Data centre tacking – Part 3

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

Meanwhile, Stephen Parker, NewLease head of cloud strategy, says data centre 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 centre 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 centre 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 centres, 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 centre in the United Kingdom and Pionen data centre 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 centre 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 centre 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 centres are going to be inundated because these businesses need cloud and don’t have the skills to build their own.”

He says data centres 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.”

For part 1 click here and for part 2 click here

This article was first published in the April issue of The Channel magazine – click here to subscribe

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