It’s an interesting time for colocation providers. Today, this industry is handling market forces that represent both great opportunity and considerable challenge: an ever-changing set of buyers, a mounting list of emerging digital trends, increasing pressure on sustainability and efficiency efforts, and the growing adoption of cloud computing. Each can have a positive or negative impact on business. As a result, providers are grappling not only with responding to and being nimble in the face of these forces, but also carving their own path for growth and survival, including evaluating new types of architectures, exploring new tools, and ensuring reliability, operational efficiency and cost effectiveness.
This article, informed by a roundtable discussion with colocation-company executives and industry analysts last fall, explores and provides guidance regarding the challenges and opportunities for colocation providers.
The Changing Face of Colo Buyers
Historically, colocation providers dealt with procurement or facilities professionals. Today, as more and more C-suite, line-of-business and other customer stakeholders become involved in data center strategy, this relationship is changing. There are now numerous potential decision makers: IT managers, CIOs, business-unit executives, chief operating officers (COOs), chief financial officers (CFOs) and even the chief digital officers (CDOs). As such, colocation providers are finding they will need to expand their knowledge base and skills so they can talk with each audience they care about in new and distinct ways, from building sales expertise and knowledge to speaking in business terms.
Evolving Colocation Business and Industry Structure
Just like their customers, colocation companies are also changing. New opportunities lie in repositioning or moving into an adjacent or altogether different segment—wholesale, retail, carrier or regional—to drive new organic growth. At the same time, the competitive landscape is evolving as a boom in mergers and acquisitions expands the footprint of businesses. There is also a growing trend in partnerships, which enable colos to increase their geographic reach without necessarily adding new services or technologies.
Given such volatility and change in the market, providers must determine where they fit in the regional or national hierarchy of colocation companies, and then look for ways to grow, diversify their offering and remain fresh in the eyes of their customers.
IoT and Big Data
Macro forces such as the Internet of Things (IoT) and big data also present opportunities for colocation providers as they explore new ways in assisting customers with the challenges these forces create. For instance, the IoT affects the IT solution stack, from infrastructure to middleware to logic and data. Colos can help customers make the right investments in new and upgraded solutions to support an IoT strategy, from data-collection points to data aggregation to capacity management and planning.
The IoT and big-data forces are also driving a need for edge computing, opening yet more opportunities because edge computing brings data acquisition, compute and storage resources closer to the network edge and the end user. This type of deployment often involves a series of smaller, distributed (read: colocated) data centers to reduce data transmission latency.
Cloud Computing and Internet Giants
Although the jury remains out on whether cloud computing is a threat or an opportunity—perhaps it’s both—regardless of tack, it has an important place in the data center ecosystem. The cloud is elastic in nature, allowing it to more easily handle and adapt to variations in data-traffic levels, and it offers the capacity for compute-intensive tasks, including analytics, which is prevalent among IoT environments. With cloud use growing, colocation providers must determine whether and how they should address this technology. Do they offer cloud services themselves, work with a cloud provider or provide only the infrastructure for cloud providers to use—or a combination of these alternatives?
When it comes to the Internet Giants, for instance, colos are well suited to offer the infrastructure that these large providers need. Colocation providers can support large players as they seek to extend their reach into new markets where they do not yet have a data center in addition to meeting their efficiency, low-latency and security goals. Colos can also find opportunities to resell the Internet Giants’ cloud services to their own customers.
Beyond the large players, colos have other opportunities to use cloud providers as tenants as well as providers offering private- and public cloud-services, access to cloud services, and software as a service. The challenge for colocation companies is to understand the problems their customers are facing, how to solve those problems and how to sell the solutions that will provide the most value to these customers.
DCIM (data center infrastructure management) software is playing an increasingly important role in data center management, both through internal use and through the ability to provide value-added services and reporting to customers. DCIM brings consistency, predictability and control to operational metrics, and it improves service assurance. It enables the transformation of data into meaningful analytics and provides data center managers with an accurate view of data center performance across IT and facilities, enabling better and more-insight-based control of the entire data center system. In turn, these capabilities drive up efficiency, reduce costs and increase overall system reliability.
For customers, DCIM has capabilities that include advanced power and full infrastructure monitoring for multitenant environments; statistical reporting on data center operations, the physical location of servers, updates on environment, PUE, power and cooling; and the availability of custom portals.
Data Center Design Architectures
Keeping up with growing trends such as edge and cloud computing requires resilient, flexible data center design. As such, architecting for flexibility is critical. Doing so enables colos to efficiently and cost-effectively address a broad set of customer applications and needs; the reality is that stranded capacity and limited offerings simply make it difficult to acquire new customers.
To prepare for and avoid these issues, data center density must be considered both at commissioning and over time, and it must support mixed-density rows. Modular data center architectures meet these requirements by limiting overprovisioning at the outset through a right-sizing method that allows providers to add capacity as needed rather than right out of the gate.
Similarly, providers must also consider the degree of resiliency their data center offers and the resiliency that their customers may need. They should also seek to rationalize resiliency versus density, as high density and high resiliency cost more than low density and low resiliency.
Lastly, as data centers become larger and operate at higher densities, safety remains a concern of growing import. Colos must be committed to training employees on safety and using method statements as a communication tools to ensure proper procedure is being followed. Periodic audits can also help to verify that conditions are safe.
Today’s business landscape is transforming at a rapid pace, and colocation providers are challenged with building highly resilient, cost-effective data centers that address the various requirements and opportunities facing them. By harnessing the power of the IoT, the cloud and more, colocation providers can chart their own paths to a successful future in the digital world.
About the Author
Mark Bidinger is President of the Cloud & Service Provider Segment for Schneider Electric. He is responsible for turnover, offer and deployment mode in a segment that is evolving rapidly for both customers, users and Schneider Electric. The disruption creates new business opportunities that necessitate a differentiated business model. Leading a global team, Mark focuses on addressing the international needs and the unique demand profiles of colocation, telecommunications, IT and Internet Giant clients.
Under Mark’s transformative style of leadership, Schneider is pursuing solutions and organizational structure to meet the demands of specific customer requirements. Helping clients manage their energy, process and business in data centers, buildings and industrial facilities, Mark’s team specializes in helping create complete solutions with smart technologies, zero-carbon-emission manufacturing and best-in-class data centers. Mark has 15+ years’ experience delivering solutions in the mission-critical space and celebrated 30 years with Schneider Electric. He has delivered multiple keynotes, most recently at Datacloud Europe 2016.
Mark holds a B.S. in mechanical engineering from the University of Notre Dame.