The Ark Government Data Centre deal: the benefits of not looking like a tourist

Last week the Register preempted the official announcement, due this week, that the Ark had scooped a UK Government 4 year “£700 million” deal for hosting non-cloud applications. By the look of the comments following the Register’s article, the deal seems to have ruffled a few feathers. Concerns revolve around the fact that Baroness Manningham-Butler, ex-head of MI5, is a Non-Executive Director and that the company is very small to run such a large contract. However, a deeper look behind the headlines provides a less dramatic picture albeit with some significant learnings for data centre operators.

Let’s look at the deal itself. The contract is a framework with a value between £50 million and £700 million. In order to get anywhere near the top end of that deal value, the Ark is going to have to work very hard. Moving data centres is a very risky process that few businesses undertake lightly, hence the low churn rate at most co-location providers. It is most likely that public sector bodies will only move when they have a technology refresh due, or if they are desperate to demonstrate they are meeting their carbon reduction targets. While this is a great coup for the Ark, that £700 million figure is in no way a guarantee.

The deal is talked about as a “hosting” contract. This is a very broad term that tends to include high levels of software and hardware operations management on the part of the provider. This would be a major challenge for a company like the Ark. The Ark’s website doesn’t say a lot about its products or services, but one or two news articles reveal that it has a wholesale co-lo focus. This contract isn’t a hosting contract as most of us would understand the term; it is a relatively straight forward co-location deal. The only challenge for the Ark may be in the realisation that delivering it may feel more like retail co-lo, but the ramp up should give them time to adjust. If you are in any doubt about the Ark’s commitment to a co-location, rather than broader hosting proposition, have a look at their real estate oriented funding partner, Revcap, or the commercial background of the Ark’s Commercial Director, Simon Burrage. This company will look far more like a Digital Realty or Dupont Fabros than a, let’s say, a Rackspace.

Finally, let’s damp down any wild speculation around “mates’ deals”. It is clear from the makeup of the management team and the location and nature of its data centres that this was a group of people with deep experience of both selling to, and operating in the public sector. Too often information technology companies market themselves as having a particular vertical market focus with only a very thin veneer of understanding about the business issues of the particular vertical, and no practical hands-on  vertical experience. This can make you seem like a tourist who knows just enough to ask for directions to the station in the foreign language, and then not understand the answer. Baroness Manningham-Butler is just the most visible part of a management team with years of experience in the public sector in general, and IT infrastructure in particular. Even a whiff of a conflict of interest in this deal would be death to a company like the Ark. I think they just outsold the competition by being the only ones who didn’t come across as tourists.

This post first appeared on the old Cassini Reviews website.