Industry Spotlight: QTS' Tag Greason on Emergence of Operational Maturity as Key Selection Criteria for Post-Pandemic Data Centers |  The ramblings of telecoms

Industry Spotlight: QTS’ Tag Greason on Emergence of Operational Maturity as Key Selection Criteria for Post-Pandemic Data Centers | The ramblings of telecoms

One of the major by-products of the global pandemic is its impact on accelerating the process of digital transformation. In just a few short years, the digitization of data, often referred to as digital transformation, has profoundly changed the shape of digital business across industries and for consumers around the world. The increased use of digital applications in video calling, telehealth, e-commerce, and online learning and entertainment has dramatically increased the need for data capabilities. The relentless growth of data, combined with the continued migration of offsite businesses to shared colocation data centers, is having a significant impact on the industry. Joining us today to talk about their experiences over the past few years, Tag Greason, Chief Hyperscale Officer, at QTS Data Centers.

TR: Data growth continues to be extraordinary and shows no signs of slowing down. As a leading data center and colocation provider, how is digital transformation affecting your business? For the purposes of this discussion, let’s focus on medium to large businesses and government organizations.

GE: You are spot on Rob. Digital transformation is creating a global digital economy that is growing exponentially and knows no borders. The flood of digitized data, combined with new compute-intensive technologies such as artificial intelligence, machine learning and predictive analytics, is increasing business needs for even larger technology stacks to store, compute, analyze and move the data. What were once normal enterprise demands for 250-500 KW environments are now complex, multi-megawatt, multi-site, multi-geographic engagements.

As a result, data center investments are increasing significantly and are beginning to meet “junior hyperscale-like” requirements for space, power, and sophisticated connectivity ecosystems. And with significant increases in investment come increased scrutiny of suppliers, their qualifications and their ability to deliver.

TR: How are the conversations and questions you have with the company changing as they seek to meet increasing demands?

XL: Ultimately, the organization’s ability and speed to scale—by which I mean easily add or subtract compute, power, and storage resources, across different data centers and geographies—and their capacity to provide sustainable infrastructure to their customers – is at the top of the list. Their questions almost always go back to these, and what the network infrastructure and strategy looks like.

Bandwidth and interconnection requirements of all types are also increasing. The sophistication of connectivity has increased dramatically as large enterprises adopt the digital models needed to deliver their digital services to more customers globally. This requires new demands for direct access to a myriad of internet, cloud, SD-WAN, transport, dark fiber and submarine networks.

As a result, companies are hiring network and connectivity specialists and, in some cases, hiring them from hyperscalers. And that goes without saying, because if you’re going to deploy one, two, three, four+ megawatts, with the required capital, you need to make sure your grid strategy is as well thought out as your colocation strategy.

There are also growing concerns about the lack of diversity and the growing risks associated with the carrier hotel model. We hear it in virtually every conversation with customers and prospects. The best providers are very interested in decentralizing the Internet and cloud entry/exit points to reduce risk. If you lack dense connectivity ecosystems and the strategy to expand them, you’re not going to win with the enterprise.

TR: What impact does this have on the negotiations? Do you see the criteria for selecting clients changing?

XL: Data center investments have grown from a single building, to multiple buildings in multiple geographies, to large data center campuses in multiple geographies, to acquiring land well in advance to meet the needs future.

You can imagine that with this kind of increased investment, it becomes much more visible to stakeholders, and selecting a data center or data center campus becomes a much more painstaking process. As IT deployments increase in size and cost, data centers are becoming even more strategic long-term partners with significant long-term investments. Conventional data center selection criteria such as location, economy, and flexibility are now considered table requirements that must be met to advance to the next round of the selection process.

Therefore, large enterprises seek vendors who can demonstrate a higher level of sophistication and operational maturity that goes beyond basic requirements for location, economy, flexibility, and scale.

TR: Please describe what you mean by operational maturity?

GE: Achieving a higher level of sophistication takes years and requires a commitment to excellence, operational partnership and discipline across all departments of the organization. Becoming operationally mature is not an end state – in fact, the highest degrees of maturity involve constant evaluation, refinement, and innovation of policies and procedures, all aimed at making the customer experience the best it can be.

QTS operational excellence stems from 15 years of operating very large data centers with very high customer documentation requirements and stringent compliance standards that enable QTS to optimize competitive advantage and commercial economy for the customer.

TR: How does operational maturity manifest itself in the market?

GE: Operational maturity begins with financial maturity. A track record of sustained growth and sophistication of funding strategies is very important for large companies investing in the supplier for the long term. What growth are they reporting in terms of revenue and margin? How do they fund the business? What is their debt maturity?

The pandemic has heightened awareness of the need for technical innovation supporting a long-term plan. The best providers will have the foresight and financial backing to invest in the adoption of new technologies such as artificial intelligence and machine learning to drive service delivery innovation and customer experience. This is manifested in an increase in new remote and operational controls as customers and operations staff migrate to remote working.

Tax incentives – mature data center providers typically work closely with national, local, and economic advisors to create tax incentives for data centers. Customers benefit from low or no sales tax on equipment deployed in data centers.

Project Management and Procurement – ​​Operational maturity will generally facilitate a mature supply chain and a robust, best-in-class repeatable build strategy that aligns capital expenditures with revenue recognition much more efficiently than conventional data centers.

An integrated approach to security and compliance – Mature data center providers understand the need for a holistic approach to managing compliance, ethics, and risk that are inextricably linked.

Environmental sustainability also emerges as an important selection criterion for large companies. Leaders will demonstrate their commitment to sustainability by publishing comprehensive environmental, social and governance reports that document commitments to renewable energy, water conservation and waste reduction.

These are some of the main characteristics of operational maturity. These are hard things to achieve and deliver and it takes years of experience to become proficient.

TR: The past two years have presented us all with unique challenges, how did QTS fare?

GE: QTS has been very lucky during the pandemic. Our operational maturity as an organization has long fostered the rigor, structure and processes that have made the uncertainty of COVID-19 almost familiar to our security and operations teams. The fact that 20% of our workforce has a military background, many of them in operations and engineering, helps a lot. Operationally, there was absolutely no disruption, not even from the customer’s perspective. Financially, we had our best year.

TR: Thanks for speaking with Telecom Ramblings!


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Categories: Data Center · Industry Spotlight

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