Why Hyperscalers Count on Colocation Providers to Accommodate High Demand for Data Center Capacity and Services

February 7, 2020 Greg Jones

Trends such as cloud computing and the Internet of Things (IoT) are rapidly accelerating the need for more data processing and storage capacities. As a result, hyperscale data center providers like Google, Microsoft, Amazon and Alibaba are reinventing the way they do business in order to accommodate this growth in demand. According Global Market Insights, the hyperscale market is expected to rise from $20 billion in 2018 to $65 billion by 2025 – a stunning increase of 225%. As a result, traffic within hyperscale data centers will quadruple by 2021 going from 39% of total traffic within all data centers to 55%. Though the hyperscalers are huge organizations with deep pockets, even they cannot accommodate this projected growth curve alone. Instead, they will look to qualified colocation providers to supplement their efforts to manage demand. However, in order to participate in this rapid growth opportunity, colocation providers will also need to reinvent themselves in order to meet the demanding criteria of the hyperscalers.

To successfully navigate this transformation, colocation providers will first need to fully understand hyperscaler goals, expectations and priorities. Prerequisites for earning consideration as a viable partner include: the ability to offer high capacity data center blocks that offer efficient performance, constant availability, consistent reliability, robust security, and a genuine commitment to sustainability.

Colocation Data Centers Have to Exceed Existing Performance Thresholds

Hyperscalers are seeking out colocation data centers that can offer more than traditional best practices. They want partners capable of supporting a methodology and business model that embraces an end-to-end scope. This includes capabilities for providing multiple financing options, for proposing an appropriate joint design strategy, for ensuring rapid facility expansion (which implies an active and available supply chain for accelerating construction and implementation speeds), for tight control of operations and security, and for executing a solid maintenance strategy that maximizes systems uptime. The ability to provide such services across a wide variety of locations and non-traditional geographies is also a priority.

Guest speaker from Google presents at Schneider Electric’s International Colocation Club event.

Gary Demasi, Senior Director Data Center Energy and Location Strategy at Google shares four requirements that his company has:

1. Align with the hyperscaler’s strategy – Flexibility of speed and scale is very important to Google. They want to work with colocation providers that demonstrate the willingness and capability to scale up as quickly as possible, anywhere in the world. They seek partners able to deal with resource challenges within emerging markets. A colocation partner must also demonstrate a willingness to share growth and development roadmaps, and to set aside resources for accommodating Google’s hyperscale data center pipeline. A willingness and ability to build 120 megawatt campuses of multi-building, 20 to 30-watt power blocks is also key.

2. Provide flexible contract structures – For Google, contract negotiation with colocation partners is no longer about lowest price. They seek partners who offer homogenous pricing across the globe. Beyond pricing, Google seeks quantifiable delivery commitments of pre-defined blocks of data center power and capacity. Those blocks must come delivered with independent power, redundancies and firewalls. Colocation providers should also be open to the idea of joint ventures, new financing and co-development work. The colocation provider’s supply chain should supplement Google’s own resources while guaranteeing uninterrupted supply capacity.

3. Offer diverse product types and competitive service models – Given the shifting marketplace, Google views traditional colocation business models as rigid. Google’s own customers seek cloud solutions from multiple vendors. They want to lessen risk and take advantage of differences in product mixes. Therefore, Google seeks colocation partners that present diverse offerings along the lines of a hybrid approach (cloud and on-premise). Instead of accommodating only 2 to 3 megawatts blocks of data center power, current colocation service models will need to be realigned to accommodate blocks of 20 to 30 megawatts. Google may also seek to play a direct role in the operation of particular segments of a given colocation facility.

4. Make sustainability a high priority – Sustainability is a very important issue with many of Google’s end user customers. Data centers produce high levels of carbon emissions. In response, Google has been carbon neutral since 2007, pushing very hard to assure maximum data center energy consumption from renewable resources. Colocation providers should expect contracts and regulations across the globe that reflect an emphasis on sustainability.

Hear More About Colocation’s Role with Hyperscale Data Centers

Understand why sharing the goals and strategies of hyperscale data centers is a competitive advantage for colocation providers who support these expansive customers. Hear from Gary Demasi who discusses this from his presentation at the annual International Colocation Club, hosted by Schneider Electric.

The post Why Hyperscalers Count on Colocation Providers to Accommodate High Demand for Data Center Capacity and Services appeared first on Schneider Electric Blog.

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