By Nick Miller
August 15, 2006
STUART McKENZIE folds his arms. "Welcome to my fridge," he says, a
twitch of the eyebrows indicating his pride in the massed racks of
humming servers in the Sydney base of global IT services provider
Peter Wilson, at Datacom's GlobalCentre in Melbourne, stages a more
theatrical welcome: boardroom curtains part to reveal the flashing
lights and busy screens of the central monitoring post.
At the Melbourne hub of telco Primus, Bruce Klimeck simply offers a
business-like handshake, places his palm on a biometric reader and
ushers visitors through the security "airlock" into his inner sanctum.
Every data centre has its own style but all are welcoming customers as
organisations around the country say "get these damned servers out of
Two years ago Michael Browne, CEO of Datacom, thought the age of the
outsourced data centre was in severe decline as technology advanced
and sophisticated servers became smaller and more manageable.
"It's a difference scenario now," he says. "Thanks to the
infrastructure you need to run a modern server rack, the power they
draw and the heat they put out, the ability to run them in-house is
The first problem is the modern server, he says. They can be tightly
stacked, draw more power every year, and put out a lot of heat. Many
companies simply cannot afford the demands this places on
air-conditioning and power supply.
The second problem is redundancy. With the growth in web services and
business management systems, plus email, many of a company's most
critical parts rely on the health of a small rack of servers.
Power cuts or natural disasters carry a new level of threat that many
companies aren't prepared to face alone.
"One of our Sydney clients moved their data centre in-house two years
ago," says Mr Browne. "They've just moved back out, to our Melbourne
facility. Organisations I would not have considered as (customer)
prospects two years ago are now seriously considering outsourcing."
Iain McKimm, general manager of operations at internet telephony
company Freshtel, says he used to build data centres in a previous job
but now prefers to rent them.
"It's a simple decision: do you spend a million dollars putting in the
computer room, the environmental control, the air-conditioning, backup
generator, fire detection, power redundancy . . . or do you just say
'here's one I prepared earlier'," he says.
Despite being an IT player, Freshtel was happy to put all its servers
in Datacom's Melbourne building. "We don't host anything except a
router," Mr McKimm says.
Outsourcing costs more money in the long run, he says, but you get the
service straightaway and can concentrate on your core business.
Some don't have the choice. The Queensland branch of the Pharmacy
Guild of Australia had big plans that it would not have been able to
"(Data-centre company) WebCentral allows us to punch above our
weight," says the guild's manager of innovation, Shaun Singleton.
Pharmacies face a blizzard of paperwork because of evolving services
and government standards, he says.
The guild wanted web-based tracking of ISO (commonly agreed
international) standards and online storage for documents such as
staffing records. The system would also track sales of pills
containing pseudoephedrine so pharmacists could cross-check that a
customer was not going from shop to shop gathering the raw materials
for the manufacture of illegal drugs.
"There were big privacy and security issues," Mr Singleton says. "We
wanted to deliver a high-quality service to 4800 users but our
business case would never have been viable."
The obvious solution was to outsource. But the special nature of the
system meant the security of the data centre became a big focus.
"The Queensland Police made it a condition: if they couldn't see the
data centre, they wouldn't work with us," Mr Singleton says.
Another advantage of putting their servers into a data centre was
added flexibility as the system rapidly grew.
WebCentral CEO Andrew Spicer's customers range from small businesses
to big government departments and banks.
With the growth in internet bandwidth, companies realise they can put
more of their services into someone else's building, and offload a big
"Why build a data centre when you can buy one," Mr Spicer says. "This
is a big swing in the way people think about IT."
So many people are converting to that point of view that demand is
starting to exceed supply. Most data-centre professionals interviewed
by Next were adding extra floor space, and prices for rack space have
more than doubled in the past two years.
Mr Spicer says customers often want to buy managed services rather
than basic co-location. But they never take an "out of sight, out of
"Customers are interested in security - they want to know about
guards, physical and network security," he says. "The second question
is usually about disaster recovery. They always ask about redundancy.
They always ask about tech support, can they get someone on the phone
That requirement was at the top of the list for the Board of Airline
Representatives of Australia, which has the tough task of keeping
track of all airline baggage in the country.
Three years ago the Government mandated a new system in which every
bag had to be checked and reconciled with an authorised passenger
before it boarded a plane.
BARA outsourced the system to Unisys and Ultra Electronics - with
Unisys hosting the servers at its data centre.
Uptime and maintenance are critical. "We need a very rapid response
time," says the board's executive director Warren Bennett. "It costs a
hell of a lot of money to have an aircraft sitting at the terminal
waiting for authorisation of the bags coming on board."
Early on there were serious failures: power problems at the central
server site and unexpected glitches in the software. But these were
smoothed out quickly.
"It just better to use a large site such as Unisys," Mr Bennett says.
"If there is a problem with the system, the baggage-handling companies
can get a response and things are sorted pretty quickly."
Unisys guaranteed system uptime, with compensation if a benchmark was
not met. Also it provided documentation for government-conducted
security audits: the Department of Transport has the power to refuse
take-off or even call back a plane in the air if it is not satisfied
with a manifest report.
Other customers are more interested in price. The typical Australian
price of $1000 per rack per month does not impress Cameron Reilly, CEO
of the Podcast Network.
"Australian providers have never come even close to the rates we can
source out of the US and Europe," he says. "The cost differential is
in the order of five to 20 times."
"I would highly recommend that anyone looking at hosting
bandwidth-intensive applications such as digital media or hosted
services give serious consideration to using a service based outside
Mr Reilly's US-based servers were installed after a short tender
process in which he looked at price, service level agreements and the
quality of service. His six servers were built on-site and within 24
hours he could log in and build the system remotely. US intervention
is now only necessary for the occasional hard reboot, replacing a
failed card or hard drive, or if there is a DNS attack.
"As broadband pipes shrink the world, that will have a serious impact
on the market," he says. "I will be hosting in Russia, China or India
in the next couple of years."
He's not blind to the downside. "On one or two occasions the service
has gone down for several hours and I didn't feel I had a reasonable
explanation," he says."(With) someone local you can build a
relationship, eyeball them, sit down and have a coffee. The downside
of being international is that when shit breaks down - and this is IT,
so something always does - it's easier for someone to give you the
"I wanted a guarantee of 24/7 access to someone relatively senior.
Make sure you have a phone number and an uptime guaranteed."
But Mr Spicer says US data centres only look cheaper on paper. "When
you phone up on Monday with a problem you're going to get the Sunday
night tech support," he says. "Even small enterprises now see their
internet applications as incredibly important. You want a reliable
Unisys' Stuart McKenzie says high-quality Tier-3 data centres such as
his attract premium customers in finance, banking and transportation.
"It's not for Bob the Builder's web server," he says. The building,
out in Sydney's western suburbs, has 1000 watts of power per square
metre, two electricity substations, two switch rooms, two generators
with a tank of 72 hours worth of diesel, and two uninterruptible power
supplies. "It's parallel all the way up."
Tier-3 centres offer premium security also. Security concerns have
shifted over time, Mr McKenzie says. Clients worry about how close
they are to the city, or to a geological fault, or to water - whether
the site is on a flood plain, for example.
Terrorism is another big concern. Global events have changed levels of
comfort, possibly forever. Some clients are nervous if a data centre
is above a car park. Others want to hear about contingency plans in
the case of a bird flu outbreak.
Steven Firth, in charge of outsourcing and infrastructure services at
Unisys Australia, says customers come in two flavours.
Those looking for a facility management have practical questions about
power supply, scalability and data pipes. Those looking for a managed
service view a data centre as the "hygiene factor" in a service level
agreement. More sophisticated customers ask about the certification of
a company's employees to determine the quality of service.
Bruce Klimeck at the Primus data centre in Melbourne says customers
should ask detailed questions about the power and air-conditioning
"The key is that there can be no single point of failure," he says.
"Even water supply can be critical - a data centre in Brisbane melted
when it lost the water supply to its air-conditioners: it had to shut
Customers should ask to see comprehensive and immediate maintenance
contracts, he says. "Otherwise it's a question of when it's going to
They should ask when the backup generator was last turned over - and
when will be the next time. He had a nasty shock at Christmas when a
routine check found there was not enough juice in a battery to get his
own back-up generator going. But thanks to the check, no customer was
affected. Power supply is probably the biggest issue facing modern
data centres - both for the racks themselves and the massive
air-conditioners needed to cool them.
Peter Wilson, in charge of Datacom's GlobalCentre data centre in South
Melbourne, says he wouldn't be surprised to see a return to the "data
chillers" of the mainframe days, with water or compressed-gas-based
heat exchanges in each enclosure. "We even have to be careful about
the physical weight of the servers."
Most data centres get the basics right, he says. Datacom tries to
differentiate itself through services, priding itself on efficient
change management, for example. "Data centres are not about real
estate any more, it's about what value you can add to a rack."
One such service is virtualisation. Mr Spicer of WebCentral says it is
an increasingly useful tool, especially for companies with widely
variable IT demands.
A customer running a tax application or a website specific to an
event, such as the Sydney to Hobart yacht race, may peak at loads
hundreds or thousands of times the normal level.
Virtual servers can take that load without the need to race into a
data centre and plug in more machines.
"That's where this (business) is headed," Mr Spicer says. "There is a
trade-off, which is mainly a perception around security. Customers
like to know they have a box somewhere with their own firewall, all
If this sounds like a return to the "glass house" days of mainframes,
it is quite similar, says Rod Vawdrey, CEO of Fujitsu Australia. He
says business is lively because many government agencies hope to
simplify their IT after years putting up with complicated legacy
Most government clients demand AS7799-compliant "bunker-like"
security, which has created a good sideline in physical security and
identity management products. Often this consolidation accompanies a
move to data centres. "There is a shift back to strongly integrated,
secure and supportable infrastructure," Mr Vawdrey says.
Security: 24/7 human presence, CCTV cameras, lockable cabinets and
Safety: gas-based and dry-pipe fire system, VESDA smoke detection,
back-up air conditioning, power and networking connectivity, stable
power grid, headroom on power supply and cooling, UPS and battery of
10 or more minutes
Services: access to dedicated fibre and all major telcos, 24/7 on-site
Scalability: ability to expand when customer does, in footprint, rack
density, power and cooling draw, UPS.
Source: Peter Wilson, Datacom
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