Cloud Services Uncategorized

Movement of Co-location Facilities to the IaaS Cloud Services Business (part 2 of 3)

By Mark Hill, Chairman,

As server technology becomes
more and more important to the health of a company, we are seeing a shift to
moving a company’s servers to outside buildings designed specifically to house
servers.  These are known as
co-location facilities.  These
facilities have security, power, cooling and Internet access to keep them safe,
secure, and running at high availability.

Co-location facilities are
evolving and many businesses are offering additional services such as changing
backup tapes, shared firewalls and routers, and operating system patching.  By providing these managed services,
co-location facilities offer more value to customers.

It is natural for the
successful co-location businesses to continue to improve their service
offerings and offer more value to their customers.  Co-location companies are moving to owning their servers and
renting out access to compute power and data storage.  The key to the change in the co-location business is that
they manage these compute and data storage resources for a large number of
customers.   As the number of
customers increases, the management of servers becomes dramatically more
efficient due to the scale and centralization of expertise.

The service of renting out
compute power and data storage is known as Infrastructure-as-a-Service, or
IaaS.   It is part of the “Cloud”
phenomenon that we hear about today. 
Even the traditional computing players such as HP, IBM, Microsoft, and
VMware have initiatives around cloud computing, evidence that the market is at
the front of a major shift.

IaaS also offers the promise
of proper allocation of resources to manage peak loads and disaster
recovery.  Many companies need to
over-allocate resources to ensure peak load performance and then replicate the
expense off-site for disaster recovery. 
This can make the cost of the compute and data resources four times more
expensive than what would be typically needed under normal operating
conditions.  IaaS can also lower
the total cost of infrastructure by centralizing the expertise of managing
increasingly complex systems.

Where IaaS shifts to what we
now call “cloud” is where standardization and virtualization converge. I’ll
talk about that convergence in my final blog post (part 3) coming shortly. Stay


Mark E. Hill is Chairman of BlueLock’s Board and
Managing Partner of Collina Ventures. Mark co-founded Baker Hill® in 1983.
Focusing on the banking industry, the company built software solutions focused
on small business lending. In 2005, the company was acquired by Experian®
(EXPN.L), a global information company. In addition to his roles with BlueLock
and Collina Ventures, Mark serves on the board of numerous companies, including
Interactive Intelligence, (Nasdaq:ININ),  Cantaloupe TV (, and T2 Systems (


One comment has been added so far

  1. Mark, we see the same shift in the customer base shifting from in-house hosting facilities, to colocation hosting (in the cloud ). Data indicates this will continue in the hosting industry for colocation and managed VMware type hosting in 2010-2011.
    We continue to see strong demand for data center space this year, and into next year at Online Tech ( ) in Michigan. In a study published by the Digital Realty Trust ( ) , the findings indicate that the market for data center space will continue to grow in 2010 and 2011. Key findings of the new study include the following:
    * 83 percent of respondents are planning data center expansions in the next 12 to 24 months;
    * 36 percent of respondents have definite plans to make those expansions during 2010;
    * 73 percent of respondents plan to add two or more facilities as part of their data center expansions;
    * The need for additional power is the top reason for data center expansions, rising from fifth place on last year’s survey to first place this year;
    * Data center and IT budgets are both projected to increase by 8 percent in 2010, up from 7 percent and 6 percent, respectively, last year;
    * Of those planning to expand, 70 percent are planning large projects of at least 15,000 square feet in size or 2 mW or greater of power; and
    * 83 percent of respondents with definite plans to expand in 2010 plan to do so with a partner that specializes in data center design and construction or data center leasing.
    Closer to home in Michigan, we see the job market improving, and an uptick in business. This is a great sign and helps validate the strong local market pull for data center space, colocation, and hosting solutions. In a recent report published by Manpower (Manpower Employment Outlook Survey; ), signs are strong across the state of Michigan, including Flint and Ann Arbor, where Online Tech has data centers for colocation and dedicated servers.

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