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Cassini Reviews recently caught up with Greg McCulloch, the CEO of Surrey based data centre operator Aegis Data, to find out what attracted him to a new single site operator after his experiences at larger multi-national operators, and how he saw the market for Aegis developing.
Q. Given your background with operators like Digiplex and Interxion what attracted you to a very new organisation like Aegis Data?
GM. Coming back into the UK market where I think my key strengths are was important to me. When I joined Interxion UK had not been a big focus for them and it was a challenge which I really enjoyed. While I was there we brought the UK from 7th in terms of size and earning for Interxion up to 2nd. I joined Digiplex because I wanted to grow my horizon and Scandinavia seemed to be the next big thing in the data centre market. It was great experience. The data centre market is different there and I learned a lot, but between the moving backwards and forwards and the challenges of language, however good their English was, I was keen to get back to the UK.
Aegis were going through a funding round and the founders had stated clearly that they needed to bring in someone from outside with core skills in the UK data centre market to take them to the next level. I was impressed with the investors who were very open. They had put a lot of money into the business, were willing to put in a lot more and believed in the market. The attraction for me was the potential to be able to go in and mould the business the way I wanted. It was pretty much a blank sheet of paper. The existing site also offered scope for growth with planning permission to extend already in place.
Q. The organisation may have been a blank sheet of paper, but phase one of the data centre was already in place. What were your impressions of the physical infrastructure?
GM. The build projected started in anger in 2012. The site had actually been an old metal works which we completely demolished. No expense was spared in construction of the building and the infrastructure which was designed from the outset for very high densities. The first hall is complete and we have 1.2MW ready to go. In fact power is a big benefit of being out in Surrey. I know only too well the pain and cost of securing power in London. Here, now, we have 6.2MW on site and have the ability to increase that to 10.2MW at little extra cost. Given our ability to expand onsite as well means we have future proofed our business.
Q. How have you gone about developing the market opportunities for Aegis Data?
GM. The original “if we build it they will come” approach doesn’t really work anymore in this industry so we sat down to look at the way we run the business. Originally it was being pushed completely on high density… we can deliver 30Kw per rack now if you want it…but people who wanted a mix of densities had not included us in their bids because they thought were high density and that was it. So we have changed that perception and will happily accept a 2KW rack sitting beside a 30KW rack.
We have brought in experienced data centre sales people, brought in marketing and hired a PR agency and changed the way we think about promoting the business. This has led us to look at key tends and important market segments. For example, we are focusing on Tier 2 financial services organisations back office systems. Latency is good here, but I don’t want to go head to head with some of the established operators on front office systems .We can accommodate back-up systems and back office systems here in Godalming in a very high quality, Tier 3 standard, data centre at a much lower cost.
Q. Given your ability to be able to handle high density configurations very easily, how much demand is there in reality for high density racks?
GM. The high density market is quite small. We don’t see there being massive growth in the next couple of years. Obviously we could condense racks down for customers, but quite a lot come with a configuration that is, for example, pre-fabricated 10 racks of 3KW each. They are not interested in us condensing that. Having said that, we are now talking to a large outsourcer who sees our ability to deliver high density as a real benefit. The cost for them to upgrade their facilities with the sort of power and cooling required to provide both the density and flexibility they might need makes it beneficial for them to consider using our facilities.
Q. How have you approached providing flexibility as you build out the facility?
GM. Given that we have designed the data centre from the ground up we have a clean white room space. There are no columns to work around; all the power, fire suppression, communications etc. are located outside the main hall. This enables us to use a box-in-a-box approach putting in racks with cold or hot aisle containment and CRACs as the customer requires in a very modular fashion. The way in which we have designed all the supporting M&E equipment also means we can swap stuff out without impacting customers. It just means that when you have a refresh or swap out you’re not going into the middle of the data hall.
Q. Being in Surrey has clearly given you some cost advantages, but how easy have you found it to find and attract the right skills?
GM. Ironically it has been pretty easy. There are some well-established data centres in Camberley, so there are a lot of engineers around. Our Ops Director came from SSE at Fareham and lives close by the site, we are interviewing sales people and engineers who live nearby. Also, we are only 40 minutes from Waterloo by train which surprises people who have seen us as being a long way out and so it hasn’t been an issue for us.
Q. Coming back to sale and marketing, how do you position yourself against the big players and what role do you partnerships play in that?
GM. Aegis is still relatively new in the market but have been making significant headway with a number of large deals as we . stick to what we are good at and what we know. So we have gone out for specific partnerships that will help us grow and we stick to Tier 2 customers, with a focus on sectors like financial service and the gamers. Cloud service providers are also good for us, but not at any price.
Q. The challenge for co-location providers is getting closer to the end customer without creating channel conflict amongst your MSP and ISP partners. Where do you sit in terms of being a completely neutral co-location provider or perhaps getting into more consultancy and managed services yourself?
GM. We are not going to become a managed service provider. We are not going acquire one. What I would rather do is work with a single MSP as a partner. We’ll pass over the smaller opportunities to them, but also get them to provide managed services for us. We want someone who will grow and scale with us as well. As much as I will be selling Aegis and its capabilities to a potential partner, I will want them to be selling to me about how they could help us. If we are going to pass business to them we want to ensure that they have the capacity, will be responsive to the customer and effectively mirror our commitment to our customers. I have had a situation in the past where the MSP we were working with, managing our infrastructure and the smaller rack deals we were handing over, wasn’t growing at the rate we were and had become unresponsive to our customers. I can’t afford that. You need a partner who is going to represent you as a business.
Q. So, how does the European Data Centre Group alliance work?
GM. That was formed through a connectivity piece, joining everyone up to a network via Nextconnex. As a consortium we wanted the ability to offer different data centres that were all joined up by connectivity. Some of the bigger data centre operators are all in one location in UK, Equinix in Slough, Interxion at Trumans Brewery for example, whereas with the consortium we have one in central London, one in Surrey and one further out, all connected via Nextconnex ensuring a customer can still have connectivity into the main hubs.
We’ve only just had the official launch and, as a group, we now recognise that we really have to get this going. You’ll start to see a lot more activity round the EDCG brand. We had to spend some time setting it up properly internally, working out where the contract sits, how much goes back to EDCG, making sure we have a single SLA and customer agreement. Now, if you’re a financial institution and you want your front-end systems in London, but your back end systems out in Surrey you can have a single agreement even though it is two data centres. We believe this now enables us to go and talk to the higher end Tier 2 organisations and lower end Tier 1s.
Q. What different questions are you starting to see your customers ask?
GM. If I cast my mind back 20 years ago to when I was at Telehouse things have changed. Customers require us to future-proof their business. We may be negotiating a three year contract but the customer wants to know where we will be in 5 years’ time. Will we be able to scale up and grow? The customer doesn’t want to have to move as they grow because we can’t grow with them. That’s different. A few years ago they would have signed a 5 year contract with the thought that at the end of that time when a refresh was due that they could move to another operator and get a better deal without too much hassle. Now equipment is more expensive and it lasts longer. The amount of infrastructure cost going in is staggering and the customer wants to ensure that they won’t have the risk and cost of moving it all if we can’t scale with them.
Older data centres weren’t built with the same thought about changing technical requirements and customers are finding that they have been constrained by, for example the size and design of their cabling ducts. One data centre I worked in you were almost teetering on the floor tiles because they hadn’t forseseen the amount of cabling that would be run under the floor. Now we see customers coming in and they don’t really look at the UPS or the generators, what they really look at closely are the bends in your cabling, the design and layout of the ducts. As far as they are concerned if this area has been well designed it shows a level of attention to detail and professionalism in the design that gives them assurance about the quality of the operation.
Q. At the start of the interview you mentioned that the availability of funds was a key attraction for you in coming to Aegis. Looking forward what do you think are the implications for a data centre operator of being well funded?
GM. Having funders who understand the business is very important. It gives you headroom to take the necessary strategic decisions. On a day to day basis it is becoming increasingly important because we are seeing more and more tenders asking about the appetite of funders for further investment. Further than that they also want to know what their investment strategy is. Customers would be concerned if a funder suddenly sold out, say, to a pension fund who might want to squeeze value out of their investment. I have seen customers on big contracts go as far as demanding a clause about who you can sell out to.
Q. You seem to have a real passion and excitement for the data centre business. Do you feel that is important?
GM. Yes, it is very important. I worked in places where we have had passionate knowledgeable people who have been very successful and I’ve seen places where people just seem to be working to a script. Customers can tell. I’ve found myself talking to people and they’ve stopped me and said…wow, you’re excited…and I am. I think it makes tremendous difference. I’m not sure we have always communicated that excitement about data centres, but I think there is a growing understanding about how important these facilities are to our digital world.
This post first appeared on the old Cassini Reviews website.