User Manual

> White Paper | Best Practices in Digital Transformation
11
Why Multi-Tenant Data Centers?
This White Paper has been prepared with a focus on multi-tenant
data centers. These are service data centers run either for clients
external to the provider (‘commercial’) or clients within a company
(‘enterprise’). These facilities share raised-floor space, power and
cooling between tenants. The portfolio of such facilities may include
a variety of standalone data centers, server rooms and disaster
recovery sites. They may be built as a campus, as a dedicated
purpose-built facility or, in a building shared with other commercial
or industrial activities. Provision is made for underground utility
feeds, diverse fiber entrances, the capacity for diesel storage and for
physical security.
In commercial facilities, space may be oered from units as small
as the sub-division of a rack, through whole cabinets in open floor
areas, through secured and separated cages which tend to be
located on the main floor area and suites which may be separate
from the main floor area.
According to DCD research there are around 1,650 organisations
worldwide who oer MTDC facilities on a commercial basis. They
operate around 7,500 facilities which have collectively around 8
million square metres of white space. In 2016 they invested around
US$22 billion in their facilities (around 30% of all investment in
facilities). This will rise to US$40 billion in 2020 (36%). The 50 largest
MTDC operators account for around 35% of the asset base and of
investment activity. The number of enterprise MTDCs is far larger
although these facilities are less likely to be purpose built and they
will tend to be smaller.
There are a number of reasons why the issues of digitalization is of
particular relevance to MTCDs.
Both colocation and enterprise MTDCs are vulnerable to the loss
of their customer base to cloud. Colocation providers which have
focused more on a wholesale oering have largely been able to
navigate through the challenge of cloud by oering single tenant
space to the specifications required by cloud providers, managed
service providers and major enterprise tenants. The MTDC world is
populated by smaller companies and considerable takeover activity
and market rationalisation. Cloud has eroded the SME client base in
all but the most recently established ‘emerging’ markets (due there
to the unavailability of suitable cloud or IT services). MTDCs are
largely unable to compete with the flexibility and scalability of cloud
or with its practice of charging on the basis of what is used.
“I’m not sure what the future holds, to be honest. Cloud is
everywhere and oering everything. It has cut down the deals that
we do – deals we used to do for 40 racks are now for 10”
[IT services]
The enterprise MTDC is vulnerable both to cloud and to other
forms of outsourcing. This has led to the continual erosion of the
in-house/enterprise asset base over the past 6 or 7 years. While
corporate preference, legislation and security requirements keep a
large number of enterprise MTDCs alive, the companies that rely on
them know that they need to develop technologically in order to
remain relevant.
The response among all types and sizes of MTDC is to move from
a facility that is operated or leased on the basis of racks, power,
connectivity and security to one that oers access to services
either through in-house ecosystems or through various modes
of cross-connectivity. Not all MTDCs particularly in the enterprise
sector have the facility profile to do this eectively, but colocation
providers are able to oer a business case based on the argument
that it is more cost eective to access a range of IT and cloud
services via a facility that is able to do so than to upgrade an on-
prem. data center at considerable cost.
A majority of MTDCs oer disaster recovery services, access
to ISPs, dedicated hosting, application hosting and SaaS. This
indicates a fundamental transition from a business model based
on infrastructure rental, to one based on IT resource rental based
on interconnectivity and then to a model oering IT resource as
application services based on cloud infrastructure. Dierent MTDCs
are at dierent points along this spectrum. Some have had no need
to move away from the original colocation model (space, power,
connectivity, security) while others will have moved through the
spectrum. u