The Importance of Data Centres
The Importance of Data Centres
- The Importance of Data Centres
The data centre services market has been growing rapidly for the past few years with a compound annual growth rate of around 13%, a trend that is likely to accelerate in coming years.
Several factors strongly encourage this growth including:
- IT data services are so fundamental to society, government and business today that the global spend on these technologies is huge. Many IT services are delivered from servers in data centres. Consolidating many servers in a small number of data centres is very cost effective.
- Communications technologies and infrastructure (including, but not limited to the internet) have grown massively in recent years, meaning that IT services can be located remotely from their users. Putting them in big data centres is therefore practical
- Critical IT services need redundancy - eg a main service at a primary location, with a backup service at another location to take over if the main service fails. By designing services to work in data centres, backups and other features such as load balancing are easily implemented. The technology to do this is now excellent and widely used.
- The move in IT towards virtualisation allows more to be done with the same amount of computer hardware.
- There is a non-linear relationship between capacity and function. Adding more computer units increases computational power by more than additional units
- Co-location is less dependent on physical location than other industries can be. heavy industry may require road/rail in addition to facilities infrastructure. A data centre can be located anywhere in the world that has access to two things; Energy and Internet connectivity.
- “Cloud computing” is now a marketing buzz phrase; companies are eager to use it (for good reasons) and tell everyone they are doing so in order to be a seen as leader in new technology.
Research by Gartner for Scottish Futures show a complicated picture for servers and colocation. (See https://hostinscotland.com/storage/72/SFT-enhanced-connectivity-report-FINAL.PDF)
Spending on servers has decreased slightly, but this is largely due to servers becoming cheaper, and sales volumes are increasing.
Spending on servers has decreased slightly, but this is largely due to servers becoming cheaper, and sales volumes are increasing.
Data centre numbers may also be decreasing, but this is to be expected: small data centres are less cost effective than larger ones, so there is bound to be consolidation in this sector.
With this in mind it is important that Wales has a plan to react to this. The data centres in Wales are mostly small. Business will move out of Wales when small data centres are closed as a result of consolidation.
Implications for Different Sectors
The sections below consider some sectors of the Welsh economy that are actively adopting data centre technology. However, the takeaway from all these sections is easily stated:
It is almost trivial to to demonstrate that cloud technology is increasingly important to modern economies, and most sectors are impacted to some extent. Many organisations boast about their use of cloud computing as this is an exciting new technology. The following sections, then are almost redundant - the case for Wales ensuring it should embrace and invest in this kind of technology as part of its IT strategy is virtually a truism.
Government
Much of government is about communications: data, policies announcements are all made available to citizens through websites. Social media plays important role in keeping citizens informed. fundamental services such as email require a server, and these kinds of services are increasingly provided as managed services from data centres
Cloud computing allows flexible computer resources to be available on demand at low cost
A broad range of government applications use hosted services, and it makes sense for any government to use home-grown providers at the very least to show faith in their own businesses, but often data protection issues will mandate it.
Financial Technology
The global spend by the Financial Services sector worldwide is huge, and cannot be understated. In many places it is the financial sector that dictates the topology of national and international network connections. Financial services contribute 10% of the economic output of the UK, providing 2.3 million jobs and 76 billion GBP in taxes. The UK has a correspondingly large financial technology sector.
The most demanding applications such as high frequency trading require network response times that cannot be achieved unless the computers performing the trading are physically located within meters of currency exchanges. This gives rise to the notion of a “Golden Mile’ within which banks will pay substantial amounts to locate equipment.
Most ‘Fintech’ applications are not so demanding - transferring money from one bank to another may be done in minutes, or make take days to perform limited by banking processes required. Add to this the spend on analysis and back office planning and it is easy to see that Fintech is a huge industry that will always spend substantially on IT.
Financial institutions cannot afford to have key systems become unavailable for any reason, and the best approach to addressing this issue is to have multiple copies of each system so that the failure of one does not kill the service. Redundant systems like this are often located in different geographical locations: a major disaster at one location will not affect a backup located many miles away.
With this in mind, Wales is actually an attractive location for many applications. It has a Northern Europe position, close to the major financial centre of London, but is a viable location for businesses interacting with other centres such as Paris, Frankfurt, Amsterdam. Cardiff and South Wales can provide the same benefits as many locations closer to London, but often at a lower cost.
Bio And Medical Technology
The Welsh government website “Trade and Invest - Wales” makes a good case for life sciences in Wales, referring to companies such as Thermo Fisher Scientific and Zimmer/Biomet who have a significant presence in Wales, academic research and successful start-ups.
Bio-medial applications draw heavily on IT for many purposes. Statistical analysis is required for most projects; modelling and simulations use intensive computing well suited to cloud computing; remote diagnostics and consultancy require fast network connectivity and will work best with systems hosted relatively closely.
Privacy requirements are very high in medical applications, and the transfer of data outside the UK is undesirable and is usually be restricted by law. Storing data in data centres in the same country as the health organisation makes sense for pragmatic reasons.
All this makes a good case for a rising demand for hosting and IT services for medical applications within the UK. Wales can meet such requirements both for organisations within Wales, and the UK in general.
Creative Industries
Wales has enjoyed some success recently in the Film production, and can (and does!) boast of successes in film and television productions.
Film production increasingly makes use of computing. A good example is the computing needed to make animated files that have become popular recently - think of films by Pixar, ‘Shrek’ and so on, but also action films like Lord of the Rings, Spiderman and many many others that make extensive use of CGI (computer generated imagery).
CGI requires high bandwidth and significant computer processing. Having these resources available within Wales local to production sites makes sense, and would support these creative industries.
Small to Medium Enterprises
Almost all small businesses nowadays use IT from everything like Social Media, Email and websites. Even companies in rural areas of Wales engaged in the most bucolic of enterprises such as making cheese will want to promote their products on the web.
Managed email, Microsoft Exchange servers and many other commodity services are available as managed services offered by hosting companies. Most SMEs need them to some extent; they can just as easily be hosted in Wales as anywhere else, but seldom are.
Providing these services in Wales is easy. Promoting them and encouraging Welsh businesses to use them would help build IT services industry in Wales by repatriating IT spending that is currently going abroad.
Web development is ubiquitous - any organisation of any note will have a website at least as an online presence; many require far more complicated functional websites. Wales seems to fall short here: given that any significant business in Wales will need a web presence, a little research soon shows the vast majority of websites for Welsh businesses are hosted outside Wales. This is unfortunate, as it represents money going out of the Welsh economy for services that Wales can provide as easily as any other country.
There are many local web developers serving local SMEs effectively re-sell hosting services - these would include any website developer that offers its customers website hosting. Currently the vast majority of such websites are hosted in England or outside the UK even the developer is based in Wales.
By providing hosting facilities for all such developers, the infrastructure and expertise to support them becomes based in Wales. Welsh branding and incentives to Welsh based developers would encourage uptake.
This service could also be sold to organisations anywhere in the world either directly or through resellers.
Travel and Tourism
The Travel and Tourism is profoundly dependent on Information Technology, allowing people to book holidays all around the world from their own homes. Most holiday bookings are done online, even traditional travel agents (a much reduced number from ten years ago) use the same booking systems within their shops
Social media is central to the industry; all destinations need to promote their businesses over the internet, even the smallest hotels, bed and breakfast and holiday let businesses have a website.
In this sector as many others the significant spending on these IT services goes outside Wales.
Education
Universities and colleges already make significant use of information technology, many have computer centres - effectively data centres - on their own campuses. This is obviously essential for colleges teaching courses in IT or many other disciplines like mathematics or engineering, but computer skills are ubiquitous these days and IT skills are useful to students of subjects like literature or history.
Cloud computing can allow wider access to computer technology, and it is interesting to consider how cloud computing can be made available to students in Wales. This is an important concept and is discussed in section 8.
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