Published On: Thu, Jun 5th, 2014

CTEX at the IMN New York Conference “Staying Ahead of the Curve on Services”

CTEXNEWYORKNEW YORK, WILLEMSTAD - As datacenters continue to evolve, service providers and enterprise customers alike are facing dramatic industry shifts. At this years 4th Annual Spring Forum on Financing, Investing & Real Estate Development for datacenters in New York, various industry specialists and stakeholders provided valuable insight on where the industry is heading – the opportunities, pitfalls and shifts. Mr. Anthony de Lima, CTEX’s Chairman and CEO provided valuable insight on the evolution of the datacenter industry.

What to Offer, How to Price &

How to Provide for Competitive Advantage

Mr. de Lima was a panelist at a key session titled; “Staying Ahead of the Curve on Services. What to offer, how to price and how to provide competitive advantage.” Mike Klein, Co-CEO of Online Tech drove the panel, which addressed critical questions about the evolution of the datacenter and managed services.

“When looking at managed services and the evolution of the datacenter, what are some of the trends driving the industry?” asked Mr. Klein. “Today’s datacenters are at a critical inflection point. Traditional datacenter providers typically focus on building Colocation space. High-end providers like CTEX focus on ensuring that the datacenter fabric can deliver the level of reliability required to guarantee and safeguard the continuous operation of our customers’ mission critical systems. As enterprise customers continue to transition to an outsourced datacenter model, third party providers must ensure adherence to industry standards such as certification of by the Uptime Institute to ensure that they can consistently guarantee and maintain high-levels of availability. For the enterprise customer, it’s all about 99.999% availability or higher. Enterprise customers who place their critical systems at a datacenter do so amongst other reasons to ensure that their systems are secure and continuously up and running. Therefore, the datacenter business itself is changing," said Mr. de Lima.

Customer Expectations for the Datacenter

Mr. de Lima continued, "If you consider the dramatic shift to the Cloud, enterprise customers now not only seek advanced Colocation services, but they expect to also be able to leverage a robust datacenter computing fabric and a comprehensive eco-system of solutions. They seek an infrastructure that is scalable, reliable, and highly secure. Most CIOs are making the shift from a CAPEX to an OPEX model where they can scale computing power on an on-demand basis. What started out as a retail utility computing model is now shifting to enterprise-class. The stakes are higher, and the datacenter provider is now faced with having to make the necessary investments to not only deliver a reliable infrastructure, but also to deliver and maintain higher-end services. It should be noted though that these services carry a much higher margin. The fact remains that from everything we see in the market, the business is evolving overnight."

The Major shifts

Mr. Klein subsequently asked, “What are the major shifts in how customers buy datacenter services?” Mr. de Lima replied, “I think more and more, the customer is in the driver's seat for defining how they want to buy datacenter services, which I think is a good thing because there is a lot more clarity in terms of how services are delivered and what the performance expectations are.

With that however, comes the fact that closing cycles on customer contracts are becoming longer, but the commitment of customers with service providers is also becoming larger. Too, customers seek a try-before-you-buy model. In other words, if an enterprise customer is going to make a long-term commitment to run mission critical applications in your datacenter or onto your Cloud computing fabric, they want absolute assurance that what you are delivering will meet and exceed their performance expectations. So as service providers, we need to be absolutely sure that services are offered on a try-before-you-buy model. It’s expected. Also, contrary to traditional Colocation services, which typically involve a 3 to 5 year contract, customers seek a more open-ended agreement, where they can scale capacity on an as needed basis. Again, I think that for the industry overall that's a good thing. On one hand it drives much better understanding of requirements, thus less missed expectations, and on the other hand the customer/provider relationship is not fixed through a contract but by continously meeting and exceeding performance expectations."

Changes to the datacenter infrastructure

- what's different?

“What do you think will be the ultimate changes to the datacenter infrastructure over the foreseeable future?” asked Mr. Klein. I think the datacenter itself is undergoing a dramatic transformation. Because of the level of reliability and demand for ‘always-on’ services both infrastructure and operational processes must be world-class. The two go hand in hand. You could have the greatest datacenter in the world, but if your operating processes haven’t been clearly defined, implemented and are measurable, things are just not going to work out. On the other hand if you have the greatest operating process and procedures, but your datacenter infrastructure itself is not up to par to support the latest technology advances, then equally you are going to face some difficult challenges," said Mr. de Lima.

Impact of density on the datacenter.

Mr. de Lima continued, "Server consolidation, and use of more dense computing technology will drive further focus on efficiency factors such as PUE ratios and per square foot Kilowatt and cooling capacity. For a service provider, this could wreak real havoc if you have not established an infrastructure strategy, which takes into account varying kinds of computing densities, brought about by varying types of customer demands. Its no longer a one size fits all for power distribution and cooling. In the case of CTEX, we adopted three different types of cooling approaches ranging from traditional CRAC units, to in-row cooling to hot-isle-cold-isle-containment units to service different types of computing infrastructure a customer demands.

Older datacenters are going to have a difficult time delivering quality services unless of course you go through a major retrofit which carries inherent service disruption risks. I also think certification has become more and more important for the enterprise customer. It gives end customers a way to validate the quality of your facility, the efficiency and effectiveness of your operational processes and ultimately the ability to assess the quality and commitment of the people running the datacenter and servicing customer needs."

The Valuation Question

“What are your thoughts on recent valuations of datacenters and the foreseeable future?” asked Mr. Klein. Mr. de Lima answered, "The market has been very good to datacenters lately. Valuations are typically in the 10 to 15 times EBITDA. I think that the more value-added services a datacenter provider delivers, the higher the valuations will go, because you create long-term term customer loyalty, which obviously drives more sustainable cashflow."

For more information about the IMN conference, CLICK HERE

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