Racing to capture escalating data flow-

The data centre market in Southeast Asia is experiencing significant growth. Several telecom operators are expanding their data centre operations in order to support the growing data traffic on their telecom networks.

This trend has been driven primarily by the rise in data traffic due to:

  • High adoption of smartphone devices and tablets;
  • Increased uptake of cloud computing services by business enterprises; and
  • Outsourcing of IT operations.

Another major driver is the large and medium enterprises that are increasingly seeking co-location and cloud computing services for their growing data storage requirements. They are also concerned with the proper management of their IT operations as well as business continuity.

Meanwhile, Internet giants like Facebook, Amazon, eBay, and Google are setting up their own data centres in the region. They aim to provide faster Internet connectivity and lower latency – an important parameter for delivering optimum video services.

To top it all, the governments in the region are also putting the pieces in place to make Southeast Asia a global data centre hub.

Vying for the data centre market

Among the Southeast Asian countries, Singapore has emerged as the top investment destination for the data centre players. According to Datacenter Dynamics, a UK-based business-to-business information provider, the island country currently accounts for 60 per cent of the market in Southeast Asia.

The city-state’s high market share can be attributed to its investor-friendly government policies, a robust IT and communications infrastructure, and transparent market functioning. Because of these factors, several multinational companies have set up their regional data centres in the country.

Moreover, Singapore is also favoured as a data centre location from the domestic usage perspective. It boasts of an Internet penetration rate of over 100 per cent for wired Internet connections and more than 177 per cent for wireless broadband access.

After Singapore, Malaysia is the second largest data centre market in the region. Many global and regional data centre players are turning to this country due to the competitive cost of land, nominal energy prices, and supportive government policies.

The government is also seeking to capitalise on its data centre market to become a regional hub. It has identified the data centre services segment as one of the key economic growth drivers under its Economic Transformation Programme.

While the government acknowledges its late entry into the regional data centre market, it is banking on its relatively enticing real estate prices, low labour costs, as well as its growing IT and communications industry to attract investments from global players. Nonetheless, the Malaysian data centre industry is held back by the country’s weaknesses such as limited availability of skilled manpower as compared to Singapore.

Though still at a nascent stage, Indonesia’s data centre market is witnessing growing demand. This trend stems from a surge in data traffic and increasing IT requirements of  large and medium enterprises, especially  those operating in the business processing outsourcing industry.

Recently, global data centre company Equinix, in collaboration with PT DCI, announced its plan to provide data centre infrastructure and co-location services in Indonesia. Furthermore, local IT system integrator Multipolar Technology has also commenced the construction of a data centre in West Java. As with Multipolar Technology, several local companies are setting up or planning to establish data centres in response to the government’s regulation that companies operating in the country store data locally.

However, issues such as power shortage, limited fibre connectivity, and limited availability of skilled manpower are still deterrents for global data centre service providers to enter the market in Indonesia.

New alternatives for managing rising data: Co-location and managed services

The higher adoption of smartphones and tablets, along with the roll-out of next-generation networks, has resulted in an exponential rise in data traffic over the last two to three years. However, the existing in-house servers of operators have already reached their capacity limits; expansion will be required in order to meet future demand.

As for enterprises, managing IT operations has become an increasingly daunting task due to the enormous amount of data flowing between the different units of their organisations. Rising energy and land costs have also limited companies’ ability to upgrade their traditional data centres.

To set up and maintain additional servers requires substantial capital expenditure. Thus, companies are looking at co-location options or purchasing managed hosting services offered by data centre service providers. Essentially, they are outsourcing their IT operations in order to streamline data traffic so that they can focus on their core business.

Under the co-location model, a customer places its own servers, routers, and other equipment at a facility with infrastructure such as power supply and cooling equipment provided by a data centre service provider.

In contrast, with the managed hosting model, the data centre service provider leases a shared server to the customer and offers services including monitoring and application management. Using the data centre services on a shared basis reduces a company’s overall cost of maintaining the IT infrastructure, while ensuring support for higher data requirements.

Nonetheless, the managed hosting model is not without risks such as the loss of data and unauthorised access to the company’s IT network. Hence, risk-averse companies can opt for co-location services, which, though more expensive than the managed hosting model, also yield substantial capex savings.

Emergence of modular data centres

The shortage of power supply, the high costs of cooling equipment, and limited land availability have compelled companies to set up modular data centres. Basically, these are prefabricated modules comprising storage, server, cooling equipment, and communications infrastructure.

These data centres enable companies to scale up their infrastructure rapidly including servers to support the increased demand for data centre services in a cost-effective manner. Modular data centres are particularly beneficial for small and medium enterprises that lack the capital resources for installing new data centres.

Greening data centres

One of the biggest issues associated with the deployment of data centres is their huge power consumption. Energy costs currently account for about 50 per cent of the operational expenditure of a data centre facility. Given fuel shortages, rising energy prices, and growing environmental concerns, data centre service providers are compelled to optimise their energy usage and focus on energy saving measures at existing as well as upcoming data centre facilities.

Companies like Schneider Electric provide data analytics solutions for modular data centres to optimise the power consumption of all servers. P. Sharma, Vice-President of the IT business unit at Schneider Electric, East Asia, explains: “For example, one part of the data centre is getting heated relatively more due to overutilisation of the servers in those racks. The Schneider platform will provide insights through predictive analysis to highlight the critical importance of moving the servers.”

Apart from technology solutions, governments have stepped in with incentives to help companies invest in energy efficient data centres. For instance, Singapore’s Infocomm Development Authority (IDA) has taken the initiative to encourage existing data centre service providers to deploy retrofits by providing an investment allowance of 30–50 per cent of the retrofit costs.

Equinix is one such company that is using the IDA grant to reduce its energy consumption at its SG1 data centre. The company is retrofitting SG1 with CRAH fans and implementing airflow management with a hot and cold aisle approach. The data centre will also be fitted with Synapsense sensors to monitor temperatures, which will enable it to provide more effective cooling to its servers.

The company already owns two green data centres – SG2 and SG3. They use an energy efficient liquid coolant; an automated system that reduces motor speed and power; along with a cold aisle containment that supports higher density installations for more efficient cooling.

Data centre players in Malaysia have also launched green initiatives. As an example, the CSF Group has established the biggest green data centre in the region called Computer Exchange 5. Digi Telecommunications also operates a green data centre. Its Technology Operations Centre uses solar reflective coating on the roof, among other energy efficient equipment.

A future hub

Data centre service providers operating in several countries in the region are encouraging their governments to collaborate and share their resources in order to turn Southeast Asia into the world’s biggest data centre hub.

Based on the business model proposed by these service providers, a small data centre built in Singapore could be connected to a larger facility in other countries with ample land. Such an approach would enable service providers to offer cost-effective data centre services. However, the adoption of this proposal is undermined by the existence of several issues such as compliance with difference regulatory regimes, data theft, and inadequate fibre connectivity.

Whether governments across the region collaborate or not, the burgeoning data centre market in Southeast Asia is still expected to account for about 25 per cent of the global market by 2015.