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Also posted on: IT Infrastructure
Last year Cassini Reviews had the opportunity to visit the Node4 data centre in Northampton and meet up with them again at an event in London. The other week we caught up with Steve Denby, the Node4 Head of Sales South to find out more about their its acquisitions and how that was affecting Node4’s market positioning.
Q. There were some significant changes at Node4 in 2015. What have the acquisitions of Reconnix and Premier IT Networks meant for the company?
SD. The acquisitions have achieved two key things for Node4. They have helped us grow our technical capability and portfolio as well as giving us greater scale. We chose to acquire Reconnix specifically due to its inherent development skills and capability in the open source arena. The acquisition was very strategic for Node4 and gives us the ability to offer a range of cloud based services aligned to developments in open source and hyperscale cloud environments, such as AWS.
Similarly the acquisition of Premier IT Networks was designed to drive Node4’s expansion and presence in London. I had been responsible for opening an office in London in November 2014. We were growing slowly from serviced offices, and now thanks to the Board’s decision to acquire Premier IT Networks we have 20 skilled infrastructure and support services staff along with a sales team based in new, dedicated offices in the heart of the City.
Q. You talked about open source and hyperscale. Why do you see those elements as being strategic and critical for you?
SD. Steve Nice, the Co-Founder and CEO of Reconnix talks about two types of applications…”pets” and “cattle”. Pets are basically traditional Windows applications. You put them on a server, place them in a server room, give them special names, feed and nurture them individually and give them a lot of love. Cattle are the hyperscale application servers. They have numbers. They all do the same thing and are identical. There are large numbers of them and if one dies you simply replace it with another. ‘Cattle’ applications can be scaled up and down much more easily than ‘pets’, making it much cheaper to deal with peaks in performance demand that aren’t just seasonal but specific to times of the day, for instance.
Q. Are you seeing a growing requirement for this sort of capability and where is the demand coming from?
SD. Yes we are. As companies emerge from the recession we see them gearing up to take advantage of new growth opportunities. Yet, increasingly, the management teams of these companies are recognising that they can achieve great flexibility and agility by moving to a Cloud infrastructure. They don’t want to spend capital on infrastructure that might be inappropriate in a year’s time as the market changes around them.
The question of capital is interesting because often it is the presence of private equity investment that is driving the requirement for Cloud-based deployments. As private equity backed firms start to grow by acquisition, the ability to glue the disparate companies together by, say, implementing a virtualised Desktop-as-a-Service (DaaS) solution across all locations, that isn’t restricted by all the different types of end user devices, eases some of the pains of integration. Ease of scaling is also important. As an example, an investment broker, with new private equity funding, had plans to grow from 150 people to around 800 people in 3-4 years. We were able to provide a clear path to this goal that copes with the unknown and doesn’t tie the business to large capital investment and write-down. If things don’t go as intended, or the market moves in a different direction, the business can adapt and be agile enough to capitalise on it.
Another important driver we are seeing is the change in the way businesses need to engage with their customers. Customers now expect a common user experience across multiple channels and new dev ops teams are appearing to respond to this, these teams need to be able to develop at pace and move rapidly from development concepts to live operations in a seamless way. The agility of the various Cloud services out there make this possible and give those that embrace them a competitive edge.
Q. Given this focus on new development and deployment models and your recent acquisition, do you see Node4 as more of a service provider than just a Data Centre operator?
SD. Yes, very much so. We have evolved to become a Managed Service Provider. We want to be able to work with company boards and IT departments to help them on the journey to the Cloud as well as being the place they locate their applications, servers and storage. While we continue to offer colocation, more and more we are starting to install our own infrastructure in our Data Centres. For example, we have invested heavily in infrastructure to deliver Cloud-based Infrastructure as a Service (IaaS). We have upgraded our storage in 2015 to provide four tiers of storage and the ability for our customers to move live workloads between these tiers non-disruptively.
It is important for us to provide a high-touch managed service with a single SLA. The customers we talk to don’t want to have to manage multiple providers to deliver a combined service. Take the example of Desktop-as-a-Service. We have upgraded our fibre ring around the UK to use DWDM technology. This has greatly increased its quality of service capability, performance and capacity. Using our network we connect up individual buildings using a variety of telco providers for the last mile connectivity, but critically we manage everything for the customer through a single SLA and use all our own equipment end-to-end.
Q. Do you use partners to help deliver your services?
SD. Our strategy is to own all the infrastructure that sits under the services we deliver in the UK. We have 4 Data Centres which we own. These are all modern, highly secure and highly energy efficient. While the average PUE in Data Centres is around 1.7 – 2.5, we are very proud that our rating in our flagship hall is now at 1.1. The fact that we own these Data Centres gives us some significant cost advantages. We have also put points of presence into a number of key locations like London, Manchester and Birmingham, so that we have broad coverage across the country.
We also provide MPLS direct connect to AWS and Azure so that our customers can connect to the public Cloud without having to transit across the public Internet. We have our own implementation consultants, developers and technical support staff. Overall we believe that owning and controlling this broad array of facilities and capabilities gives us a unique proposition for customers dissatisfied with trying to amalgamate a solution from multiple providers.
Q. You do actually house some servers at Equinix in Slough. Why is that?
SD. That is partly historical, a result of the Node4 acquisition of LETN. This structure enables some of our financial services customers to use the cross connect within that facility for high-performance interconnection with trading partners without going out over a network. Clearly we can’t provide that and we don’t want to try competing with Equinix directly, we actually partner with them so that we can use their global reach to enable connectivity for any of our customers that require it, but it is not a massive growth area for us.
Q. How are you set up financially and organisationally to build upon your recent acquisitions and deliver continued growth?
SD. In 2013 our founder and CEO Andrew Gilbert led a Private Equity Investment into Node4 by Lloyds Development Capital. Their continuing support has enabled us to grow rapidly from around £14 million in 2014 to an expected £28 million this financial year with over 180 employees. We also have an extremely strong team of Non-Executive directors with senior management experience at companies like IBM and Vodafone. So I believe we are well set up to take advantage of the exciting opportunities in the market
Q. What sort of changes in the market do you think will create these opportunities?
SD. I think we see the Internet of Things (IoT) being the next big thing. There are such a wide range of potential applications. I recently heard of a little known Scandinavian example of radar devices being fitted to the bottom of city taxis to scan for leaking utility pipes as they drive around. That sort of innovative thinking drives new business models as well as increasing the amount of storage and the number of transactions IT Service Providers like Node4 are being asked to provide. With our local Data Centres, high-capacity network and agile storage we think we are well placed to take advantage of the move to the Edge that IoT seems to be driving.
This post first appeared on the old Cassini Reviews website.