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16 Jun 2021
Private Equity Investment in the Data Center Market
Private Equity Firms are taking over the data center market. The last few years have all shown the same thing in regards to data center investment: the market is being bought up by firms forming joint ventures with some of the largest publicly traded data center providers in the world.Data centers are critical assets that allow for sustained growth in cloud services. Taking a temperature of the market one can see that there are a few mega trends that are driving up financial interest in data centers. The rapid acceleration of cloud computing, the growth of hyperscale operators, and data center operators need for geographic breadth all contribute to this being a unique period of time in the data center industry. Companies recognize that they need to increase their offerings while simultaneously increasing the amount of locations and markets that theyre operating in.Public companies cant make investments in all of those areas without stressing their financials. It appears as though investors in the market are all starting to come to this realization at about the same time as well. This constant need for more data center space is fueling private equity activity as investors look to benefit from high value and strategically placed data center assets.Trends in FundingIn 2019 alone, private equity firms accounted for 80% of all data center acquisitions. In total, there were 105 deals that involved private equity firms purchasing data centers. This more than doubled the number of similar deals that were closed in 2017 and was four times as many deals that were closed in 2016. This upward trend has resulted in the value of acquisition deals reaching an all-time high. As the digital transformation continues its clear that investors are viewing data centers as a safe investing choice.So, is this a good thing? Private equity firms have a well-deserved bad reputation of acquiring companies, sucking all of the profit out of them, and discarding the husks in an ever-growing trash heap of dead companies.While that may ring true in other business sectors, the vast majority of these acquisitions and funding deals have shown that the private equity firms snatching up data centers or investing in them are looking to grow the business they acquire. Given the high demand for cloud services and the fact that data centers are infrastructure driven businesses where you get out what you put in, this seems like an obvious business decision. The growth potential of the data center market feels limitless right now. Also, many data center businesses typically dont have a lot of manpower or HQs so that means there is less overhead for a private equity firm to strip away to begin with.Private equity investment in data centersOne big player in the data center sector, Digital Realty Trust, was formed back in 2004 when a private equity firm bought out 21 data centers. DRT has since grown into a leader in the industry with over 214 locations across the United States and Europe. In their case, private equity investment was a means to propel the organization to new heights.Recently, Equinix announced a forthcoming major expansion of their hyperscale data center portfolio with Singapores GIC sovereign wealth fund providing $3.9 billion in funding. GIC has funded much of Equinixs prior expansion in the hyperscale arena, having previsoulsy invested $3 billion in facilities recently completed in Japan and Europe.This new influx of capital will allow Equinix to build 32 more hyperscale data centers in key locations around the world. Equinix has long been a global leader in the colocation and interconnection industry. This move allows them to instantly transform themselves into a formidable player in the hyperscale market, where single client deployments can take up entire buildings. Injections of capital from private equity firms have a habit of increasing the offerings of data center providers at astounding rates.One of the largest deals announced so far this year was the acquisition of QTS by private equity firm Blackstone Group Inc. The deal was valued at roughly $10 billion, representing a 21 percent premium on the closing share price that QTS was listed at on the day of the acquisition. QTS operates data centers in North America and Europe with over 7 million square feet in colocation space available. Instead of looking to flip the companys assets to turn a quick profit, the firm hopes to expand their footprint and services even further in an attempt to gobble up more of the ever-increasing colocation market share. This seems to be the blueprint for these types of acquisitions.Bigger Deals on the HorizonThe last few years have shown us that private equity firms view data centers as one of the best ways to make money. The underlying strategy theyve had in most of these deals is to pump funding into existing data center providers so that the acquired company can increase their market share, thus creating a healthy ROI for investors. We can expect the valuations of these types of funding deals and acquisitions to increase over time as data center services become more and more essential.Due to the ongoing digital transformation, and the widespread adoption of working from home in the immediate wake of the covid-19 pandemic, the demand for cloud services and increases data storage will skyrocket in the years to come. This is good news for data center providers as trends indicate that data centers will serve as the fuel that propels this growth.
10 Jun 2021
Data Centers in the time of Automation and Artificial Intelligence
The digital worlds cornerstone is data centers. Cloud computing, IoT, 5G, Big Data, and AI would all have limited growth potential without them. As the volume of data produced grows exponentially, so does the need for data center technology innovation.The global pandemic increased the importance of data center operators becoming less reliant on human intervention for everyday operations. Now, more than ever, organizations are investing in automation and robotics in the data center so that employees can bring more value elsewhere to the business and have more time to interact with clients and strengthen relationships.Top Data Center Automation Trends to Watch in 2021Data centers have long been highly automated environments. The digital transformation has led to the proliferation of environmental sensors in racks and servers which allow organizations to track many critical aspects of their infrastructure utilizing software. This philosophy has expanded beyond typical infrastructure management to include automation solutions that integrate artificial intelligence.Data center automation allows for the routine day to day activities of a facility to be completely managed and executed without humans. These tasks include scheduling, monitoring, general maintenance, and application delivery. These solutions allow for the data center management team to focus more of their attention and time on mission critical tasks.Robotics as Collaborative ToolsAccording to a recent AFCOM study, 40% of data center providers that were surveyed stated that they would be deploying robotics or automation software in their facilities within the next 3 years. Its no secret that these technologies lead to more efficient and profitable facilities, which should be the goal of any data center operator looking for sustained success.Theres been countless articles and books written about how robots will one day replace humans but one of the biggest automation trends of the last few years has proven quite the opposite. Robotics solutions within data centers have allowed robots and humans to work together to enhance each others role and help businesses find new ways to serve their clients more efficiently.Take cloud migration as an example. Migrating to the cloud is hard. Its a time-consuming job that creates many sleepless nights for the IT departments of enterprise businesses. The complexities and personalization involved ensures that businesses will always require the insight of a human in order to get it just right. However, there is a lot of work that goes into cloud migration that doesnt require the flexible thinking of a human IT professional and that is exactly the kind of work that would be perfect for a robot.This kind of automation already exists at some level in IT departments today but moving forward automation solutions that ease the programing load for IT departments will be an area that will see significant growth over the next few years.Artificial IntelligenceAI is one of the primary tools in facility automation as it holds a great deal of promise for automating infrastructure so that it requires less human touch to remain functional. The end game is creating an environment where data center workers are deeply integrated with technology automation, each making the others job easier, as opposed to the technology replacing the worker.Google has utilized AI to assist with managing the cooling systems in their data centers, allowing for real time updates on changes in weather or workloads so that the system can allocate resources to particular areas of the facility as needed. AI is also commonly used to monitor emergency backup generators by examining the machinery at a microscopic level with sound and video, sending alerts to human staff when a defect or change in functioning is detected.Automating Hyperscale Data CentersThe demand for creating and leasing data center space has increased dramatically during the last five years. Hyperscale platforms like Microsoft Azure, Google Cloud Platform, Facebook, and other digitally driven behemoths have leased masses of capacity at an incredible rate worldwide. The majority of this hypergrowth occurred in established data center markets like Northern Virginia, Amsterdam, and Singapore. These markets will continue to serve as meccas for colocation services in the years to come.A hyperscale data center is a facility that makes it easier for online platforms to store and move massive amounts of data. Moreover, they are required to sustain the global web, social media, streaming media, AI/ML, cloud gaming, and cloud providers scalable infrastructures. Hyperscale and automation seem to go hand in hand. As more hyper scale data centers appear, the need to automate the processes within them will grow as well. Taking data from across the data center and applying analytics and machine learning to that data to identify and inefficiencies or irregularities will be key.The data center industry will continue to expand rapidly, resulting in increased demand for hyperscale data centers in strategic locations worldwide. Thus, custom development, leasing space from specialists, and contracting with global colocation providers will be used to complete the build-out.Innovative Cooling TechnologiesTo keep physical buildings at an appropriate temperature, cooling equipment, and related technologies, are essential in keeping vital IT equipment from overheating.There is no shortage of innovation in data center cooling technologies, and the field is always evolving. One alternative to reduce electricity consumption is using seawater or rainwater. Cutting edge software defined AI can also be used to assess power usage and temperature settings in real-time and make adjustments accordingly. In some data centers, cooling robots that monitor temperature and humidity are also being utilized to increase efficiency.Demand for Data Center TalentData Center administrators, generally speaking, have a core skill set and were hired for a specialized purpose. As new innovations flood the market, it will be essential to have employees that are well versed in the maintenance and programming of those technologies. To maximize data center professionals capabilities, organizations must make a point to provide the required tools and training. A skills matrix can help management effectively communicate talent gaps.Attracting topflight talent is difficult. Its essential that businesses devote time to participating in proactive internal and external recruitment efforts. An often-overlooked step is to form collaborations with business groups, colleges, and commercial and public sector training institutions. In the coming years, providers will have to change how they recruit and retain talent if they want to remain ahead of the curve in a data center market thats poised to explode as the digital transformation continues.These initiatives will assure a long-term stream of competent and enthusiastic individuals for data center positions. Automating the data center is a good way to take make facilities more efficient but the full benefits will never be fully realized without a team of innovative professionals to help steer the ship. Even as technology advances, an organization will only ever be as good as the employees that are on the front lines.
26 May 2021
Why eCommerce is Vital for Businesses of All Types and Sizes
eCommerce has become a vital part of our collective buying habits throughout the last two decades. Enterprises can leverage these new habits by utilizing an eCommerce platform and strategy that allows customers to shop how and when they want.Nowadays, most consumers simply do not want to leave their homes to buy products whether they be small or large purchases. Instead, consumers prefer to shop from the comfort of their homes, making eCommerce a suitable alternative for both enterprises and customers.Ecommerce During COVIDThe COVID-19 pandemic has pushed the expansion of eCommerce to new enterprises, customers, and product categories. It has given clients access to a wide range of products from the comfort and safety of their own homes and it has allowed businesses to continue operating despite contact limits and other constraints.Despite the persisting differences of countries, the COVID-19 issue has increased dynamism in the eCommerce sector and broadened the scope of eCommerce, especially through new enterprises and customer segments. Moreover, in many nations, eCommerce transactions have shifted away from luxury items and services and toward necessities relevant to an individuals needs. This trend has picked up steam in the IT sector as well as many providers were forced to pivot to online platforms to assist with sales in lieu of face to face meetings with potential clients.Benefits of eCommerceAs the market increasingly shifts to the digital marketplace, building a solid eCommerce platform can give companies the following wealth of benefits.Broadens the BrandeCommerce is an excellent approach to transform your business from a typical brick-and-mortar store to a cutting-edge, well-known, and loved brand. Ones business is no longer just one store as going online entails providing exceptional items, online customer assistance, blogs, and social media content 24 hours a day. With eCommerce and online presence, businesses can expand their product ranges and client base without worrying about having to physically move to other locations.ConvenienceAn online business is open 24 hours a day, seven days a week, allowing clients to shop whenever they want, regardless of their schedule or time zone. People nowadays do not always have time to accommodate several sales calls prior to making a purchasing decision. Hence, people increasingly turn to the internet to find the products they want or need.This is especially true for enterprise IT management teams who typically have a lot on their plate. Given the technology available to organizations today, theres no reason a client shouldnt be able to find pricing and procure colocation space or cloud storage resources at the click of a button and on their own time. If a business can provide this option for its consumers, they will appeal to a broader array of clients who are all looking for a convenient and flexible experience.Increase the ReachMillions of people worldwide can read a website at any moment, thanks to the internets accessibility. This opportunity allows individuals or entrepreneurs to expand their businesses and reach to a global audience. This means more than just having a website and cultivating an online presence. In order to truly maximize your brands reach and increase your client pool, its essential to develop a transparent and easy to use eCommerce platform that allows potential clients from around the globe to take a peek behind the curtain and see what your organization has to offer. Too many businesses fall into the trap of requiring clients to contact internal sales agents in order to move forward with the procurement of services. This excludes a significant portion of online customers who prefer to browse pricing and deals strictly online. Taking the time to cater to this segment of potential buyers opens up a whole new avenue of potential revenue.Gives Marketing OpportunitiesHaving an ecommerce platform as a marketing tool is one of the greatest advantages for any business. Utilizing SEO increases the sites odds of being found in search engines. Plus, eCommerce has various marketing strategies, ranging from pay-per-click advertising, social media marketing, and email marketing, including links back to the website.ScalableAs the company expands, expanding the product line and target audience will most likely be the next target to develop the company and meet the customers needs and consumer demands. Moreover, an eCommerce platform allows an entrepreneur to establish the business as needed.Adding more categories, more transaction choices, and even expanding where you distribute is made possible without worrying about moving to a larger location like one would with a physical store.Mapping Out An Ecommerce StrategyA company needs a good eCommerce marketing strategy to win new customers and boost the business income. A customized marketing approach is of great help in attracting the correct clients, efficiently and effectively increasing revenue.Outlining GoalsThe first step should always be defining the goals for a year before developing a marketing strategy. An essential question that an eCommerce business owner should answer is: What exactly does the company want to achieve? Here are a few marketing objectives to consider:Boost traffic to the site createdIncrease the number of repeat customersAdd a certain number of new customers each monthExpand the available product linesIncrease the overall revenueAfter establishing a general one-year plan, try to get more specific with the objectives.Identify the Target MarketAfter outlining the goals, the next step is to establish the target market. A company must identify who the targeted customers are since this factor affects how and where the eCommerce marketing efforts should be centered. Companies may miss out on important information about their target clients and their challenges if companies neglect this step.Sending a survey to an existing audience is the best approach to get started. Begin by addressing the ideal customers if one does not have any yet. Identify the following important demographics when examining the target market:AgeGenderLocationMarital StatusJobIncomeBuying BehaviorInterestsSocial Media PreferencesResearch Your CompetitorsThe next step is determining who the key competitors are and what their current strengths and weaknesses are. This study will help the company to identify opportunities to obtain a competitive advantage.Examine the websites of the competitors and the things they offer. What is the level of detail in their product descriptions? Do they have a blog to advertise their business, and if so, how frequently do they post?Competitor research is a continuous process. Always keep an eye on what the competitors are doing to remain on top of shifting market dynamics. Subscribe to their newsletters and follow them on social media. Its also good to buy some of their items to test the customer experience and see how the process treats their customers.Determine Pricing and PositioningTodays consumers have a lot of options when it comes to price comparison. It is critical to put in some effort in finding out about this. One should have a better sense of what their ideal clients are willing to spend money on and how much they are willing to pay for those things now that they get identified. It is not suitable for making the target market think the products offered are too expensive. As technology advances and as the world changes, one must keep up with it. Going online is a great option for businesses as safety and convenience are todays top priorities.
6 May 2021
Getting to Know: FMS Integration
I had the opportunity to sit down with Ted Fletcher, owner of FMS Integration LLC. FMS Integration offers custom operational technology products and solutions. With products ranging from remote monitoring, wireless senor technology, and leak detection, theyre capable of enhancing the data center efficiency of any organization. Below is a condensed version of our interview.[Kyle] Tell me a little bit about yourself, your background, and how you got started in the industry?Ted:I got started in the Data Center industry back in 2001. I was going back to school for some electronic certificates after being a forklift mechanic for 5 years and started at RLE Technologies making leak detection cable. After a few weeks, they moved me into building circuit boards for different products. A couple months later, I worked with engineering and started learning the use of the products used in the data center industry. I became the first official technical support person at RLE. As time moved on, I also became the RLE field service technician for system startups for leak detection and monitoring solutions. In 2004 I left RLE and moved back east and worked for Fenwal Protection systems for the IEP (Industrial Explosion Protection) group as a field service engineer. I moved back to Colorado in 2008 and was the technical support manager / applications engineer till 2012. I then went to work for FieldView Solutions, which later was acquired by Nlyte Software. I was with them until 2015. I then was hired by CyrusOne to work as an EPMS Engineer for the Electrical Controls department. I worked for CyrusOne until the end of 2020. In January 2021 I officially startedFMS Integration LLC. [Kyle] What is the back story behind FMS Integration? How did it get started?Ted: Before joining CyrusOne, I was on the fence to start my own company. After five years working for a large Data Center Colo provider, I decided to make my move. Over the years I have grown a passion working with different electrical power devices and the communications used by them. I take great pride in helping facilities with their monitoring/communications needs from the field devices. I love the technology we have available to establish communications and provide different level of monitoring solutions.[Kyle] How is your offering different than the competition?Ted:I do not want to be thought of as a one-solution vendor. I believe every application has its own unique design. I will not sell a customer on a $50K software solution if a $3000.00 or $500.00 dedicated monitoring device gets them what they need. I try and helpeducate and share informationwith customers on their application from detailed wiring diagrams, easy to ready communication risers and training videos that can be subject specific to their needs and is theirs to retain to help train others within their organization.[Kyle] What are you seeing in terms of demand for services? Is it more remote monitoring or sensor technology or leak detection?Ted: I think moving forward, there will always be a fair mix forWireless Sensor applicationsandleak detection in the data center world. I would love to educate more people on the wireless sensor technology for laboratory environments and introduce the leak detection line to more industrial and commercial applications. Remote monitoring is the product line I see to continue with great organic growth. As IoT, IIoT and more data collection is required from technology devices, this is a solution that will be evolving for years. As facilities work on optimizing their facilities, the power monitoring options available today give users a lot of data. New installations and retrofits help give a more granular look at what is being consumed and where the on-time (duty-cycle) can be reduced to help facilities save more on their operating costs.[Kyle] What is the main driver for purchasing services from you that youre seeing from your clients?Ted:A personal attention to detail to give the customer the best quality of service available. I prefer usingmonitoring solutionsthat can expand with the customers growth and needs. A quick example is using products that can use wired Analog 4-20mA sensors, dry contact inputs from devices along with flexibility for protocol data such as Modbus, BACnet and SNMP. As the customer continues to grow and wants to expand to a larger software-based solution, these already deployed devices can output the wired input data to multiple headend systems using open protocols. So, the customer just needs to disable the email notification as they already have an integration device in place.[Kyle] Whats in store for the future of FMS Integration? New product launches or anything that you want to share?Ted:We live in amazing times when it comes to technology and the new innovations brilliant people/organizations keep developing. I look forward to learning new solutions and hiring people with the same passion to continue to learn and grow. As new technology solutions are introduced to the marketplace, I plan on keeping up with them as best as possible. I have recently taken the Technical Certification Program from Tridium for the Niagara 4 software/hardware solution. Tridium over the years has developed an amazing product to address a wide array of applications from building controls, power monitoring, lighting, security and more. It is systems like this that help bridge the data gap from multiple systems for a more uniform data sharing for building devices/systems.