Datacenters: The Heart of the Digital Economy

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1 Technology Spotlight Datacenters: The Heart of the Digital Economy Sponsored by: Cogeco Peer 1 Mark Schrutt November 2016 David Senf TECHNOLOGY IS A KEY COMPETITIVE DIFFERENTIATOR The Trade Desk is in the top 10 of Forbes America's Most Promising Companies and #55 on the Deloitte Fast500. The California-based firm is a leading digital marketing management system with 100 milliseconds (that's a tenth of a second) to close deals between media buyers and advertising channels. CTO and co-founder Dave Pickles explains: "When we turn on a vendor, they'll send us 100,000 requests per second." The Trade Desk is built for velocity and volume, and moved from on-premise solutions to Cogeco Peer 1's hosting platform in "They have an incredibly robust wholly-owned network and the ability to have their technicians customize a solution that meets our needs," said CTO Pickles. "This is critical for us." Technology is quickly becoming the key competitive differentiator, and datacenters, cloud computing and network communications are the new currency in today's digital economy. Done right, properly managed and optimized, technology can reshape well-established industries and vault startups and unknowns to market leaders. Poorly designed or executed and overlooked points of failure could shave billions off your market capitalization, as retailer Target found out in DATACENTER CONSOLIDATION The datacenter is at the heart of the digital economy, which is being shaped by Big Data and analytics, mobility, the Internet of Things (IoT) and cloud computing. While datacenters are critical to the growth of the digital economy, private corporate datacenters are showing their age. They are increasingly costly to operate, difficult to scale and a constant challenge in terms of security. Many companies are looking for new ways to support their infrastructure needs and free up resources to focus on more important initiatives. Some organizations, such as the Canadian and U.S. governments, have set up considerable gates or put on hold any new datacenter construction. The Trade Desk and other organizations have completely exited the datacenter business and instead are relying on third-party service providers. We will lose 50 million square feet of private corporate datacenter space globally in the next four years. In Canada, the number of private corporate facilities has dropped from 4,000 to 3,800 just in the past year. Globally, new builds will annually decrease by 1.4% and new raised floor will drop by 8.5% through November 2016, IDC #EMEA

2 However, IDC's Digital Universe Study shows that the amount of data is doubling every two years and will grow to 44 zettabytes (which equals 44 trillion gigabytes) by In the race to digitally transform, organizations are creating, analyzing and transforming information into decisions, new offerings and services at breakneck speed. We are running out of space and power and there is not enough new corporate capacity coming online to support the needs of the digital economy. Where are corporations turning? To datacenters run by commercial, third-party providers whose sole focus is securely hosting and managing thousands of servers and petabytes of data. IDC research projects that the number of commercial datacenters will increase by 14% over the next four years. These facilities will be large, more than doubling the space available for colocation, hosting and cloud services by COMPELLING CASE FOR THIRD-PARTY INFRASTRUCTURE PROVIDERS For the third year in a row, IDC's datacenter survey found that availability and resiliency are the major challenges to operating a corporate facility (see Figure 1). The average datacenter is close to 10 years old and cannot properly support today's energy-demanding, high-performance computing. The majority of datacenters are a generation or two out of date and take significant cost to operate on a 24 x 7 basis. For example, energy rates in the U.S. have increased 28% over the past decade. FIGURE 1 Challenges of Running Own Datacenter Q. What are the top two challenges that your organization faces in running your own datacenter today? Source: IDC Canada IT Advisory Panel (ITAP) n Survey, December IDC #EMEA

3 Staffing centers adds an additional challenge for CIOs who struggle to find skilled labor or train existing staff to keep them current on new technologies. According to the Breach Level Index by Gemalto and SafeNet, there were 4,994 known breaches globally in 2015, of which only 24% were accidental. The 2015 Cost of Data Breach Study: Global Analysis by the Ponemon Institute reported that the average total cost of a data breach was $3.79 million, a 23% increase since These are hard dollar costs and do not fully account for lost revenue and, more importantly, the reputation of the business. Today's security attacks are well organized, difficult to detect and penetrate deeper into the organization than ever thought possible. "A big part of what I do is manage risk. Security is number one, but the datacenter, which is definitely linked, is right up there. These are the things that keep me up at night. They aren't necessarily IT issues but business issues." Jim McDade, former CIO of Alberta Health Services and Workmen's Compensation Board It is a costly and frustrating exercise to keep up with the security risks. Leading CIOs are taking a strategic approach to reducing risks by working with commercial datacenter providers. Hosting firms are in the business of running datacenters and heavily invest in processes and tools to identify, eliminate and manage security risks. Furthermore, leading technology decision makers frequently work with vendors that operate their own facilities and networks. This reduces the points of failure and the potential of introducing additional, unplanned risk into the equation. Technology leaders are focusing on optimizing and simplifying IT. They demonstrate the value of technology investments, help guide solution choices and work with their line-of-business (LOB) peers to introduce new technologies that improve productivity and revenues. Leading CIOs are less focused on delivering IT or running datacenters and much more focused on effectively selecting and managing specialized third-party providers and adding value to the business. The move to third-party providers can also create opportunity. For example, many standalone datacenters sit on valuable real estate that can be monetized or used for better purposes. In addition, many corporate-run facilities have limited capacity to expand to support digital technologies. Technologies such as Big Data, mobility, IoT and cloud provide new opportunities for organizations. Commercial datacenters are designed explicitly to support highperformance computing. Furthermore, moving to a third-party provider allows the opportunity for clear, usage-based billing that is instrumental in making technology decisions. COGECO PEER 1 Managed Network Services and Network as a Service (NaaS) Managed network services can be provided via hosted or on-premise environments or through the cloud. NaaS is a cloud-based managed network service that provides dynamically adaptable networking services virtually in a multitenant, pay-per-use model. Cogeco Peer 1 has been delivering on its mission of providing technology platforms to help its clients grow and reach their business objectives for close to 20 years. Beginning with its inception in the late '90s, Cogeco Peer 1 quickly built world-class expertise in designing and architecting datacenters. This experience became the foundation of Cogeco Peer 1's services, its global expansion through North America, Europe and Asia, and the introduction of a suite of offerings that extend from colocation, remote infrastructure management and dedicated hosting to the cloud IDC #EMEA

4 Cogeco Peer 1 is a member of the Cogeco Inc. family. As part of the US$2 billion revenue and market capitalization organization, Cogeco Peer 1 has followed its parent's direction of strategically investing in core assets. Cogeco Peer 1 has a strong presence in the US, Canada, Mexico, the UK, Germany and France, and presence in Holland and Singapore. Cogeco Peer 1 has one of the largest operated and managed datacenter footprints in the industry. Its FastFiber network extends close to 50,000 kilometers and is connected through a series of 50 points of presence. Each Cogeco Peer 1 region is supported by local teams of account managers and technical engineers. Cogeco Peer 1's datacenters are certified in the most critical areas of design and build, resiliency and regulatory compliance. Cogeco Peer 1's customers are supported by its proprietary global FastFiber network, which combined with its integrated security and world-class facilities provides a strong foundation for Cogeco Peer 1's hybrid IT solutions. Cogeco Peer 1's datacenter offerings include: Colocation Dedicated hosting Managed IT: Cogeco Peer 1 has also evolved its managed services portfolio to include application services, database and OS support and network management. Cloud: Cogeco Peer 1's line of infrastructure-based cloud services includes public cloud, private cloud and backup as a service. Specifically, Cogeco Peer 1 offers: On-Demand Cloud Platform: scalable public IaaS and bare metal servers, which can be stood up in a matter of minutes and are billed on a per-minute basis Mission Critical Cloud: public IaaS with multiple delivery regions across the globe Virtual Datacenter: enterprise-grade public IaaS available with a choice of hypervisors Managed Private Cloud: managed dedicated server offering FIGURE 2 Cogeco Peer 1 Offerings and FastFiber Network Source: Cogeco Peer 1, IDC #EMEA

5 Cogeco Peer 1 is helping to drive the digital economy. From small startups to the world's largest enterprises and most valued digital brands like The Trade Desk, Cogeco Peer 1 is the engine behind the transformation that is occurring today. The operated and managed model, combined with the full suite of datacenter solutions and local sensitivity, provides tremendous advantages to its clients located around the globe. Cogeco Peer 1 has full control over its datacenters. It works closely with its clients to scale quickly, leverage IT as an enabler rather than an inhibitor of growth and provide world-class performance needed to become leaders in the marketplace. CHALLENGES AND OPPORTUNITIES Cogeco Peer 1 is completing the final integration stages of its most recent acquisition. Combining companies takes effort and time, and Cogeco Peer 1 has done a commendable job throughout its history. That being said, there is still work to be done on harmonizing the operations and sales of the two companies. The primary focus for Cogeco Peer 1 should be on consolidating the suites of offerings across its regions, to ensure consistency and provide it with a competitive advantage in the market. Cogeco Peer 1's worldwide footprint takes tremendous business development effort. This includes attracting and retaining a large sales and professional services team. As Cogeco Peer 1 continues to grow and extend its product offerings, it will need to be more efficient in its sales efforts. This includes leveraging tools to drive promotion and build sales funnels as well as investing further in its alliance and partner program. Organizations have more vendors and options to choose from than ever before. The marketplace for colocation and cloud has become extremely competitive. As acquisitions, expansions, new providers and offerings come onto the market, the real winner in the end will be the IT buyer. IDC believes that the vendors that will be the most successful in future will be those that understand and clearly communicate their differentiators. For Cogeco Peer 1, its value proposition firmly rests on a broad portfolio of infrastructure solutions delivered out of globally located and operated datacenters, improving agility and reducing risk for its customers. Cogeco Peer 1 will need to continue to evolve its offerings and invest in its strategic assets to remain a leading provider of third-party infrastructure services. OPTIMIZING YOUR HYBRID IT ENVIRONMENT Most organizations are supported by a hybrid IT environment a mix of technologies, tools, processes and deployment models (colocation, hosted, managed, cloud). When optimized, a hybrid IT environment becomes an enabler of growth. It provides the flexibility to match workloads with performance, security and cost, as well as delivery models from internal to third-party, to get the job done. Optimized hybrid IT is not an end state. Through processes and tools, a company can introduce new technologies and continuously fine tune and extract the optimum value from its IT investments. Some of the guiding principles for optimized hybrid IT include: Start with the business. Assess how technology currently supports the strategy, plans and business environment and what gaps exist to meeting objectives. The gaps could include required technology investments as well as exposure to risk. Prioritize applications. Infrastructure is nothing without applications. Optimized hybrid IT sets out the portfolio of datacenter solutions to support a company's applications and 2016 IDC #EMEA

6 systems. This includes prioritizing applications, which systems are core to the business and their associated support requirements, and what delivery models are currently used. An optimized state matches applications and data with the appropriate infrastructure platform and model, on-premise or delivered by a third-party provider. Optimized hybrid IT also includes a migration roadmap that includes sunsetting, upgrading and potentially transitioning to the cloud. Assess current IT management capabilities. This includes a review of the datacenter operations, network solutions and staffing and skills. Key in this step is the assessment of your ability to manage IT delivery and vendor relations. Consider all deployment options. There are more delivery choices available on the marketplace than ever before. From on-premise, to remote management, to private and public cloud, optimized hybrid IT extends the assessment of applications, datacenter delivery and vendor management. Factors such as regulatory compliance including data residency and financial options such as opex versus capex need to be taken into consideration. Last, flexibility and perhaps most importantly provider relationships are critical in driving the greatest return from technology. Optimized hybrid IT can be achieved with internal, single-source and multisource models. There are a number of benefits from working with a single provider. Primary among these is simplifying and lowering the cost of sourcing management. If the vendor offers a suite of services in various locations, a single source model provides the runway to expand globally and extend services from colocation to the cloud. Furthermore, companies have more control, easier transition and lower risk when working with single source vendors that operate and manage their own facilities. Other factors when selecting a datacenter provider include: Certifications and qualifications Do the facilities have the resiliency to ensure continuous operation and the assurances to meet regulatory compliance? Power, cooling and facilities Do the datacenters have available power to handle growth? Risk profile Location, security measures and backup and recovery capabilities. Access to value-added services such as remote hands and feet, application support and professional services such as designing infrastructure solutions. Price, as well as options and contracting. The decisions around technology and its role in innovation and competitiveness are more important than ever before. Optimized, technology and datacenters become powerful assets in improving productivity, expanding markets and raising the bar for customer relationships. Effectively managing the datacenter remains a challenging and problematic area, and leading organizations are turning to third-party providers to augment capacity, support global operations and leverage digital technologies to achieve success IDC #EMEA

7 About IDC International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. More than 1,100 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries worldwide. For 50 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. IDC Canada 33 Yonge St., Suite 420 Toronto, Ontario Canada, M5E 1G4 idc-community.com Copyright Notice Any IDC information or reference to IDC that is to be used in advertising, press releases, or promotional materials requires prior written approval from IDC. For permission requests contact the Custom Solutions information line at or gms@idc.com. Translation and/or localization of this document require an additional license from IDC. For more information on IDC visit For more information on IDC Custom Solutions, visit Global Headquarters: 5 Speen Street Framingham, MA USA P F Copyright 2016 IDC. Reproduction is forbidden unless authorized. All rights reserved.

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