A carrot and the stick are accelerating the migration of business servers from on-premise to provider facilities. Driven by high CAPEX and OPEX costs associated with data centre build and maintenance, and attracted by the flexibility offered by colocation services, many organizations are opting to house IT equipment – or to deploy cloud services – outside company walls. By taking a colo approach, businesses can avoid the relentless wrestle to keep up with state-of-the-art in infrastructure operation and maintenance, while benefiting from provider investments in efficiency, security and scale, and from new found new ability to focus on core and/or higher value service delivery tasks. Analysts have made a strong case for this transition with impressive forecasts for global data centre market growth. Research and Markets, for example, has calculated a (CAGR) of 16.1% for global data center colocation growth, with revenues increasing from USD 25.70 billion in 2015 to USD 54.13 billion by 2020, and demand from medium sized enterprises, in North America and Asia-Pacific driving the fastest growth.
But at the same time there is overall growth in capacity – 451 Research has estimated that the global colocation market will increase in terms of total operational square feet from 108.9 m square feet in 2015 to a projected 149.7 m square feet by the end of 2017 – a shift within the industry itself is also anticipated. According to 451 data centre analyst, Kelly Morgan, the industry is “extremely fragmented” with the majority of colocation facilities operated by small local providers (represented in grey in the graphic below), who are finding it increasingly difficult to compete with larger, more geographically diverse providers. The result, she argued, is “continued consolidation in this sector.”
But how are the larger providers looking to capture share of this growth momentum and what kind of service strategy is likely to produce success in this fluid terrain? On this score, CenturyLink’s plans for 2016, which combine expansion with operational efficiency improvements and standards-based delivery, offer instruction.
Bringing new capacity online
Last year, CenturyLink added 14 MW of critical capacity at eight data centers. According to Drew Leonard, VP colocation, CenturyLink, the company has allocated budget to a number of expansion projects for the coming year as well. At Chicago 3, for example, CenturyLink intends to bring a 1 MW expansion online this July to satisfy some presold commitments made when phase two was brought online, and to address new customer demand. The Phoenix facility has also experienced increased demand for both raised floor and modular services – 2 MW of raised floor is now sold out and the company is acquiring additional modules. In addition, CenturyLink is able to respond to demand at its Washington site opened in December 2015 with 1.5 MW of total 4.5 MW capacity. Chip Freund, director, colocation and data centre product marketing, CenturyLink has calculated that new build in 2016 will total approximately 3 MW and 20,000 square feet of additional raised floor space, and may increase further if customer interest warrants.
To meet this demand, Leonard added that CenturyLink can accelerate expansion in any market, and will “build to suit” for large colocation opportunities. This flexibility can be attributed in large part to CenturyLink’s adoption of a modular, four phase approach to data centre design: “a few designs ago,” he explained, “instead of building everything out at once and hoping we filled the data centres as quickly as possible, we went to a modular approach where we would build out four 1-2 MW over four or five years to service demand.”
Despite healthy development of the cloud services market, a global phenomenon that is seeing enterprises move at a quickening pace to outsource infrastructure requirements, CenturyLink has experienced ongoing increase in demand from two constituencies: the majority of its business comes from existing customers who increase their colo requirements as their organizations grow; but the company is also attracting interest from new customers such as cloud providers, or XaaS providers who leverage as much as possible the edge of the network in order to locate close to end users. With 60 data centres across the globe, CenturyLink is able provide these with the geographical distribution needed for to deliver quality customer experience.
Freund added: “from a demand perspective, we are seeing enterprises moving workloads to the cloud. But what we are also seeing is that the entire workloads, or certain components of the infrastructure, are not ready for the cloud at the same time that these customers are wanting to move out of in-house data centres.” For these organizations, colocation provides an obvious alternative – with its diverse and full portfolio of cloud, managed services, colocation and network offerings, including “direct connects into AWS and Azure public clouds,” Freund argued, CenturyLink offers a preferred one for hybrid environments. “Even though the industry is clearly seeing a move away from on-premise data centres, colo and cloud are both growing from an enterprise perspective,” he added. “The big deals we are seeing today are from the service provider space, and they are coming to us for our geographic footprint. We have data centres across four continents and there are only a couple of us in the industry that have that kind of reach.”
If customer demand for new build is growing, CenturyLink also works to optimize capacity in existing facilities. As Leonard explained, “we are continuously looking at ways to drive greater efficiencies in our data centres, and this means that we also look internally at the space we already have today, where we can make more cost effective expansions in existing data centres, where we can take advantage of the OPEX, the space and the rent that we are already paying to put more infrastructure into those facilities and drive up the return on those buildings.”
As example, Freund pointed to new “chiller-in-a-box” infrastructure deployed at the Columbus, Ohio CL1 facility, which was a recent winner in The Energy Efficiency Improver’s category of Datacenter Dynamics’ annual competition, and is now being rolled out to five additional sites. Use of this integrated chiller, heat exchanger and tower cooling system (CIB) reduced power consumption by 30-35 percent at CL1, freeing up half a megawatt of power that could be redirected to customer’s IT infrastructure. Given the increasing density of customer infrastructure, this energy savings may have a significant impact on power availability: CenturyLink estimates deployment across its portfolio could eventually produce over 40 MW of additional capacity. According to Freund, “five or ten years ago, we were seeing customers deploy at 75 watts a square foot in terms of power density; today, we are regularly seeing 175 to 200 watts, so if we can bring this power to the raised floor space, we are adding capacity without adding bricks and mortar. Colocation is all about power – square footage is important but power is the real driver, and functionally what we charge for as a product.”
In addition to cooling innovation, the data centre team also takes advantage of more traditional methods to improve energy management – air containment, for example, which can be used to retrofit existing data centres as a means of improving PUE, integrated wireless sensors for precise temperature and humidity monitoring, and smart-control LED lighting. Over the last two and a half years, CenturyLink estimates that it has improved data center density by 34 percent vial deployment of advanced energy technologies. Where possible, these techniques are extended across CenturyLink’s global footprint, and the company makes effort to standardize on facilities equipment, data centre management technologies and design – Leonard notes that the company is on its sixth cycle of data centre design – in order to support standardized operational procedures, and to achieve economies of scale, pricing advantage and a consistent PUE. But it is not always possible to standardize on the buildings themselves as these are generally leased properties, and sometimes, Leonard explained, “customers don’t want what we have” or are located in different geographies with varying climactic conditions. The central Washington facility, for example, allowed CenturyLink to offer a unique value proposition – lower cost and renewable energy resources, and the company remains committed to providing some flexibility in design and operating procedures.
Collaboration with customers
A challenge that continues to dog efficiency improvements in data centre operations is lack of communication between facilities and IT managers. Saddled with the power bill, the former may be concerned with energy reduction technologies and activities, while the latter commands budget for increasingly powerful IT infrastructure with increasingly dense energy needs. If resolving these disparate interests and responsibilities remains elusive within the enterprise, it may be a harder nut to crack within colo facilities where relationships are even more removed. To address the issue, CenturyLink engages in discussions with customers on IT design and layout during the onboarding process: “we’ll put together rack elevations, cage layouts for customers with structured cabling and work with them on how to deploy their servers within the racks, and where to position high density cabinets vs. low density cabinets within the cage,” a process that Leonard described as essential to CenturyLink’s adherence to SLAs around AHSRAE levels. But this work also protects the customer, as it helps to avoid hot spots: “there is very tight integration as part of the onboarding,” he added, and this discussion is raised again at the time of contract renewal, when audits enable CenturyLink to right size capacity for IT density. In some cases, the company may offer incentives for redesign: as Freund explained, “we may make it attractive on renewal for older customers with a low density footprint who take up a lot of floor space to densify. They may take more power down, but it’s good for the customer who gets a better rate, and good for us as we get more square footage of space that we can sell to another customer.”
Ultimately, better energy management equals a better sustainability story, which the company supports with some unique wins. In addition to the CIB project, which the company believes will produce an annual carbon reduction of 43,555 tons, CenturyLink was the first operator to deploy Bloom fuel cells at the OC2 facility in southern California, and is a long standing member, via its UK-based data centres in the Carbon Trust, a monitoring and advisory service aimed at creation of a low carbon economy. These types of initiatives serve as an additional piece in CenturyLink’s customer service story, and one that the industry, accounting for approximately two percent of global carbon impact, and its larger providers are increasingly compelled to tell.