Off centre

HP Critical Facility Services customer project manager Kevin Miller

For businesses that choose to outsource their data centre requirements, there is no ‘one-size fits all’ solution to the problem of how to go about shifting large and important parts of the business to another location. Much depends on the type and size of business, what a firm chooses to outsource and who it decides to outsource to. It is not an easy process, as even in the smallest of organisations IT permeates into every aspect of the business. HP Critical Facility Services customer project manager Kevin Miller says it is vital that project leaders ensure they have the support and co-operation of all departments that will be affected and that a precise plan is drawn up. “The real challenge is working out what you need and what you want,” he says. “Firms need to get everyone together and work out what they need, because people don’t necessarily realise what is required. Trust and security are two major elements and people don’t trust the unknown.”

Injazat’s head of product development and solutioning Michael Collins says that companies often don’t understand the TCO in building and operating their own data centres. “It is approached from a technical perspective and CIOs need to work closely with CFOs to realise the savings that can be made through outsourcing versus building and operating your own,” he says.

Alpha Data’s business unit head for enterprise computing, Gigi George, says that the idea of outsourcing is raised because firms have in-house infrastructure that is difficult to manage, and is costly. “A move to outsourcing means they can share with other users and so cut down on costs. Understanding the requirements of the business is vital, says Collins. “For example do you need

Alpha Data’s business unit head for enterprise computing, Gigi George

application uptime to support your business needs and protect loss of revenue and reputation? Is it based on business continuity and disaster recovery requirements? Are you looking for the physical security that an enterprise class data centre can provide for your assets? Once you truly understand what the business requirements are only then can you start to work with data centre providers.


Another round of research and planning is required so that the correct partner is chosen and the business doesn’t make the potentially damaging decision of teaming up with the wrong provider. “You need to articulate your needs and make sure that you conduct a proper request for information (RFI) that covers all requirements so that the vendor understands,” says EMC’s technology solutions manager for the Middle East and North West Africa, Wael El Nadi. “You also sometimes need help from consultants, and you need proper legal assistance. In particular, you need to focus on local laws and to make sure that contracts fully cover local laws.” The need for understanding local behaviour and customs extends to wider issues, such as visa requirements that can vary from country to country in the region, through to cultural considerations such as the long vacations taken by many in summer and the potential for reduced productivity during Ramadan.


Aziz Ala’ali, regional director for the Middle East and Africa at Extreme Networks

“Firms that choose to outsource must make sure the outsourcing firm has good governance on infrastructure,” says Aziz Ala’ali, regional director for the Middle East and Africa at Extreme Networks. “You don’t want challenges on security or risks of losing data.” A data centre’s ability to look after data correctly is a concern that should drive the decision-making process. Guru Prasad, general manager for channel development at FVC, says there have been many instances in Europe and the US where offline data has been mixed between different customers, and that many times it only comes to light when customers receive the wrong data by mistake.

In such instances, it is likely that the error will be investigated with an audit to establish whether or not processes were followed, but Prasad says he has seen instances where the processes were simply not there to follow. So even though reputation of the data centre can count for a lot, businesses need to do as much as possible to find out if such processes are in place to avoid costly mix ups and slips.

“If people are not happy, it is a good idea to bring in someone unbiased, like a consultant, to have a look at this for you. They can help you to objectively map out your current environment work out why you are planning on outsourcing, what you can’t do in-house and help you to define the service level agreements,” advises Miller.


Maintaining standards

SLAs will help to make clear what exactly an enterprise expects from the data centre provider, but before they get to that stage of reaching an agreement, formal industry-standard accreditations are an important part of the process that can help to cut down on the risks involved. According to Prasad, most customers want to see the data centre adhering to SAS 70 type two, the data centre security standard that most outsourced or tiered data centres will follow. Developed by the American Institute of Certified Public Accountants and used by insurance claims processors and credit processing companies as well as data centres, it sets the standards an auditor must employ when they assess the internal controls of a service organisation, looking at the efforts an organisation has made to prevent errors and the likelihood of them happening again.

“That certificate is an ongoing standard,” he says. “When we go to a large customer here, the first thing they ask for is SAS 70. That is something you can do to ensure customer data remains safe,” he says. Miller adds that the Middle East has, by and large, also bought into the ISO27001, an IT-specific standard that requires that management routinely and systematically examine the organisation’s information security risks, taking account of the threats, vulnerabilities and impacts and that they implement a suite of comprehensive information security controls.

Guru Prasad, general manager for channel development at FVC

Miller says that there are no particular weakness in the Middle East compared to anywhere else, as long as firms go with mainstream providers, but he points out one particular problem that might be difficult to guard against even with ample research, RFIs, SLAs and accreditations. “Generally, the risks come not from the outsource service provider but from the sub-contractors they use,” he says. “There is a shortage of skills, so often contractors are used and there are proven statistics that more viruses are introduced by contractors than any other way.”

Cutting costs

It is difficult to quantify just how much can be saved by outsourcing a data centre because so much depends on the size of the business and what it chooses to hand over to a third party. But Extreme’s Ala’ali, suggests that businesses can expect to make savings of 20-60% across capex and opex. To illustrate the capital expenditure that can be saved, he gives the example of two data centres that were recently built in the Middle East. He says that for Mecca Towers in Saudi Arabia “the design alone was in excess of US$2 million”, while Aramco’s data centre, also in Saudi Arabia, cost $4.5m. “Expenditure is huge, so by choosing co-location, you can lose that altogether,” he says, adding that this depended on the applications.

With the need for a constant supply of electricity for light and cooling, risk management, fire safety together with redundancy capacity, the costs of simply maintaining an in-house data centre can be high, particularly when operational spending is combined with the initial cost of establishing the data centre. Being able to pay as you consume means that enterprises can benefit from economies of scale across what technology research firm Gartner describes as the four categories that are responsible for over three quarters of the cost of a data centre: staff, software, energy and facilities, and servers. The benefits of reduced spending through outsourcing can be mixed especially when matched with in-house facilities, with some firms opting to employ a hybrid approach of a mixture of both in-house and outsourced.

The main aim, adds Miller, is generally to convert capex to opex. “It’s probably more relevant for smaller companies,” he says. “Bigger firms can usually take advantage of reduced rates anyway, but smaller firms generally see higher opex, so conversion of that is useful. That can then be funnelled to other areas, such as R&D.”

Economic downturn

The economic downturn has taken its toll on many aspects of the IT and technology industry, but the industry figures that CNME spoke to were in agreement that it has had little impact on the region’s burgeoning outsourced data centre sector. “We don’t see major outsourcing projects here anyway,” says EMC’s El Nadi. “Some telcos in the region, maybe, but it’s not really a cost driven initiative – it’s more that they want to focus on other parts of their business,” he says.

EMC’s technology solutions manager for the Middle East and North West Africa, Wael El Nadi

It is an area which many feel will start to mature towards the end of this year and into 2011, with new players expected to establish themselves as providers and more choosing to outsource. “The market in the Middle East has been fairly slow to adopt, full stop, regardless of the economic climate,” says Miller. “But people are now cottoning on that here in the Middle East we’re bang in the middle of everything.”

In the mean time, more businesses are expected to conduct studies on the types of applications they currently run in-house, and their level of importance and effectiveness in keeping them in-house. Ala’ali gives the example of UAE-based airline Emirates. “Is [Emirates’] Skywards scheme business critical in terms of availability? Well, if it goes offline for a while it is not critical, unlike their scheduling system. Applications with mid or lower business values can be handed over to co-location sites or outsourced centres for management.”

Leading the way

In the Middle East, the UAE and KSA are regularly singled out as the two countries that are more advanced than others in terms of outsourcing data. This is largely due to their telecom infrastructure, but it has also to do with the types of businesses in the countries. And as other countries in the region invest in their connectivity, and competition among telcos increases this could change. “Qatar is catching on quickly, Oman is starting to provide services with the two operators there,” says Prasad. “Countries like Kuwait and Bahrain are not far behind, with Bahrain now seeing these services offered to financial. I would say that KSA is still in a nascent stage, and it is slowly seeing interest in the past year.”

In order for budding shoots of interest to be turned into significant growth, the governments of the region will have a role to play in boosting the fortunes of the sector in the Middle East. Although the connectivity solutions offered by some telcos are up to international standards, there is a lack of choice, and costs are high when compared to other parts of the world. Both are problems that the region’s leading countries suffer from.

For Miller, the problem is a combination of two things – partly cost and partly the availability of fibre. “A proper tier four data centre should have two T1 data connections, but you can’t get that here. That’s something that the UAE needs. Also, you need more than one power source. Until these two issues are sorted out we are stuck in the same position.”

Ala’ali agrees. “In the Middle East, for a data centre to qualify as a tier three or tier four it needs multiple sources of electricity and network,” she says.

Furthermore, in the past, telcos and electricity board have not always had rigid or defined SLAs, and without these, it is hard to provide good governance for outsourced facilities. After all, if they can’t make assurances about the level of service they will provide, it is tough for a provider to do the same. If a need cannot be catered to domestically then a business might be tempted to look beyond its own borders. However, Prasad says that most customers want to work with providers in the same country that they are in because of a lack of connectivity across the region. Connecting from Dubai to Oman, for example, is difficult, he suggests, while the savings might not make it a worthwhile proposition.

Moving out of the Middle East to Asia could unlock greater savings due to cheaper manpower. Indeed, Miller says that during the economic downturn, demand for outsourced data centres in Europe remained at roughly the same level. The main push came from the North American market, with supply driven by Asia, and 29 of the 44 largest published substantial data centres in the first quarter of the year were built in the continent.

But once again, connectivity is an issue, and the reliance on a few submarine cable networks and internal connectivity in countries like India is seen as a major barrier. “Countries like India today are lagging in the network perspective,” says Prasad. “Connectivity within the pan Arab world will improve and could increase among Arab states, but the cost of interconnection is still high. Until that come down, hosting in other countries is unlikely because network costs can be prohibitive.”

Cloudy horizon

“With the move to the cloud, outsourcing will be more common, and the shift to cloud-based apps will help,” says EMC’s Wael El Nadi. “Cloud computing is the new wave in IT, and this will lead the way to managed services, not the other way round. The main engine will not be about outsourcing, but the journey to the cloud. As a sequence of that, there will be more demand for outsourcing because the way IT is purchased will change.”

HP’s Miller agrees that the impact of cloud computing will be big, and will alter the way the industry does business. He says: “As the cloud comes in, we won’t need an all-singing all-dancing facility in one site…the way end users choose outsourced data centres will change with cloud. They are poised to offer cloud services, and they are perfectly placed to offer multi-client solutions. They may need to change the way they work, and SLAs may need to change, but the cloud is inevitable.”

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