The poor economy isn’t stopping Canada from becoming the world’s data centre
By Ian Harvey
April 1, 2010
April 1, 2010
Canada is hockey, maple syrup, Mounties in red tunics, beavers, polar bears, golden wheat fields, snow-capped mountains, thundering rivers, shimmering lakes and the craggy rocks of our shorelines. And now data centres. Demand for data storage, and by extension data centres, is on an upswing, driven by the shift toward cloud computing, software as a service and managed services, also known as outsourcing. According to industry analysts Tier1 Research, demand for data centre services in North America rose 14 per cent in 2008 and is projected to increase at the same rate for the next several years.
Adding to the demand are increasing concerns about the U.S. Patriot Act, which can give authorities access to any data stored on American soil. Many Canadian and European companies are quietly moving their data, often to Canadian data centres.
Robert Offley is the president and CEO of data storage provider CentriLogic. “We actually started CentriLogic in the U.S. and then came to Canada, and part of the reason was the Patriot Act,” Offley said. “The Patriot Act is really scary for some companies.”
And whereas American legislation is pushing customers away, our Personal Information Protection and Electronic Data Act (PEPIDA) is actually attracting business. Because its provisions are equal to or stronger than similar European laws, Offley said European companies can locate their data here and still be compliant with their native requirements.
Mark Schrutt, director of outsourcing services at IDC Canada, said data services is a good business space, despite the recession: “The demand for storage and hosted services is exploding, but the prices are holding steady. Telus has announced its sixth data centre and…MTS Allstream is building its sixth data centre in Manitoba.”
Not only that but Canada is safe from most natural disasters, said CentriLogic’s Offley, citing a recent conversation with a Florida business concerned about hurricanes.
However, there are no guarantees in the business world, said George Kerns, CEO of Fusepoint Managed Services. He said while demand here is growing, it’s not growing faster, relatively speaking, than in the U.S., where there’s a larger economy of scale at play. “We’ve had some anecdotal information about the Patriot Act but not enough to say it’s a trend,” Kerns said.
Still, the data business is evolving and the concept of storing data anywhere other than in your own backyard has dramatically changed in the last 25 years. “Back then you would never have thought of putting your data in India or Korea, but with remote management and today’s connectivity, you can put it almost anywhere,” Kerns said. “And that’s the big shift as enterprises focus on what they do best and outsource their data needs to a managed services company like us.”
Lean green power
Bill St. Arnaud, chief research officer at CANARIE (Canada’s advanced Internet development organization), also sees opportunities in Canada’s power network.
Data centres consume significant amounts of power, so “locating in Canada would make sense because of our sustainable power, cooler climate in the North and cold water for cooling,” he said, noting those factors are part of the argument to locate a major data centre in the cool climes of northern Manitoba.
These factors have resulted in a number of significant announcements over the last year. Data services and marketing provider Hostopia, for example, was bought out by U.S. cheque printer Deluxe in 2008 for double its share price value, while Q9 Networks was also snapped up by a private equity group, ABRY Partners, at six times revenues and 38 per cent over stock price, even as the credit crunch was starting to ripple through the markets. And U.S.-based 3n launched two centres in Toronto and Vancouver earlier last year while IBM and B.C.’s RackForce are investing $100 million to build and operate a 150,000-square-foot green data centre in Kelowna called GigaCenter. That facility, which will pull hydro power from the Columbia River, showcases IBM’s engineering savvy and RackForce’s operational expertise, according to RackForce’s vice-president of marketing Brian Fry. He believes it will be the greenest data centre in existence.
“The rule is that a 100,000-square-foot data centre is the equivalent of 100,000 SUVs on the road getting 11 miles per gallon,” Fry said. “We expect it to be at about 500 [SUVs].”
Location, location, location
Placing the centre in Kelowna really helps reduce the carbon footprint, he said, because of the city’s infrastructure, labour pool, power availability and climate, all of which contribute to low-cost cooling. “We met with IBM and they took us through the process and the formulas they use to determine the best places to put a data centre,” Fry said. “And Kelowna is one of the best places in Canada.”
On the flipside, the era of the downtown data centre is fading, he said, dragged down by real-estate costs, cooling and power issues. “Cisco’s network technology means you are lossless for over 2,000 miles, so really you can put your servers anywhere it makes sense,” he said, noting GigaCenter is being installed in a former Western Star truck factory. “You have all these one-storey industrial buildings which were pulp mills or mines or factories or land with great access to power.”
Similarly, Anton Self, CEO and founder of Bastionhost in Halifax, sees strong demand for data storage outside the U.S.
He’s building Dataville, a 64,000-square-foot facility in an old emergency government headquarters bunker dating from the 1960s cold war. His vision is to create a bridge between Europe and the U.S. on neutral ground. Sort of a Switzerland of data centres. He said storage demand will outstrip supply by a factor of three to one and Canada has a “unique advantage” with its strong privacy laws and other features, which make locating data centres here attractive.
“I think because Canada has been relatively unserved by data centres there is a potential to grow in Canada,” Self said, adding that access to cold water and a cool climate is an attractive package. “For every watt powering a server you normally need two-thirds of a watt for cooling. But we won’t need that much if we use geothermal cooling.”
Adding to the demand are increasing concerns about the U.S. Patriot Act, which can give authorities access to any data stored on American soil. Many Canadian and European companies are quietly moving their data, often to Canadian data centres.
Robert Offley is the president and CEO of data storage provider CentriLogic. “We actually started CentriLogic in the U.S. and then came to Canada, and part of the reason was the Patriot Act,” Offley said. “The Patriot Act is really scary for some companies.”
And whereas American legislation is pushing customers away, our Personal Information Protection and Electronic Data Act (PEPIDA) is actually attracting business. Because its provisions are equal to or stronger than similar European laws, Offley said European companies can locate their data here and still be compliant with their native requirements.
Mark Schrutt, director of outsourcing services at IDC Canada, said data services is a good business space, despite the recession: “The demand for storage and hosted services is exploding, but the prices are holding steady. Telus has announced its sixth data centre and…MTS Allstream is building its sixth data centre in Manitoba.”
Not only that but Canada is safe from most natural disasters, said CentriLogic’s Offley, citing a recent conversation with a Florida business concerned about hurricanes.
However, there are no guarantees in the business world, said George Kerns, CEO of Fusepoint Managed Services. He said while demand here is growing, it’s not growing faster, relatively speaking, than in the U.S., where there’s a larger economy of scale at play. “We’ve had some anecdotal information about the Patriot Act but not enough to say it’s a trend,” Kerns said.
Still, the data business is evolving and the concept of storing data anywhere other than in your own backyard has dramatically changed in the last 25 years. “Back then you would never have thought of putting your data in India or Korea, but with remote management and today’s connectivity, you can put it almost anywhere,” Kerns said. “And that’s the big shift as enterprises focus on what they do best and outsource their data needs to a managed services company like us.”
Lean green power
Bill St. Arnaud, chief research officer at CANARIE (Canada’s advanced Internet development organization), also sees opportunities in Canada’s power network.
Data centres consume significant amounts of power, so “locating in Canada would make sense because of our sustainable power, cooler climate in the North and cold water for cooling,” he said, noting those factors are part of the argument to locate a major data centre in the cool climes of northern Manitoba.
These factors have resulted in a number of significant announcements over the last year. Data services and marketing provider Hostopia, for example, was bought out by U.S. cheque printer Deluxe in 2008 for double its share price value, while Q9 Networks was also snapped up by a private equity group, ABRY Partners, at six times revenues and 38 per cent over stock price, even as the credit crunch was starting to ripple through the markets. And U.S.-based 3n launched two centres in Toronto and Vancouver earlier last year while IBM and B.C.’s RackForce are investing $100 million to build and operate a 150,000-square-foot green data centre in Kelowna called GigaCenter. That facility, which will pull hydro power from the Columbia River, showcases IBM’s engineering savvy and RackForce’s operational expertise, according to RackForce’s vice-president of marketing Brian Fry. He believes it will be the greenest data centre in existence.
“The rule is that a 100,000-square-foot data centre is the equivalent of 100,000 SUVs on the road getting 11 miles per gallon,” Fry said. “We expect it to be at about 500 [SUVs].”
Location, location, location
Placing the centre in Kelowna really helps reduce the carbon footprint, he said, because of the city’s infrastructure, labour pool, power availability and climate, all of which contribute to low-cost cooling. “We met with IBM and they took us through the process and the formulas they use to determine the best places to put a data centre,” Fry said. “And Kelowna is one of the best places in Canada.”
On the flipside, the era of the downtown data centre is fading, he said, dragged down by real-estate costs, cooling and power issues. “Cisco’s network technology means you are lossless for over 2,000 miles, so really you can put your servers anywhere it makes sense,” he said, noting GigaCenter is being installed in a former Western Star truck factory. “You have all these one-storey industrial buildings which were pulp mills or mines or factories or land with great access to power.”
Similarly, Anton Self, CEO and founder of Bastionhost in Halifax, sees strong demand for data storage outside the U.S.
He’s building Dataville, a 64,000-square-foot facility in an old emergency government headquarters bunker dating from the 1960s cold war. His vision is to create a bridge between Europe and the U.S. on neutral ground. Sort of a Switzerland of data centres. He said storage demand will outstrip supply by a factor of three to one and Canada has a “unique advantage” with its strong privacy laws and other features, which make locating data centres here attractive.
“I think because Canada has been relatively unserved by data centres there is a potential to grow in Canada,” Self said, adding that access to cold water and a cool climate is an attractive package. “For every watt powering a server you normally need two-thirds of a watt for cooling. But we won’t need that much if we use geothermal cooling.”
