Data Center Industry -Boom or Crisis

Data Center Industry – Boom or Crisis

December 2014

Sourcing at the Speed of Innovation

Why most investments may underperform – and what to do about it

RampRate At A GlanceAdvisory Services Based on Decision Execution Platform and Approach

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© RampRate Sourcing Advisors, Inc. All Rights Reserved and Protected.

Confidential.

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Year Founded: 2000

Clients Served: 200+, Multiple Industries

Headquarters: Santa Monica, CA

Offices: New York, Boston, Vancouver, India

Key Metrics:500+ Sourcing Transactions170 Restructures99% Success Rate

$24+ Billion In Contract Value23.8% Average Cost Savings

DeliveredData On 1,194 Suppliers, 2,718 Sites in

400+Metros, 119 CountriesOver 140,000 RFP Line Items

2.1 Million+ Unit Costs Given

Differentiation: HyperSource.IT!Decision Execution PlatformTM

Decision Execution Suite

Realtime InfrastructureSourcing Exchange

SPY Online Index

Supplier Ecosystem

Software Enabled Professional Services For Optimizing & Sourcing IT: Low Risk And Guaranteed ROI

Team of Expert Analysts/ Solutions Architects400+ Supplier/Buyer Relationships

Coverage: Data Center/Colo, Cloud,

Hosting, CDN, Network, Telecom, and Mobility RampRate Provides A Pay For Performance Fee StructureProject Fee Of 1%-2.5% Of 1 Year Total Contract Value

Guaranteed Savings Of At Least 300% Of Project Fee; 25% savings fee over Deal Term

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14 Years, 200+ Clients, 99%+ Success Rate

© RampRate Sourcing Advisors, Inc. All Rights Reserved and Protected.

Confidential.

Media/Broadcast

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Finance E-Commerce/SaaS

Services Gaming Publishing

High Tech Social Networks/Web 2.0Telecom/CDN/ Hosting/Cloud

4© RampRate Sourcing Advisors, Inc. All Rights Reserved and Protected. Confidential.

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TOP 5 DATA CENTER INVESTMENT MYTHS

• It’s a real estate investment• … actually a technology one

• The cloud will only make things better• …it will reduce stickiness and won’t live in your data

center

• Demand growth lifts all boats• ...no, just the new, efficient, modular ones

• I can make an investment with a 20-year payback period• … which will be outdated in 5-10

• So there’s no hope against this tectonic shift• … but tectonic shifts are as slow as they are

unstoppable


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DO YOU HAVE THE PERFECT LOCATION

FOR A DATA CENTER?


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SREAL ESTATE: THE POT DOES NOT MAKE A MEAL

Location, Location, Location

EfficiencyPower

Contract

Airflow


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HOW MANY OF YOU THINK CLOUD WILL BE

GOOD FOR YOUR BUSINESS?

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SFORECAST: CLOUDY …WITH A CHANCE OF RAINING ON YOUR PARADE

20% Making money from “The Cloud”

80% Losing growth, stickiness, and margin to the cloud


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WHO’S EXCITED ABOUT THE FLOOD OF

DEMAND FOR DATA CENTERS?


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SABOUT THAT RISING TIDE…

Remember these 90%+ occupancy forecasts in 2008-2012?

“Vacancy rates in New York, Frankfurt, Paris, and London are now 40%, and most operators there indicate little need for further expansion in the near term” (Telegeography, Q4 2013)


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SABOUT THAT RISING TIDE…


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HOW LONG IS THE PROJECTED LIFETIME OF YOUR NEXT DATA

CENTER PROJECT?


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SFUTILITY OF 20-YEAR FORECASTS

Data center differentiators in 1999


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SFUTILITY OF 20-YEAR FORECASTS

First thing I see about these top-of-the-line facilities 15 years later CITY IDC W/SQ

Waltham, MA BO1 67Waltham, MA BO2 67Elk Grove Village, IL CH3 86Sterling, VA DC2 65El Segundo, CA LA1 67Jersey City, NJ NJ1 50Weehawken, NJ NJ2 90Santa Clara, CA SC4 67Tukwila, WA 1st floor SE2 50

What do you even put in a 50 watt / square foot data center?

https://www.savvisstation.savvis.com/docs/welcome/welcome_guide_html/dc_guidelines/policy_power.html


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SO SHOULD WE ALL BE LOOKING FOR NEW

JOBS?


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SIN THE LONG RUN, WE’LL ALL BE DEAD


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NOTHING IS AS PERMANENT AS A TEMPORARY FIX

IBM's System z mainframe running z/OS revenue declined to $1.1 billion, representing 8.0% of all server revenue in 4Q13 - IDC


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BUT WHAT CAN I DO?


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DEPENDS ON WHO YOU ARE Enterprise Owner / Operators

o Assess current costs and create a bill of IT (ITBM / ITFM software)o Identify where each workload should live (RampRate Hypersourcing)o Allocate workloads among the different environments (ServiceMesh, etc.)

Providers / Co-los With Older Facilities o Negotiating better deals with utilities / telecom (e,g, Sabey)o Understanding the interplay with cloud solutions (e.g. Equinix CloudConnect)o Working with RampRate as a channel partner o Knowing when to cut your losses and divest

New Incoming Providerso Is the power contract long term, flexible, and competitive?o Is there enough fiber coming into the building (not wishcasting)?o Is there something that I’m absolutely going to be best at? PUE / green power?

Density? Network? Service / support? Latency?o Is everything I build modular?

Outside Investorso Doubt everything and don’t believe precedento Only invest in someone who’s best at something

Cloud / Managed Hosting Capacity Ownerso Find opportunities and learn – commoditization is coming your way too

Data Center Industry -Boom or Crisis

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