Anthony Milovantsev, managing director at Altman Solon, outlines why local level evaluation and focused efforts against four key criteria should be at the heart of operator strategies.
In the post-pandemic world, data centre demand is expected to be stronger than ever. For operators and data centre investors, being aware of the characteristics that will set them apart from the crowd in the eyes of prospective clients is going to be critical.
For data centre operators to be in the best position to optimise success at this time, evaluation of local and regional dynamics is required to strengthen their operations, and ultimately attract a wider customer base.
The specific demand and supply constellation that can either open up opportunities or pose threats, such as oversupply and shortages, can only be identified on a local level.
The steps to identify the market potential on a local level need to involve analysis of historic and announced new-builds or expansions, use of existing facilities, pricing trends and land banks/power availability.
In order to weigh up and properly categorise implications, these analyses require differentiation between data centre segments such as retail, wholesale and hyperscale go-to-market approaches supplemented by industry focus, for example carrier, system integrators or media.
Beyond the demand and supply situation, the facility itself determines the strength of competitive positioning and future growth potential. Again, the positioning of facilities is most relevant to local competition rather than relative to global best-in-class competitors.
There are four key criteria that customers will assess when it comes to choosing data centre services. These respective areas are where operators and investors should focus efforts to show evidence of strength in order to stand out alongside competitors and grow their portfolio.
Track record and reputation
Track record and reputation – most notably in terms of facility security and reliability – are essential for data centre customers, given the nature of the service providing outsourcing of critical IT infrastructure for large companies.
In the hyperscale segment, it can be difficult to secure large anchor tenants without a previous solid track record.
Location
Facility location determines distance to local staff and to end users. Distance is the main factor determining latency, which is important for CDN and cloud segments to reduce loading time.
Operators should leverage this point to their advantage when engaging and converting local customers by highlighting why location is so critical for success.
Added to this, distance between the data centre and the client plays an important role for carriers, enterprises and system integrators that need to be at a driving distance, as staff need to work inside the data centre.
For workloads that are non-latency sensitive, data centre operators with campuses in relatively remote locations should emphasise their location/price trade off proactively.
Connectivity
Connectivity is the ability to make and maintain connections between two or more points by way of a telecom or datacom system.
As a business-critical factor in the data centre infrastructure, operators need to evidence their understanding of the different levels required for different businesses and use cases.
Data centre quality and time to market
Guaranteed secure power and the ability to serve different power densities are important to serve a full range of use cases, such as high-performance computing (HPC), which result in a need for power and cooling systems.
Having access to cheap electricity, therefore, needs to be a key consideration. Data centre quality is measured through industry standard data centre tiers providing markers of quality.
For the wholesale enterprise and hyperscale segments, time-to-market means ability to deliver fully functioning floor space quickly.
Compressing time-to-market in this segment will keep data centres relevant and needed in the eyes of large customers, who have the capital to self-build on a much larger time horizon.
Combining facility-specific success factors with the local market conditions allows for a consistently local assessment of the trajectory for a data centre operation.
The key to understanding the development potential of data centre operations is recognising the asset itself, as well as the local market and competition.
In keeping the four key criteria in mind and focusing efforts on demonstrating performance in these areas, data centre operators will be in a stronger position to capitalise on this growing demand in the post-pandemic environment.
