The way out for old corporate data centres

In August, data centre start-up ST2 announced the proposed construction of a large new data centre on the old ICI site at Redcar in North East England. Last week I caught up with Kevin Timms and David Gilpin from ST2 to understand more about the reasoning behind the move and plans for this site and beyond.

Building new data centres is a 15-20 year financial commitment. While the market appears very robust with plenty of new capacity being brought on stream to meet our apparent insatiable urge for more and more on-line activity, the building and operating of the data centres themselves is in danger of becoming a highly competitive, commoditised market. At first sight, the building of a large data centre on Teesside with what might be considered a wholesale co-location offering seems a risky move. But initial impressions can often be misleading.

One thing that strikes you straight away about ST2 is the make-up of the small start-up management team.  CEO Anne Stokes is on the Board of Governors of the Data Centre Alliance and she has a background in real estate management. COO Kevin Timms was, until recently, IT Director at Ford Motor Company and David Gilpin has held senior product development and operational roles at Sungard. This makes for a very balanced team that understands not only the core building and service provider operational issues, but also the motivations and drivers of enterprise CIOs. That’s not a mix you often see in this sort of data centre start-up.

The basic premise for this initiative is that most major corporate, in-house data centres are no longer fit for purpose. They are old. This makes them very expensive to run and weren’t built with the flexibility to handle the variety of different computing tasks and configurations demanded by new systems of engagement running across public, hybrid and private clouds. Nor do most corporates have the desire to build and run new data centres…it just isn’t their business.  ST2 are very clear that their primary market will be those large enterprises looking to get out of old, uneconomic data centres. They accept that some new applications might be located in traditional hub locations with good, direct access to the public cloud and other trading partners. But they are equally clear that there remains a large requirement to re-house and handle existing and future transaction systems that don’t require the sort of low latency and high interconnectivity driving some applications to key regional hubs.

A number of smaller, regional data centre operators have been integrating vertically to deliver a range of added value systems integration, hosting and infrastructure management capabilities. ST2 don’t have plans to go down this route given the channel conflict that might create with any potential cloud or hosting tenants, but they haven’t ruled out investigating how, and if, their sister organisation Streamwire might be able to provide elements  of consulting or infrastructure services on a project basis.

As to the data centre itself, a lot of thought has gone into its specification and design. It will be designed and operated as a Tier 4 facility. That is unusual in the UK, but not unique. However, ST2 claim that they will be able to price this at “very competitive” Tier 3 levels.  This should be made possible by off-grid, renewable power located right next door, supplemented by dedicated 50MVa on-grid power for resilience, the latest building and cooling technologies to deliver a best-in-class target PUE of 1.04 and the highest levels of security.

ST2 claim to have an anchor tenant identified. Given the specifications of the data centre I would suspect that major financial institutions and other enterprises with highly regulated, mission critical applications are likely to be the most likely customers. With a capacity for 2,700 racks ST2 believe that there will be a small number of large customers taking up the space. They haven’t ruled out a major cloud player or infrastructure player becoming a tenant, but they need to be engaged now, in the planing and design stage. Kevin Timms remarked that the demands of the mega-scale players would make it difficult for the likes of Google, Microsoft or Amazon to be seen as valid prospects once the Datacentre is built.

With Digital Realty focusing more on retail co-location and interconnectivity markets, Virtus remaining close to London and Infinity SDC running into funding issues there is then perhaps a strong logic for a high quality wholesale co-location proposition based away from London and the South East. I look forward to reviewing the new data centre formally when it opens for business in Q2 2017, and keeping an eye on their plans for further data centres in the North of England.

This post first appeared on the old Cassini Reviews website.