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D CEO’s Data Center Roundtable

Dallas’ most respected data center experts describe the current state of how Dallas businesses handle their data center needs.

D CEO has turned to some of Dallas’ most respected data center experts to get their assessment regarding the current state of how Dallas businesses handle their data center needs as well as their thoughts on where this industry is headed. Here, they offer a glimpse into data centers from the perspectives of those sought after for delivering advice and updates about ongoing trends and changes in this industry.

At the highest level and using the broadest definition, what is a data center?

Bryan Marsh: Data centers provide the foundation for the digital world that we live in today. They are fortified structures that house computer servers which process and store data and network communication equipment, enabling data to be transmitted via fiber optic, copper, and microwave technology. Data centers provide a highly reliable and secure environment with redundant mechanical, cooling, electrical power systems and network communication connections. They are normally designed to be operational 99.999% of the time, which is commonly known as the Five Nines of uptime. Digital Realty has achieved this designation for 12 consecutive years over its entire data center portfolio which now includes 214 data centers with over 30 million square feet of space across 35 metropolitan areas globally. 

Lance Black: The term data center typically refers to a facility that houses an organization’s dedicated physical IT infrastructure. A data center is focused around power (electricity), cooling, and security. It is designed and built specifically to ensure adequate cooling and power for the most efficient operation of computing equipment by maintaining a predictable environment and a stable power structure. The facility itself also typically provides access to a range of network providers from which a company may acquire services. 

Why do CEOs, CIOs, CTOs, and CFOs need to be educated on data centers, and how can they help their businesses run more efficiently?

Michael Lahoud: With years of experience to back this up, we can prove that the sensible alternative is to lease space from a colocation provider or engage a professional data center developer to provide a turnkey build-to-suit data center—both faster, less expensive, and far more economical solutions for meet growing IT capacity needs. Putting operations expenses to work at this rate is much more advantageous to business strategies that can otherwise put capital to work on core business-building business investments. All in all, in the case of data centers, outsourcing always makes better business sense.

Bryan Marsh: Data centers are one of the most complex and expensive types of commercial real estate to build, own, and operate. They play a critical role in every business, since they house companies’ sensitive data and process its information, deliver content or services, bill and collect financial transactions, and help communicate with its customers, suppliers, partners, and the public. The cost and impact of a firm’s data center and IT strategy are crucial to the success of any organization. There are many different factors that influence the best solution for each user. It’s important for executives to understand the ways data centers are designed, constructed, connected, operated, and financed to determine the best fit for them.

It’s important for executives to understand the ways data centers are designed, constructed, connected, operated, and financed to determine the best fit for them.

Bryan Marsh

Lance Black: Most CEOs are very knowledgeable and talented in making technology decisions as it relates to the operation of their business computing requirements. CEOs know that deciding to place their equipment in a data center allows them to focus on the business and operational aspects of IT rather than physical plant operations necessary to maintain the environmental requirements of their equipment.

The Cloud versus Data Centers. What is the difference?

Lance Black: The term data center typically means a facility that houses an organization’s dedicated, physical IT infrastructure, while the Cloud is a computing platform delivering services via the internet from the Cloud provider’s data center. The physical assets in a data center are usually acquired through CAPEX, while the services provided via the Cloud are typically OPEX. There are certainly pros and cons for each, but the Cloud can offer practically unlimited capacity and scalability, as well as rapid deployment of resources—something that can be costly and difficult to achieve through the deployment of physical infrastructure.

Bryan Marsh: The Cloud is a network of servers which may be located around the world that are tied together via the public internet, private communication lines, or other hybrid networks that operate as a single ecosystem and can be accessed online anytime. In the Cloud, one doesn’t know exactly where their data and programs may be stored at any given time. Data centers house the Cloud since they are the facilities where the Cloud’s servers and networking equipment physically reside. 

Michael Lahoud: Data centers are one of the key building blocks for the Cloud, which require a physical home to live in. The services that live in a corporate data center and those that live in the Cloud are very similar, but the Cloud is a different consumption model for those services. The Cloud is an OPEX-based consumption model that allows an organization to consume services on demand and to ramp up and down as needed. Many organizations find that a hybrid Cloud model is a better balance to own the resources they need every day and to burst when needed.   

Data centers and colocations are on the rise. Why?

Bryan Marsh: There has been a shift from legacy on-premise physical deployments to Cloud-supported architectures. For many enterprises, growing their IT environment within the Cloud provides the right mix between cost containment, flexibility, and performance. However, as enterprises grow, the value of colocation presents itself as steady-state and high-performing workloads provide cost efficiencies. Enterprises realize that a mix of Cloud and colocation provides the ideal environment to implement a hybrid multi-Cloud strategy, which takes advantage of the different value sets of Cloud and colocation, with the goal of achieving desired performance results while containing cost.

Michael Lahoud: As companies take a hard look at expenses and what it truly costs to run and maintain an in-house data center, they are seeing that there are great cost savings to look at the colocation model.  Colo offers the highest level of redundancy and uptime but since they have a larger scale, they can spread costs that would typically be burden against the enterprise data center across a much larger customer base.

Lance Black: Predictable cost, large expandable footprint, flexibility in power and cooling, redundant network providers – all these are common in any data center. It is far more challenging to build and maintain similar services in-house, and thus there is an increased demand for outsourced data center facilities.  Cloud computing, AI/ML applications, and “Edge” computing and the Internet of Things (IoT) are pushing organizations to deploy into more data centers in more locations, nationally and globally, to consume, or deliver services where needed.

How serious of a threat to businesses is cybercrime, and how can a company’s IT group work effectively with a facility to protect their business?

Michael Lahoud: Cybercrime is an enormous threat across not just our industry, but all industries. This is something each level of management at every company should take seriously through respect and training. Having the right data center partner who truly invests in and continuously trains their staff on security is requisite in today’s digital economy. Each colocation operator needs to show that investment via certification and accreditation in this space with compliance across ISO27001 and PCI-DSS, among others.

Bryan Marsh: Companies are facing some of the most aggressive security threats in history, with close to $600 billion, or nearly one percent of global GDP, lost to cybercrime each year, according to the Center for Strategic and International Studies. Data center providers play a critical role as the first line of defense for many businesses. As organizations improve their cybersecurity postures, more focus is shifting on the vulnerabilities in physical security. With over 60 million annual visitors and millions of sensors, controllers and cameras to manage more than 200 global data centers in our portfolio, Digital Realty manages the convergence of security every day. Some of the largest cyber-attacks focus on vulnerabilities in operations technology. An unmanaged camera or supplier access to a fire suppression system can open a vulnerability to a cyber-attack, similar to the Iranian nuclear shutdown or the Target cyber-attack. By building a common defense in-depth capability, leveraging security intelligence led by AI, Digital Realty is accelerating our convergence as well as the ability to support the confidentiality, integrity, and availability of data.

Lance Black: Cybercrime may be the most significant threat any organization faces today. Ensuring a provider has the management and security team on staff is essential. Additional understanding of security capabilities and certifications of the data partner should be considered.

What are some of the most important technological considerations to make when considering a data center partner?

Bryan Marsh: Data centers store millions of dollars of IT equipment that consume a lot of energy, produce a lot of heat, and require lots of back up. All these systems need to be well protected, well maintained, and run continuously around the clock every single day. From a technological point of view, users are looking for the most reliable, energy-efficient, and cost-effective data centers in the best locations to serve their needs. It’s important to partner with an experienced data center provider like Digital Realty who has the largest portfolio in the world, and who utilizes the latest designs and equipment.   

Michael Lahoud: Important technical considerations to consider is whether the data center partner is supportive of and in line with the customer’s specific business needs. Often, we hear about data center operators who went all the way into a contract but did not have the capabilities to facilitate the actual requirement for that engagement. Many times, this is related to the density of a customer’s cabinets, or even the lack of a density in a particular facility. As an experienced data center operator, however, we vet all of this in detail before we execute a service contract, so we can pre-engineer a colocation solution.   

Lance Black: Considerations, such as power availability, redundancies in the power and cooling infrastructure, security, and network/telecom options, are really table stakes for data center providers anymore.  Careful considerations around managed/security services, or Cloud and Cloud connectivity options are becoming a larger part of the conversation. 

What is the best way to protect a company against loss of data and intellectual property?

Michael Lahoud: While companies invest millions of dollars in state-of-the-art security measures to protect their financial and intellectual assets, they typically overlook the biggest risk of all—their employees. Human factors training and protocols help mitigate risks beyond the physical and cyber safeguards that technology and processes can provide. At Stream, we consider our human factors initiative an imperative in our ongoing training so that employees gain a heightened awareness of the human factors that can create risks to operations or personal safety. Intentionally or unintentionally, humans cause an extremely high degree of all security failures, and each breach costs companies millions of dollars to resolve. Yet, while many organizations put strong physical or logical security measures in place, they do a relatively poor job of educating employees to recognize possible threats. At Stream, we insist on maintaining effective security awareness training programs throughout our facilities management organization and require staff to meet rigorous certification requirements and internationally recognized guidelines. Not all companies can provide that level of defense, but they should.

What are some of the most important financial considerations to take?

Lance Black: The data center/colo market has become extremely competitive in terms of pricing. There can be a tendency to attract organizations with a low initial entry price but charge exorbitant prices for the a la carte services, such as remote support, cross-connects, or internet connectivity. Educating oneself in any given market is extremely important in this decision. Once again, it is imperative that organizations consider additional capabilities of the data center provider around managed and security services.

Bryan Marsh: The total cost of owning and operating a data center is composed of several factors. Base rent is dependent on the amount of IT load that is required to run a customer’s servers and networking gear and the amount of floor space needed to accommodate such equipment. The rent is also dependent on the term of a lease or license, any ramp or free rent, tenant improvements, lease commissions, and the tenant’s credit rating. Operating expenses may be included in the gross rent or prorated among several customers. Interconnection charges are for cross-connects and other network connectivity products. Taxes may be imposed upon the real estate, personal property, equipment purchases, online sales, and other uses. In some jurisdictions, there may be tax abatements and incentives in place for data center owners, users, and operators. Utilities typically include electricity, water, gas, and cooling.

As companies take a hard look at expenses and what it truly costs to run and maintain an in-house data center, they are seeing that there are great cost savings to look at the colocation model.

Michael Lahoud

How important is the way the building is designed in the overall effectiveness of a data center?

Bryan Marsh: Data centers are designed to carry a specific IT load in a certain sized room with a certain degree of resiliency. The IT load is measured in the number of kilowatts or megawatts of power furnished to support IT load. On top of the IT load, there is an additional amount of power required to support the cooling, lighting, security, and ancillary services. The resiliency or amount of redundancy in the electrical and mechanical systems is typically either an N, N+1, or 2N design with “N” designating the normal state. The computer rooms may have slab or raised floors with overhead or underfloor distribution of power and cooling systems. Containment may be installed to improve the efficiency and performance of cold and hot airflow within the data center. The overall effectiveness and efficiency of the data center will be determined by how well these systems are designed, constructed, measured and tested.

What are the most common physical risks of working, or not working, with an off-site facility?

Michael Lahoud: Physical risks associated with off-site facilities depend on the location and facility management protocols. Mitigation steps should be taken proactively in advance to reduce the impact of external risks, as well as those internally attributed to human factors. Expert data center development and operations, however, mitigate those potential risks upfront by pinpointing locations far from external threats—and securing the data center with appropriate and monitored physical security barriers, integrated security technology, and an active 24/7 on-site guard-force. These are measures that a typical enterprise operator may find more challenging than an outsourced dedicated off-site enterprise colocation solution.

How have data centers and technology infrastructure changed during the past five years?

Bryan Marsh: As the digital age continues to evolve and grow, so have data centers. They are more prevalent in major urban markets where there is a high demand from Cloud service providers, enterprises, and government. They are pushing out to smaller cities and towns where data and content need to be delivered faster and closer to the public. In the major markets, data centers have grown as owners look to reduce costs achieved through economies of scale. They have become more modular in characteristic with various components built off-site and delivered on a just-in-time basis. They have become more energy-efficient and environmentally friendly with less waste and using renewable forms of energy. They require less redundancy in the electrical and mechanical systems as equipment reliability and best practices have improved and users have adopted alternative back-up plans using the Cloud and software-defined networks.

Michael Lahoud: With IoT ultimately giving way to broader deployments of edge computing, the industry has acknowledged the essential need for distributed infrastructure and digital twin technologies. To enable this evolving edge ecosystem, leaders must not overlook the naturally combined requirements of technology and real estate in comprehensive edge scenarios. Connected buildings, infrastructure, and real estate, which Stream brings to the forefront, will position commercial real estate companies like Stream as connected real estate champions across an evolving industry.

What are some of your clients’ biggest data and technology concerns currently, and how are you addressing them?

Lance Black: Security continues to be top of mind for almost every client today. We advise customers on the benefits of focusing on their operational environment, but that is not the cure-all. Additional planning around responses to threats, attacks, and breaches are essential to having a fully functional security plan. We help our customers work through these challenges and fill in the gaps when necessary.

Bryan Marsh: Where to put your workloads is really driving the hybrid infrastructure conversation, which is presenting itself as the desired IT end state for corporations. As a result, our customers are looking for perspective on the types of workloads that make the most sense for the Cloud, and those that operate best in a physical environment. Emerging technologies and applications like artificial intelligence, deep learning, and high-performance computing are placing strain on power and cooling capabilities, as the rack densities of these hardware stacks that support them move higher and higher. While that’s happening, there’s still a requirement to support large data lakes and networking needs that require much less power and cooling. We’re addressing these challenges by offering a variety of cooling technologies and power options to future proof our customers’ architecture and right-size their environments, which optimizes TCO long term.

What are some of your predictions for how data centers and technology infrastructure may change or evolve during the next five years?

Bryan Marsh: Data centers continue to thrive as the amount of data created, stored, and exchanged continues to grow. Large hyperscale deployments will see the most growth as more companies leverage Cloud-supported architectures. Core infrastructure requirements for both large enterprises and service providers will consolidate around regional epicenters of data center activity. However, edge-placed deployments will flourish as latency reduction becomes critical to serving population bases and IoT applications via mobile and last-mile connections.

Michael Lahoud: Enterprises are dealing with large amounts of data from various devices, determining how best to store and analyze that data in order to improve business intelligence. Issues of security, cost, and latency are likely to remain challenging, particularly as enterprises seek to store/process some of the data in the public cloud or use advanced analytics that require connecting to public cloud or software-as-a-service providers. This will bring new challenges around network capacity and cost, some of which may be eased by using colocation in order to improve connectivity and latency while still meeting security and compliance requirements.

What’s the primary challenge your customers face with expanding overseas?

Bryan Marsh: Unique data sovereignty requirements for different emerging markets will drive many data center providers to expand globally as their largest customers grow their addressable markets. Data Center go-to-market strategies will need to evolve to position the data center within a customer’s overall workload placement strategy, contemplating the need for on-premise infrastructure and Cloud resources, with the interconnection of those resources becoming a more essential element of the performance of applications. GDPR requirements further complicate expansion efforts as more stringent policy and regulation require customer data to remain in-country.

How can a company’s IT group work effectively with a facility to protect their business?

Michael Lahoud: When an organization decides to go with a colocation data center and use a third party, there should be a sharing of knowledge around the capabilities of the operator. Most facilities offer more services and capabilities than what the IT group understands, and it can be leveraged to make the process more efficient as well as to better protect their business.   

Lance Black: When making a data center decision, it may be wise to select a provider that does more than maintaining the data center environment. Choose one that also offers various degrees of managed services that allow you to augment your technical staff when needed or for specific skills that you only require occasionally.  This is a great way to maximize your relationship with a provider. The provider essentially becomes an extension of your staff and has a vested interest in ensuring you meet agreed-to performance metrics.

Security continues to be top of mind for almost every client today. We advise customers on the benefits of focusing on their operational environment, but that is not the cure-all.

Lance Black

What’s keeping your clients up at night?

Michael Lahoud: The sheer magnitude of properly operating mission-critical environments is a topic that seems to be an ongoing challenge for IT organizations. Whatever is happening inside or outside of the business, the IT service environment must remain secure and operational. A data center operator must heavily invest in its facilities management team to keep them in top form. Every organization has procedures, but we do beyond the basics with our Stream Technical Engineering Procedures (STEPS) program and incident reporting process—a collaborative process for our entire facilities management organization. This way, our customers can rest assured.   

Lance Black: Our customers’ largest concern is the security and availability of access to their mission-critical applications. Having fully functional backups, recovery, and restoration testing and adequate redundancy of personnel and physical resources all funnel into this concern. Leaders who see these as avenues to leverage a good data center provider by leveraging their managed services skills and their security offerings sleep far better than those who try to provide all these services within their own operational budget.

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