, Microsoft and Google will be delivering hosting services on a global basis at price points no-one can touch, with mid-market players such as Revera 'buying up small guys [in Australia] to get their customer base – not the technology.

"There's going to be no place for the accidental hoster with a data center in their stationery cupboard, with one rack. That's not going to happen, even in New Zealand," Parker says.

"But there will be space for highly specialised and differentiated data centers, just as in retail Coles and Woolworths dominate the market in Australia, but there are also the high street butcher, baker and so on, offering services you don't get at the big stores.

He cites the example of The Bunker data center in the United Kingdom and Pionen data center in Sweden.

Both are built in underground former military command centres, capable of surving bomb attacks.

"They're not cheap, but if your data is so important, you want ultra security, this is survival of data to the extreme," Parker says.

While that might be an extreme, Parker says local data center providers need to look to vertical industry alignment and providing the services – perhaps integration or customisation, industry specific offerings, local knowledge of legislation or industry requirements and so on – the big players can't.

"So the big global players can provide a vanilla offering with scale and price point, while the mid market offerings are differentiated.

"But they do need to be careful what they use as differentiation. It can't be things that can easily be removed.

"In Australia we saw a lot play the local card saying they had a data center in Sydney. Then Amazon opened in Melbourne and Sydney. And Microsoft is coming to Melbourne and Sydney, supposedly. And Rackspace is coming.

"If you're going to play a differentiation card that is really easy to remove, be very, very careful. But it's not so easy to remove something like a focus on the wine sector, with knowledge of local legislation and requirements and stuff built in that isn't represented elsewhere.

Parker says there is an upside to it all, though. "There are lots and lots of small business specialists in New Zealand, most of whom are doing the traditional, on-premise thing, but they've got to do cloud.

"So data centers are going to be inundated because these businesses need cloud and don't have the skills to build their own.

He says data centers will be required to take the 'raw ingredients' – such as racks, connections – they offer larger clients and package it up into 'ready to eat' offerings for the small business specialists.

"They will need to productise services they have provided to more sophisticated clients into standard ready to go meals for mass adoption – where the customer can then decide whether to warm it up, break it out into several meals and so on.

While Team New Zealand's requirements were a little 'unusual' and very specific, they are indicative of more and more businesses needing to crunch serious data, and the increasing demand for data centers.

In fact, Matthew Boon, Gartner vice president and group team leader, says data center hardware alone is forecast to be a $90 billion/year market now, and Gartner expects that to grow to $110 billion by 2017.

And that's just hardware as it's very difficult to factor in everything else associated with data centers, he says.

Boon says a global survey of CIOs shows infrastructure and data center spend is now second on their list of priorities, with BI/analytics ranking number one, and mobile number three. Cloud comes in at number five with networking at six.

"And they're all really intertwined." Within the data center arena, he says security is a top concern – in fact, it's one of the top two areas of investments companies are looking to make with their data center expenditure.

Private cloud is also proving an area of 'high interest', along with integrated, or converged, systems where servers, storage and networking are integrated into a single solution.

While it offers greater efficiencies and a more effective way of managing IT, it comes with an upfront cost and an impact on how data centers are built, powered and cooled – and how the channel needs to sell the offerings.

"If you look at the big vendors – HP, IBM, Oracle, Cisco – most are moving much more towards converged offerings," says Boon.

"And for the channel, that has to be positioned differently to to the customer and there are different skill sets required to sell and support.

He says there will be a lot more focus from vendors over 2014 in helping the channel – and vendors' own sales people – to sell the offerings, saying through 2013 some vendors blamed poor results on poor sales execution, but he believes it was more a case of the channel and sales teams, 'not being empowered to sell effectively'.

"If you're used to selling infrastructure in the traditional way, when an organisation just needs servers for applications or storage for data, with the move to converged infrastructure you clearly need skills to sell an overall solutions to data center managers or CIOs. You have to sell much more broadly across the ecosystem," Boon says.

"It's not just about how to sell the technology. Many more CIOs are becoming much more business focused. They're reporting to the CEOs much more and need to be able to show the linkage between the investment and the value it brings back to the business – how will this reduce customer response times etc, and bring real value to the business.

Boon says while many in the channel are well aware of the need to align a sale with business benefits for the customer, many are 'not doing it as effectively as they might'.

"Typically, the business value still comes back to return on investment – you'll be spending X million and your return on investment will be in 12 to 18 months.

"I'm not seeing them getting down to the granular level and being able to say, we have examples where this investment reduced response times by five to eight seconds on average... and providing information like that, that the CIO can take back to the business.

"You're not always going to be able to get as granular as that, but the discussion needs to be had as to what the business is trying to achieve – improved retention, more customers... – its pain points, and then you map the technology to that.

Says Boon: "It's really important to keep on top of the changes that are coming. We're seeing some of the biggest changes in a long time in the way vendors are approaching infrastructure, with the likes of IBM exiting the x86 business.

"The channel needs to remain relevant in a much more commoditised environment, and to do that they need to offer a value proposition and ongoing services, and ensure they make IT relevant to the customer's business issues.

Meanwhile, Stephen Parker, NewLease head of cloud strategy, says data center providers need to focus on vertical alignment.

Parker says like any industry experiencing something 'new', over the past 10 years 'every man and his dog had tried to get into hosting'.

"It's the same with any new idea. But now we're definitely in the consolidation phase.

Parker says that means a squeeze on the mid market data center providers.

The big guys like Amazon, Microsoft and Google will be delivering hosting services on a global basis at price points no-one can touch, with mid-market players such as Revera 'buying up small guys [in Australia] to get their customer base – not the technology.

"There's going to be no place for the accidental hoster with a data center in their stationery cupboard, with one rack. That's not going to happen, even in New Zealand," Parker says.

"But there will be space for highly specialised and differentiated data centers, just as in retail Coles and Woolworths dominate the market in Australia, but there are also the high street butcher, baker and so on, offering services you don't get at the big stores.

He cites the example of The Bunker data center in the United Kingdom and Pionen data center in Sweden.

Both are built in underground former military command centres, capable of surving bomb attacks.

"They're not cheap, but if your data is so important, you want ultra security, this is survival of data to the extreme," Parker says.

While that might be an extreme, Parker says local data center providers need to look to vertical industry alignment and providing the services – perhaps integration or customisation, industry specific offerings, local knowledge of legislation or industry requirements and so on – the big players can't.

"So the big global players can provide a vanilla offering with scale and price point, while the mid market offerings are differentiated.

"But they do need to be careful what they use as differentiation. It can't be things that can easily be removed.

"In Australia we saw a lot play the local card saying they had a data center in Sydney. Then Amazon opened in Melbourne and Sydney. And Microsoft is coming to Melbourne and Sydney, supposedly. And Rackspace is coming.

"If you're going to play a differentiation card that is really easy to remove, be very, very careful. But it's not so easy to remove something like a focus on the wine sector, with knowledge of local legislation and requirements and stuff built in that isn't represented elsewhere.

Parker says there is an upside to it all, though. "There are lots and lots of small business specialists in New Zealand, most of whom are doing the traditional, on-premise thing, but they've got to do cloud.

"So data centers are going to be inundated because these businesses need cloud and don't have the skills to build their own.

He says data centers will be required to take the 'raw ingredients' – such as racks, connections – they offer larger clients and package it up into 'ready to eat' offerings for the small business specialists.

"They will need to productise services they have provided to more sophisticated clients into standard ready to go meals for mass adoption – where the customer can then decide whether to warm it up, break it out into several meals and so on.