A New Breed of Data Center Providers

Darren Watkins is Managing Director of VIRTUS Data Centres.

It could be argued that the choice of data center is becoming irrelevant; that one data center is just the same as another and that data center space is therefore a commodity.  On this basis, it could also be assumed that global organisations work with providers that have a global footprint - purely because of geographical coverage.

The data center, however, is a very long way from being a commodity.  A commodity typically has three characteristics: the product is the same, the quality is the same and the price is the same, whereas data center providers vary in many ways - from accreditations, space and power capacity, connectivity options and service levels, to location.  And, it must never be assumed that because the provider is not a global organisation, it is unable to provide a global service.

Today, there is a new world way of achieving a global data center footprint that gives businesses much better local knowledge, enabling them to be truly global.  This new breed of global players, which aren’t the typical big corporations, can often provide much deeper local expertise.  They are made up of an alliance of providers, each leading the field in their region.  The local roots mean the alliance data center provider knows the customer, business culture and regulations enabling them to provide a very personal approach.  They will also have strong existing relationships with a variety of local carriers and have developed deep ecosystems.  It is this local knowledge that enables these provider to work closely with their customers at a local level, whilst still benefiting from a global network.

This approach works successfully when local providers with the same core values are brought together into a global network, and is especially strong when each member of the global alliance is the leading provider in the local market in which they operate. They must all offer the same level of service and support to enable other data center providers within the network to confidently recommend each other and feel assured that their customers will be well looked after.   Granted, a global provider could be number one in each region in terms of square meters of kW, but they are unlikely to be leading in the more important customer-centric criteria such as meeting and exceeding customer expectations and understanding the customer’s business.

Five other reasons to consider the new breed of global data center providers:

Cost savings: It is expected that economies of scale can be achieved when contracting for data center space and IT equipment on a global scale, but don’t assume that the same can’t be achieved with a global data center alliance.  They too can reduce cost aspects of many elements by negotiating with their suppliers to ensure they can get discounts.   In country, local knowledge and long standing supplier relationships of the alliance data centers can achieve further cost benefits passing these on to customers.

Ease of doing business: While the big global providers promote the simplicity of the homogenized global single contract or Managed Service Agreement (MSA), the reality is that it often gets complicated because of the sheer size of the organisation.  A business could be contracted with a data center in London, but that contract may also require sign off at an EMEA level and if it’s part of a global account, then it will more than likely be reviewed at a global level.  This can add a lot of time, effort, resource and pain for the customer because they can’t move as quickly as they need to, diminishing the value of working with a single, global organisation. 

The customer of a smaller alliance provider often does not have the same level of multiple sign off; they would simply talk directly to the local data center provider and agree the contract locally. Once agreed, any sister companies could then share critical knowledge (with the permission of the customer) in order to provide a seamless and speedy delivery where it makes sense legally and practically.  For example, if it is known that the customer likes their contract to be structured in a certain way, then this kind of intelligence could be shared without it escalating into the corporate red tape. 

Speed of response: One key benefit of customers working with alliance data center organisations is the ability to speak directly to the people they need to deal with, in order to ensure queries and issues are resolved swiftly.  Should a customer wish to implement something tactical e.g. deploy a cross connect over-night, often a large global organisation has processes and procedures that need to be followed, which may take a number of days to actually come to fruition.  However, with local providers, customers speak to someone who’s on the ground at their data center, and this vastly speeds up the efficiency of the processing.

Regulation: Local offices understand the local regulation.  If the customer was an American organization on the West Coast of the US that was worried about GDPR and was trying to buy from a provider in London, the local provider would have the knowledge, as they work daily with the laws and regulations.  This enables the local data center provider to develop a consultative relationship, providing advice as well as delivery.  While the knowledge wouldn’t be devoid in a larger global provider, it would most likely require a knowledge transfer between different teams in order to provide this to the end customer.

Connectivity: Connectivity is a key differentiator between all data center providers, and another reason why the service is not a commodity.  Alliance providers will go the extra mile to ensure customers use the most effective routes, often producing fiber maps, which don’t provide revenue, but demonstrate deeper knowledge.  A global provider may have a challenge from a resource perspective to do something similar because they simply don’t have the time or solution people to do it.  They may provide a list of carriers in the facility, but as standard they are unlikely to apply the depth of local knowledge such as the fiber maps and diagrams of how to connect it all together - using the best routes from one place to another can be a real competitive advantage to our customers. 

What is Global?

The global data center market remains highly fragmented, with more than 1,200 companies providing services, but only three organizations have over $1 billion revenue, and only 19 have facilities across three continents or more.  So, it isn’t easy for global organizations to find a truly global provider that can offer competitive pricing.

By working with the new breed of global alliance data center provider however, organizations can get a very high quality service, often at the same or better price.  They obtain both the benefit from the local perspective, as well as the all the other elements of working with a global provider with a global footprint. Whilst dealing with a local alliance provider, there is still a larger network which can support their location needs, but without the burden i.e. no global or regional team overheads because the teams are all local and autonomous. 

Opinions expressed in the article above do not necessarily reflect the opinions of Data Center Knowledge and Informa.

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