What Does the Enterprise IT Flight to Cloud Mean for Wholesale and Colocation Data Center Providers? Part 3: Environments and Configurations
by Josh Anderson
CapRate recently convened a panel of six leaders in the Canadian Data Center industry to discuss the sector’s most timely topics regarding enterprise IT Flight to Cloud, including what buyers are looking for, the kinds of enterprise moving to Cloud, and the necessary ingredients for, as well as the dangers of, a migration to the Cloud. This is Part I of the discussion’s transcription. Participants in the discussion included Scott Metcalfe – Vice President, Data Center Solutions, JLI; Roger Karam – Chief Executive Officer, Northern Investment Partners, Inc; Marc MacDonald – Founder, Canada15Edge Data Centers and Managing Partner, HighlandsCap Management; Ted Mocarski – Senior Partner, Novacap; Dave O’Reilly – Vice President of the IT Solution Division, Schneider Electric; and Scott Metcalfe, Vice President – Data Center Solutions, JLI, who moderated. Below is the Part 3 of a transcription of this roundtable (see Part 1 and Part 2 here).
Ted Mocarski, Senior Partner, Novacap: The most relevant example is a company we’ve partnered with up in Montreal that posts ERP applications on behalf of customers. And I’ll echo what Marc says. There’s no one flavor. You really have to work to find what works for your customers, because the smart ones know that there are things out there. That being said, our primary environment — with this company, we will never own infrastructure. We had 4-5 at Cologix in Montreal, we have a second site in the U.S. at IO. Within those cabinets, we run a private cloud, and we take our customers and put them on it, and also running out of that site we run Direct Connect into AWS and into Azure. For common functions and some applications, the customers are willing to off-site into the public environment. We will work with them to go and do that and manage it on their behalf. Our preferred public cloud provider, quite honestly right now, is Azure. We’re having problems with our Direct Connect into AWS, they’re giving us a hard time with regard to that and managing the bandwidth. Ideally, a private cloud that we manage, and a Cologix out of Montreal, Direct connect for some common functionality into the Azure environment and whatever else we need to manage on-prem for customers, we come up with a solution.
Dave O’Reilly – Vice President of the IT Solution Division, Schneider Electric: I think that, at the end of the day, access to data, such as where it’s stored, and security aspects that Marc touch on, are critical. If you look at most of the provincial governments that we speak to across the country, they are so sensitive of data being transferred, that data can’t even cross the 49th parallel, which means that data has to be resident here. It means that in a pure Cloud environment, you’re going to have an issue with that. Especially when you’re dealing with disaster recovery plans that include data, maybe resident or somewhere else. I think that at the end of the day, the one thing I’d say is that security trumps all.
Scott Metcalfe, Vice President – Data Center Solutions, JLI: Roger, you obvi have done a fair bit of due diligence of analysis on the Canadian marketplace. This is a question that can probably go across the board again, but are you concerned that there is oversupply in certain markets? I mean, Calgary has a ton of product. Pricing has not compressed. Vancouver has very little product. Montreal and Ontario have a lot of new product that just hit the market. Will that create pricing pressure on retail deals south of 250KW or wholesale deals north of 250kw?
Roger Karam – Chief Executive Officer, Northern Investment Partners, Inc: I’m not going to comment on inventory, but on the wholesale side, I think that we have four different markets. Montreal, Vancouver are slightly more similar than Toronto and Calgary. That’s probably why we are focusing on Montreal first and Vancouver second. We believe that there is going to be a supply to the market, but we also believe that the demand will exceed the supply. I’m talking winter to long-term. It’s always difficult to make an assessment of short-term, because very often we’ll have some supply on the market, but it’s down to the customer to move it. What you can see in Quebec is, the focus on data centers – I mean when we started doing this two years ago, we were talking to HydroQuébec and others – they had no focus.
Basically, they started looking into it, they were interested, but prior to that they had no interest in data centers. Now they realize that there is an ecosystem in the data center field which can be very beneficial to Quebec. We’re convinced, and we tell this to our investors, that we are sitting in the best country in the world to build data centers. On a national level, there are very few countries that can compete with Canada, because of the cost of electricity, renewal energy, data sovereignty. The only other countries that can compare to Canada are Scandinavian countries – Sweden, Norway, Finland, and sometimes Iceland, which remains an island. So I don’t believe that in the medium to long term, we’re going to have too much supply. It’s very true for Montreal, it’s very true for Vancouver, but the fundamentals are probably slightly different for Calgary and Toronto.