Q&A: It's All About the Data

David Jones, President and CEO, Peak 10 -- August 1, 2006

What is your definition of a data center and how would you subdivide the industry (colo, etc)?

A data center is a secure facility that houses IT and network infrastructure including systems and servers, applications and data. A data center offers critical, redundant environmental and physical controls including cooling, power and security.  The data center market can be subdivided into three groups: Simple Colocation, Managed Colocation and Managed Hosting. 

1. Simple Colocation: Typically a secure facility where the customer rents space and provides their own UPS backup power and their own network connections. These are sometimes referred to in the Telecommunications world as “point of presence” providers or “meet-me-rooms.” They also typically require escorted access in and out of the facility. 
2. Managed Colocation: A secure facility where the provider offers the complete infrastructure including power, security controls, network connections and redundancy that are fully monitored 24x7x365.  Most IT professionals would refer to managed colocation as a data center. 
3. Managed Hosting: Combines the benefits of a fully managed data center with the services necessary to maintain the IT operations of an organization including network connectivity, data storage, back-up, monitoring and management, and security around the clock. 

Peak 10 would be fall into the managed colocation and managed hosting categories. 

What are some of the business and IT issues driving demand for data center services?

Demand in our business sector has been on the upswing for the past 24 months.  We attribute this to several factors:

1. 1.  IT outsourcing for small and medium sized business is more acceptable. Peak 10 has been in business for over 6 years and has a proven business model for IT outsourcing.   We have become a viable solution for managed services support in the small/medium business and enterprise market, which is the lifeblood of growth in the southeast.  Businesses rely more on IT and the Internet more than ever before and this demand is growing.
   Since forming Peak 10 we have held to our belief that the Internet would eventually become critical to efficient business function and practice. Our success in supporting businesses’ IT needs has been attractive to prospects that have critical business functions and data that must be located in secure and reliable facilities.
2. Software as a Service model and Utility Computing. Businesses are demanding more availability from their applications that support their businesses around the clock. Peak 10 supports this in two ways. First, we provide a secure, reliable and highly available infrastructure. Second, we have multiple data centers that are geographically dispersed with interconnectivity to offer geographic redundancy. Peak 10 has a long history of delivering business applications out of our enterprise class data centers. We supported early ASP businesses to the newer “software-as-a-service” and model and anticipate further growth in the future.
3. IT compliance and security.  With the passage of several federal regulations and related need for companies to validate security and IT controls, managed hosting providers need to assist businesses with compliance that will continue their business success. Some of these regulations include HIPAA, SAS-70, GLB, Sarbox, and numerous FDA regulations. Peak 10 offers full support to our clients in helping them achieve compliance with their respective standards and industry regulations. 
4. Operating costs and staffing.  As we came through late 2004, 2005 and now 2006 power costs and IT staffing costs have risen, causing businesses to re-look at hosting their own infrastructure and support in lieu of companies like Peak 10.  Power costs have risen dramatically with higher consumption from blade and compact servers to costs of cooling the facilities where they are located. In addition, IT staffing costs have risen, particularly in support of key areas such as security. 
5. DR and Business Continuity.  Organizations of every size and industry are now faced with the need to develop and implement disaster recovery and business continuity plans to reduce vulnerability to unexpected events, minimize downtime and revenue loss, enhance data security and recovery, and ensure regulatory compliance.  With a network of seven data centers throughout the Southeast, we have become a leader in providing solutions to ensure the availability, security and integrity of critical data and business applications around the clock.

What are key differentiators between the larger data centers?

Typically the larger, successful providers have enterprise class facilities that offer a full compliment of services that small and medium size companies and larger enterprises can leverage to manage their IT infrastructure efficiently and effectively.  The key differentiator between providers is how they provide support.  Is support local or centralized?  Peak 10 is a geographically diverse company with seven data centers in the southeast.  However, we support and serve our customers at the local level, empowering our local engineering and support teams to meet any and all needs a customer may have. 

We do also provide a centralized function that spans our entire operation for facility and network environmental and capacity capabilities. A central team of engineering support provides a coordinated 7X24 compliment to the local operating centers. Other internal functions of the company manage and maintain the “platforms and tools” employed across the company’s multiple sites.

Our business has been successful because we Peak 10 can provide the security and stability of a larger organization with the support and service level of a local business.

How do you see the industry evolving over the next 3-5 years?

We believe that businesses will continue to focus on their core operations and leverage best of breed operators like Peak 10 for critical IT outsourcing services.  Further more, computing power, Internet connectivity (bandwidth) and storage demand will continue to grow as new technologies become more affordable and readily available.  The Software-as-a-Service model and Utility Computing will continue to grow to provide businesses on-demand capacity. Virtualization should also have a positive impact for clients and for data center providers. This trend will make the need for secure, redundant and highly available data center solutions even more critical for organizations of every size.

What's the biggest challenge to growth for the data center industry?

Planning for and accurately predicting what the growing demand for the services and solutions data center operators provide will be the industry’s greatest challenge.  Understanding how this increase in demand will affect the need for power, cooling and to a lesser extent secure space will be extremely critical as service providers must grow with scale and at the same time meet the ROI necessary to protect their capital investment.  It will be important for the industry to leverage new technologies like virtualization to improve its own operations.
 
Peak 10 is in several southeast markets, what does your company look for in a new market?

In reality markets find us.  In deciding whether or not to enter a market we look at several factors.  First, the market needs to be a growing, vibrant business community that has been traditionally underserved by national players.  Secondly, there must be access to available talent.  We look for employees that are involved and committed to the business community and will adhere to our proven operating philosophy.  Employee commitment and market leadership is important to Peak 10 and has been one of the key drivers behind our success.  Finally, we make sure that we can provide customers an enterprise class facility that meets our high standards for security, availability and redundancy.

What advice would you have for companies in selecting a data center?

I think there are five key factors to consider when making a decision on a data center solutions provider:

1. Knowing your partner. You will be handing over your organization’s “crown jewels” when you put your servers, applications and critical data in an outsourced data center. It’s important to know your partner well. What is their reputation? What do their customers say about them? Do you have access to their executives? Do you understand their vision and more specifically how they are going to solve your business needs?
2. The facility and over-all operation.  An enterprise class data center needs to be a secure and redundant facility that can maintain and monitor critical environmental controls (power and cooling).  In today’s business environment it would be wise to select a provider that also offers the managed services necessary to support your IT operations including reliable Internet connectivity, data storage, monitoring and security.
3. Diversity of customers.  Selecting a provider with a diversified mix of customers is important.  A data center operator and managed services provider should be well-versed in the needs of businesses of every size and industry.  Speaking with a provider’s customer base is a best practice. 
4. People and market commitment.  The key differentiator for best of breed providers is their people.  Selecting a provider who has not only the technical expertise and industry knowledge you desire but the commitment to your business is important.  A data center solutions provider needs be an extension of your IT staff.  Selecting a company that is committed to the local market and embodies a true partnership philosophy is important.
5. Executive accessibility.  If your data center solutions provider is truly committed to your business they will facilitate and open the lines of communication between your organization and its executive team.  As a true business partner, best of breed providers will want their management to understand and be involved in your business.  In short, their success is predicated on your success.  A provider who understands subscribes to this philosophy will be there for your business under any circumstance.

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