Export opinion on data centres

9 Jun 2008

Ireland’s longest-standing data centre company Data Electronics is now looking at overseas growth potential.

If you took a gamble on data centres and hosting in the early part of this decade, chances are you might have lost your shirt.

The great data centre massacre of the early ‘noughties’ seemed to suggest that letting a third party host or manage your IT infrastructure was not the way to go.

That has all changed. The improved health of the IT sector after a brief period of turbulence also coincided with the return of data centres as a major player in the managed services space.

While Ireland might not yet be on a par with other European countries in relation to the take-up of managed services, it has become an important component of the IT industry.

Maurice Mortell, CEO of Data Electronics, has seen the highs and lows of data centre operations, while his company has remained strong and continued to grow. He says one of the reasons why people are opting for managed services is because the market has shifted from where it was and people are now more comfortable taking these services from providers.

According to Mortell, there were many case studies in the market showing the benefits of a wide range of managed services for companies of different sizes.

“From our perspective, I suppose what we’re seeing is a big take-up of monitoring services such as monitoring infrastructure and mission-critical applications, especially for businesses that are now operating in a 365, 24/7 environment and have a problem manning that from a HR perspective.

“Our service is 365, 24/7 and they can avail of that at a fraction of the cost it would take to man it themselves.”

Mortell says that companies are looking for different components of their IT infrastructure to be hosted, ranging from IT security such as managing firewalls, intrusion detection and anti-spam, to risk management and corporate governance around data, and of course storage solutions.

“In terms of IT security, it’s a huge headache for companies to manage themselves. We are also seeing a firm demand for managed storage solutions with companies taking space on our SAN (storage areas network) at our data centre or doing it remotely from their office to our data centre.

“There are also a lot of issues around data – what should be stored and for how long and indeed how secure that data is and that falls into companies’ disaster recovery and business continuity plans. And that’s another area we’ve seen an increase in activity in on the services side.”

With talk of a recession knocking on the country’s economic door and with the increasing amount of companies offering hosting and managed services, is there sufficient growth and appetite in the Irish market to keep the firms offering these products in business?

Mortell believes it is too early to call whether the downturn will have an effect on the IT services sector. He is, however, of the opinion that the model can be pitched in a number of different ways. “It can be a cost saving – so costs can be managed better over a period of time when there is a downturn and it’s more cost-effective than the company investing in the infrastructure.

“The way the market is at the moment here, there’s not a huge amount of data centre space around, even though there’s a lot of new build going on. This shows there is a large demand for these services.”

Mortell does concede there is the possibility that projects which might have been planned will possibly get put “on the back burner” until people see what the overall fallout is going to be. “You wouldn’t see the impact here until a year down the line because most of the contracts are still in the sales cycle of about 6-12 months, so it’s hard to predict.”

While Data Electronics has used acquisitions as part of its growth plan, Mortell maintains that organic growth is really where the company sees itself going.

Mortell says the initial growth plan was organic and the company built its own facilities to cater for existing customers and develop new services.

Then when the market declined, opportunities arose and the chance to buy Inflow came up in March 2002. “The initial acquisition did accelerate our growth. Since then, what growth there has been, has been organic.

“We have an open mind in how we grow, so if there is an opportunity around strategic acquisitions that adds value to what we’re doing and is part of our strategy around our service offerings then, absolutely, we’ll continue to do that.”

Data Electronics is currently preparing a 105,000sq ft facility in North West Business Park, Blanchardstown with a phased development. The first phase of 20,000sq ft comes online in October of this year. Besides that, the company has its collective eyes on the possibility of setting up shop abroad.

“After Blanchardstown, we might be looking at locating outside Ireland and replicating the model in a bigger market,” Mortell concludes.

By Eamon McGrane