DCK Exclusive: Iron Mountain's Evolving Data Center Strategy

Iron Mountain (IRM) is a global brand best known for archiving customer documents, images, magnetic tapes, and providing backup services, including disaster recovery.

Data Center Knowledge recently spoke with the executives tasked with developing the physical data centers and managed services offerings for government and enterprise cloud, data and disaster recovery, cloud seeding and migration for Google Cloud Services, and related initiatives.

Iron Mountain, is best known for "The Underground", which includes data centers operating 220 feet below ground in a heavily guarded former limestone mine in Boyers, PA about an hour drive north from downtown Pittsburgh.

There are 1.8 million square feet developed underground, protected by an OSHA-approved fire department, and Level IV Department of Justice security protocols. The total facility encompasses 1,000 acres underground, with just 20 percent built out for storage and data center use to date.

Read more: EMC and Iron Mountain Take Data Backup Underground

What can be seen from the road is not impressive, and it doesn't come close to telling the entire story. In a similar fashion, the Iron Mountain multi-tenant data center business has largely been flying under the radar. Since Iron Mountain has a relatively small data center footprint in secondary markets like Boston and Kansas City, industry insiders may not realize this information storage Goliath may become a competitive threat.

Iron Mountain is an S&P 500 company with an $8.9 billion market cap. It is also a REIT (real estate investment trust) that operates a massive real estate portfolio containing more than 80 million square feet, spread across 1,350 facilities in 45 countries.

Notably, Iron Mountain serves more than 220,000 global customers including 94 percent of the Fortune 1000, providing storage and information management services. The majority of IRM corporate revenues are derived from document storage and services, where customers are "sticky," and cash flow is dependable. However, in many developed markets while document retention is still required it is a fairly stagnant business.

Iron Mountain also has a large magnetic tape-based disaster recovery business segment serving ~20,000 US customers. The logistics associated with this business are impressive. It requires about 3 million trips annually to pick up and deliver tapes at 30,000 customer locations. This business line is still growing in the low single-digits, since many enterprise and government customers continue to run legacy applications on-premise.

Source: Iron Mountain

On the other hand, the Iron Mountain multi-tenant data center plan first announced in April 2013, now appears to be picking up considerable momentum. The most visible sign was the recent groundbreaking in October, for the first phase of a four data center, 60 MW campus, located on 83 acres in Manassas, VA.

Read more: Iron Mountain Entering N. Virginia with Massive Data Center Build

The initial phase is a 150,000 square foot data center with 10.5 MW of critical power, designed to serve cloud services providers, federal government agencies, system integrators, financial services firms, and healthcare companies.

Iron Mountain plans to complete FISMA High, ISO 27001, PCI DSS Level 1, HIPAA, and SOC 2 Type II compliance audits and certifications for the Manassas campus. The present-day Iron Mountain data centers feature 100 percent uptime track records as well as a 100 percent uptime SLA.

IRM Talks Strategy

Data Center Knowledge interviewed SVP and General Manager Mark Kidd, and CTO Eli Almog, in an effort to discover where the puck is headed. Kidd is a veteran Iron Mountain executive who has launched a variety of new business initiates for the company. Almog joined the IRM data center team less than a year ago to spearhead the nuts and bolts of creating the Iron Cloud.

Although competing to land RFPs from hyperscale cloud services and SaaS providers is not part of the business plan, Iron Mountain is keenly aware that providing customers a competitive total cost of occupancy is still crucial. Kidd explained that a lower cost of power and sales tax was one reason for selecting the Prince William County location for building the latest Iron Mountain campus. However, both executives emphasized that simply providing four walls, a roof, and reliable power for large-scale wholesale deployments was never really the IRM objective.

Building an Iron Cloud

Kidd's vision for Iron Mountain Data Center Solutions has been to leverage Iron Mountain’s strengths in chain-of-custody, asset tracking, compliance, security and service quality to deliver a highly differentiated solution.

Iron Mountain is building a cloud infrastructure designed to pare "storage provisioning times down from months to minutes," according to Almog, "who emphasized the importance of layering value-added services on top of the data." Customers can manage their infrastructure and data remotely down to the equipment level with RFID tag tracking, and secure DCIM-enabled customer portal.

Source: Iron Mountain

Iron Mountain’s cloud-based service offerings utilize Virtustream® xStream® and Virtustream Viewtrust® software to orchestrate, automate and secure cloud storage services, including:

In April, QTS Realty announced a partnership with Virtustream/EMC to provide FedRAMP compliant government cloud in Dulles, VA and Dallas, TX. It appears that Iron Mountain and QTS (Carpathia) could be competing in Virginia for government customers with a similar product/service offering.

Read more: Will Federal Data Center Construction Freeze Benefit Colocation Providers?

Kidd feels that the long and deep relationships Iron Mountain has with government agencies, and unique service offerings, will help to differentiate Iron Mountain in the marketplace. Almog emphasized that the Iron Mountain relationship with Virtustream was collaborative, and he was working on new services and use cases.

IRM Needs Scale

However, Iron Mountain needs to scale colocation data center solutions more quickly than organic growth alone can provide. This means that M&A will likely augment ground-up data center development to accelerate offerings for customers.

Kidd said Iron Mountain will be evaluating expansion alternatives that are good fit for delivering consistent solutions for customers across multiple markets. He said the goal will be to "thoughtfully deploy capital" with an eye toward asset quality and standardization of services across a larger data center footprint.

Read more: How TierPoint Quietly Built a Data Center Empire in Secondary Markets

Iron Mountains must first decided if other Tier 1 data center markets will be targeted first, or if a more "ubiquitous" footprint in smaller US markets would be a more prudent way to grow. M&A criteria would include: data center design, quality of the footprint, overall asset quality, and ability to deliver services consistently across the portfolio.

Seeding the Cloud

On November, 30 Amazon Web Services re:Invent 2016 hogged the headlines when the company shared its Snowmobile tractor-trailer rig capable of transferring and transporting exabytes of data to the cloud in just weeks. Who doesn't like 18-wheelers and Legos?

Back in April of this year Iron Mountain wrote a low key corporate blog post to tout a solution for companies needing large-scale data migration to the cloud. The service is called Iron Mountain's cloud seeding and migration, a solution which supports the Google Cloud Platform, originally announced in March 2015.

It could be relatively easy for Iron Mountain to take this service to the next level, since it already operates an enormous fleet of trucks utilizing patented security and tracking protocols with an auditable chain of custody.

Disaster Recovery on Steroids

Iron Mountain serves the needs of more than 2,300 global customers in Boyers, PA alone. It is an underground city with over 2,700 daily workers, including ~200 Iron Mountain employees. In 2008, Marriott leased 12,500 square feet of space to establish a data center in the Underground for disaster recovery purposes. Global IT leader NEC Corporation is a data center tenant, as well as several US government agencies.

The Underground provides customers protection from natural and man-made disasters, including an EMP event. An EMP, or electromagnetic pulse, is a sudden burst of high-energy electromagnetic radiation generated by solar storms or high-altitude nuclear blasts. The damaging current and extremely high voltage surges can result in the complete destruction of unshielded data processing and storage systems.

Kidd mentioned there was currently 12 MW of data center critical load at the site, with plenty of additional capacity. The facility is served by 2N electrical systems (A/B paths - cabinet through generator), and N+1 mechanical and cooling redundancy.

If one or more of the 26 diesel generators (2N) need to be fired up, in addition to substantial on-site fuel storage, Iron Mountain has a written agreement with a large national supplier. This fuel vendor owns product in pipelines at all times, and can pull fuel from more than 100 different terminals in three different states when needed.

Investor Takeaway

In the above ground world, it is a whole new ballgame for Iron Mountain in Northern Virginia's Data Center Alley, the largest and most competitive US data center market. Iron Mountain has more global information storage customers than all of its public and private data center competitors combined. However, very few are currently data center customers.

Read more:  Cloud Fuels Unprecedented Data Center Boom in Northern Virginia

The next challenge will be to leverage customer trust and Iron Mountain's reputation for service, compliance, and security to attract customers that already have colocation and hybrid cloud relationships in place with other providers.

While it remains to be seen how the company intends to scale the data center business plan, Iron Mountain's investment in the Manassas, VA campus signals the beginning of the next chapter. Mark Kidd made it clear to Data Center Knowledge during our interview that Iron Mountain plans to balance growing its footprint of data centers with keeping an eye on the bottom line.