Savvis has been doing its homework - and executing on plans that have emerged from this study. The Missouri-based cloud and colocation specialist is in expansion mode, looking to wrest new opportunity from a major shift the company envisions for the IT outsourcing market. Within five years, Savvis believes that 70 percent of all IT infrastructure will be outsourced, and is preparing to address this emerging demand with significant data centre build across Europe, Asia and North America: this May, the company announced ten data centre expansions to bring its total global facility count to 50; by November, Savvis was operating 57 data centers worldwide, with more than 2.4 million square feet of gross raised floor space. The latest data centre fleet announcement comes from Markham, Ontario, where Savvis is constructing a new 100,923 square foot, 5 megawatt facility near Toronto’s Pearson International Airport.
Savvis’ confidence for the future hails from its ongoing survey of senior IT decision makers. In the latest installment of a report based on this study (Global IT Trends: IT Outsourcing Fuels Business Growth), commissioned researchers Vanson Bourne uncovered a relatively short term transformation from pervasive preference for an in-house to an outsourced model for IT deployment. According to the report, within the next 12 months, in-house private cloud will predominate over in-house owned infrastructure; in two years, co-located services will be the deployment model of choice, and in five years, outsourced managed services will represent for 24 percent of the market and cloud 25 percent, accounting for nearly half of the outsourced landscape. The report concludes: "Finally, after 5 years, the outsourced cloud will achieve dominance over all other models. Until then, IT infrastructures will be a hybrid mix of largely outsourced models." This trajectory is presented in Figure 5 from the report.
The hybrid demand outlined in Savvis’ report is well aligned with the company’s portfolio of offerings and expansion strategy. Savvis anticipates an ultimate shift to outsourced cloud, and has been building capability in that service area: in the Canadian market, for example, the company launched its Virtual Private Data Centre service to enable cloud bursting for customers needing additional infrastructure in the summer of 2012, and its Symphony cloud storage solution at the end of the year. More recently, the company announced acquisition of Seattle-based Tier 3, a provider of PaaS and cloud automation and management solutions, as the foundation for further development of cloud capabilities. That said, Savvis’ reading of the outsourcing market over the next half decade indicates ongoing growth across all the company’s current solution areas, consisting of cloud but also managed IT and colocation services, supported by corporate parent CenturyLink’s extensive communications network. In the report’s Figure 7 (presented here), Savvis’ expectations for IT managed services and colocation growth are outlined.
Savvis is not alone in predicting solid growth for colocation and IT managed services over the near term. In a Canadian market study prepared by 451 Research (Canadian MTDC Market Assessment: Supply and Providers, 451 Research: December 2012), report authors have estimated a CAGR for the Canadian Multi-tenant Data Centre market of 16% for 2010-2014. According to 451, the market has centred on the GTA: in 2011, Toronto providers operated colocation facilities totalling more than 900,000 square feet, representing virtually 50% of Canadian colocation capacity. Since then, both supply and demand in Toronto has continue to increase. As the following 451 chart shows, while the supply of new capacity is projected to increase from 7 to 12 percent over 2012 to 2015, new MTDC demand is expected to grow at a consistent rate of 12 to 13 percent into 2015 (and presumably beyond) - while utilization rates remain high, at 91 to 94 percent throughout this period.
Assessing the competitive landscape for multi-tenant data services, 451 researchers have also focused on provision of valued added services, such as the building of "premium carrier-neutral facilities and enhancing their lineup of cloud and managed services." Furthermore, "Toronto is the center of the managed and cloud services market in Canada. Demand for hybrid products consisting of colocation and cloud or managed services is much stronger here than in the three smaller markets [Montreal, Calgary, Vancouver]."
As a provider of combined cloud, managed IT and colocation services, Savvis is anticipating fertile ground for its new data centre in the Toronto market. Scheduled for launch in the summer of 2014, the new facility, which is being built in a former IBM distribution centre structure in Markham, Ontario (Toronto’s primary carrier hotel at 151 Front Street is at capacity), will represent Savvis’ second facility in the Toronto area, and its fourth Canadian location (including Montreal and Vancouver data centres acquired through Savvis purchase of FusePoint in 2010). Named TR3, the new data center will offer 100% power uptime SLAs, with a power density minimum of 150 W/sf, N+1 generator configuration, and temperature and humidity managed to ASHRAE standards. TR3 will receive Tier III certification from the Uptime Institute (a division of 451 Research) for high availability through redundancy.
Connectivity between cages, buildings or to carrier networks will be delivered through industry standard agnostic CAT5E, COAX, and Singlemode/Multimode Fiber cross connects, and Layer 2 switching infrastructure will offer services for networking, hosting and storage via a single cross connection. Customers will also have dedicated access to the company’s Tier 1 IP backbone, built on Savvis’ core Application Transport Network, and high bandwidth Internet access services, ranging from 1 megabit to 10 gigabits. Savvis will offer a full complement of port interface speeds and SLAs for 100 percent network availability.
Ash Mathur, VP and country manager for Savvis Canada, explained that the new Markham facility is part the company’s global expansion strategy: "TR3 is a strategic investment, and at a global level, this is very important for the company to grow our presence in Canada." For Savvis, Canada’s strategic importance lies in its geographic proximity to the U.S.: Canadian expansion is a "natural extension" of the company’s North American focus, manifested in its continent wide CenturyLink communications network and data centre footprint. "North American growth is top of mind for company executives," Mathur explained, and a response to Canadian and U.S. customers who are demanding single point of contact, cross-border service delivery.
From a Canadian perspective, this build is one component of a "very aggressive growth plan for Canada" that the new country manager and his team are putting in place. According to Mathur, demand is growing in the domestic market across the spectrum of services, including IaaS, PaaS, cloud computing, and managed hosting/colocation. This demand is rising, Mathur believes, out of the "enterprise’s [sober] look at core competencies [or lack of specialized IT skills], the need for agile, scalable infrastructure and the ability to correlate costs of IT to the business side as services are scaled out." For the enterprise, he claimed, "it makes sense to selectively choose from these different services as their business needs change" - assuming the outsource provider offers a full suite of managed, cloud and colo services coupled with an integrated offering that includes a complement of skills and services - reaching up the stack to application management - which Savvis intends to deliver out of the new facility.
As differentiation from the other Toronto-based providers, Mathur pointed to Savvis’ ability to serve customers of all sizes with a full and growing suite of enterprise class offerings and its "interesting mix of customer-centric, enterprise-oriented [focus], and templated, industry standard [capabilities]. We can offer a hybrid approach... with industry best practices and capabilities that we can bring standard off the shelf, while looking at customers as individual enterprises." Additionally, Savvis stresses the advantages of its global presence: in addition to providing local capacity for firms in Toronto, it can support the Canadian operations of global firms in TR3, while support the extended operations of Canadian multinationals by distributing workloads to other data centres — all the while taking advantage of the expertise and scale it accesses through its global delivery network.
Savvis is currently looking for anchor tenants, reserving pre-orders on the new data centre. For more information or to reserve space, visit http://www.savvis.ca