For years, it seemed like Tier One cities were getting all the attention from data center providers. Colocation providers weren’t rushing to set up shop in Nashville, Detroit, Tampa Bay or another second- or third-tier city, and it made sense considering the networking trends. Carriers and their customers needed access to expansive metro fiber networks and simple cross-connects in the world’s most densely populated facilities. It didn’t hurt that New York, Chicago, Los Angeles and other Tier One metro areas each housed millions of people and had the necessary real estate. And with most people consuming and posting content in only a couple of locations at that time—TV and desktop Internet—data workloads were relatively stable and predictable.
Unfortunately, this setup limited small and medium-size businesses (SMBs, sometimes called small and medium-size enterprises, or SMEs) in second- and third-tier cities. They had to accept higher latency as well as lower-performance networks, and their nearby colo options were subpar.
But times have changed. Today, data is coming from all corners of the planet thanks to the Internet of Things (IoT), mobile data, over-the-top (OTT) video, streaming media and more. Data center strategy is evolving to meet customers where they are through edge facilities. SMBs have been blissfully caught in the middle, and they’re selling themselves short if they don’t take advantage of this trend whole heartedly.
Edge Data Centers: Powering the Future
IoT and the much anticipated 5G takeover, as well as several other data-related advances, hinge on greater network efficiencies—that is, speed. Real-time processing and streamlined data pathways are vital to seeing these next-generation technologies take hold.
Cue the solution: edge computing—and the smaller, strategically placed facilities that make it possible. Though there are several definitions for edge data centers, we’re referring here to the regional facilities in second- and third-tier cities that help to cache data closer to the end users and connected devices sending or creating it. As TechTarget explains, “in-the-field devices” are also part of the equation, and edge data centers support them. A retailer, for example, could use them to recognize when connected devices are in stores and send targeted marketing offers their way.
Most edge-computing use cases involve IoT, as the solution is perfect for handling huge amounts of data locally, “reducing the backhaul traffic to the central repository,” according to Network World.
In any case, edge computing and edge data centers are on the rise. According to a 2017 survey by SDxCentral, 40 percent of respondents anticipated that mainstream adoption of edge computing and multi-access edge computing (MEC) would take hold within the next two to four years, while 33 percent thought it would happen even sooner.
The edge-computing trend owes in part to content providers, which have a never-ending appetite for bandwidth and high speeds because they must deliver an optimum experience to end users to stay ahead of the competition. Since demand for bandwidth is lower in data centers residing in second- and third-tier cities, opening facilities there allows content providers to save on the bandwidth costs associated with delivering content to end users outside of major metros. Also, streaming content resides locally in edge data centers, reducing latencies in second- and third-tier markets.
Edge Computing and SMBs
But content providers aren’t the only lucky ones. These benefits are game changing for SMBs, too—from financial institutions to health-care providers, schools, law firms and more. After all, edge data centers are bringing the Internet closer to these businesses as well as their customers or patrons. Edge facilities deliver more bandwidth and lower latency to second- and third-tier cities while reducing network congestion; such factors are increasingly important for businesses regardless of vertical, size or reach. These facilities also mitigate full-blown disaster in the face of DDoS and other cybersecurity attacks, which is good news all around for Internet users.
Since SMBs in the digital age are more likely to have customers worldwide who they reach online (even if they have a tiny physical footprint in a relatively small city or rural location), these benefits are more vital than ever. As the Harvard Business Review put it, “SMBs today are increasingly ‘micro-multinationals,’ smaller shops with a global base of customers.” And even if a business only has a local or regional reach, staying connected with employees, customers and prospects as efficiently as possible is crucial.
SMBs that colocate in local, edge data centers also have the advantage of working directly with a hands-on, always available local team (if they pick the right provider). Businesses in second-tier cities haven’t always had many options when it comes to local colocation, but that situation is changing, allowing them to more easily and cost-effectively employ hybrid IT. While helping SMBs to achieve scalability, security and performance goals, hybrid IT can also save businesses on capex—provided they choose a pay-as-you-go, commitment-free colocation/cloud partner.
These facilities can offer the same services you’d expect in a major metro, but at a lower cost, since real-estate prices in small cities are lower, IHS Markit analyst Liz Cruz explained in the Data Center Journal. Though five major metro areas still took home roughly half of North America’s multitenant data center revenue in 2016, as Cruz explains, the edge is “driving demand for colocation services, since everyone from cloud providers to small enterprises is looking for a wider geographic IT footprint.”
According to a press release, IHS Markit predicted in November 2017 that the edge could boost the colocation market, which “will see an increase in smaller, retail deals, with enterprises setting up a few racks in regions across the globe to serve local customers, as well as growth in ‘Tier 2’ cities like Phoenix, Atlanta, Milan and Dublin.”
Hybrid IT and SMBs
How exactly are SMBs storing their data these days, then? Cloud-adoption rates are clear: IT models for the SMB space have shifted in the last few years. IDC forecasted that overall public-cloud spending will grow from roughly $70 billion in 2015 to $141 billion by 2019, TechTarget reported. Forty percent of that spending will come from SMBs.
Most SMBs that are integrating more cloud into their IT mix subscribe to a hybrid-IT model, meaning they combine the benefits of on-premises, cloud and hosted solutions. A 2017 Harvard Business Review survey found that compared with large enterprises, SMBs are seeing even greater benefits from a hybrid-cloud model, including business growth, enhanced time to market and risk mitigation.
Increasingly, SMBs need cost-effective, agile and scalable solutions that help to ameliorate IT risks and headaches for a small staff. With hybrid IT, they can have all of the above and get more “bang for their buck” overall. What’s even better? Finding high-bandwidth, cost-effective cloud, hosting and colocation services all from the same provider, right down the street in your second- or third-tier city.
About the Author
Bob DeSantis is an accomplished executive and entrepreneur who has held senior leadership positions in public and private, competitive, and regulated companies in the communications, technology and energy industries. He’s been a leader in acquiring, building and growing businesses and arranging for their initial public offerings as well as other strategic events. Bob’s expertise spans strategy, operations, finance, corporate law, real estate, and mergers and acquisitions.
Before becoming the CEO of 365 Data Centers, Bob was the cofounder and managing partner of Xand, which became the leading privately owned data center, managed-services provider and cloud-services operator in the Northeast before its sale to Tierpoint. His previous technology and communications experience includes serving as president and COO of cloud operator Flexisphere; CFO of DSL.net, a nationwide Internet service provider; CFO of Electric Lightwave, a metro and long-haul fiber business; executive vice president of core optical-switch manufacturer Tellium; and CFO of Frontier Communications (formerly Citizens Communications) during that company’s transformation from a diversified utility to one of the nation’s largest telecommunications companies.