Downturn drives demand for outsourced data centres

With demand for data centre space showing no sign of slowing, and the ongoing effects of the credit crunch affecting the ability of organisations to build their own data centre capacity, the co-location sector is set for a busy year in 2009.

Speaking at this week's Data Centre World in London, Eric Schwartz, President of Equinix Europe, a global co-location provider with approximately 42 data centres around the world, said that 2008 had been all about growth, and this is expected to continue in 2009. He pointed to data from Tier 1 Research, which found that demand for data centre services is currently growing at twice the rate of supply.

There are two models of data centres he said. One is the real estate model, which is a traditional data centre controlled by the user organisation. Then there is the co-location model, where the industry offers companies an outsourced option for data centre capacity.

“The internet continues to grow, and that demands the growth of data centres, as all that data has to be stored somewhere,” he told delegates.

But there are problems, because of the credit crunch and budgetary pressures, it is now more effective for organisations to outsource their data centre requirements as they are struggling to build their own new data centre capacity.

“We expect challenges but it is not impossible,” Schwartz told Techworld. “A company like Equinix has the financial strength to keep these investments going. Equinix spent US$400 million (282 million) last year, and is likely to spend another $375 million (264 million) this year as it expands in nine of its 18 global markets.

In the UK, Equinix is expanding its data centre in Slough, with another 175,000 sq feet, or 15,000 square metre facility very near to its existing Slough data centre. This new expansion is due to come online in the first quarter of 2010.

But he warned that the build cycle for data centres is getting longer, thanks mostly to the increasing difficulties posed by power infrastructure as well as planning permissions. Schwartz said that power and connectivity issues was one of the major reasons why Equinix aims to build near to its existing data centre sites.

“Our co-location customers are focused on service, they want to know whether the data centre will support their applications and will be fit for purpose,” he said. “Companies will increasingly push data centre services to the co-location sector. After all, who is better at running at building and operating a data centre? It is always the co-location industry that has the expertise. That is the advantage of being a globally entity, with access to capacity and credit, we can drive the learning curve on new technologies.”