July 29th, 2008 - The Oklahoman

Energy resources help boost data centers' growth

By Jim Stafford
The Oklahoman

Oklahoma's low energy costs and cost of living should shield data center businesses in the state from predicted "disruptions” caused by rising power costs and space constraints, an Oklahoma City industry insider said Monday.

Recently, a Gartner Research analyst predicted rising energy costs and space constraints will cause "considerable disruption” to the nation's rapidly expanding data center business.

"During the next five years, most U.S. enterprise data centers will spend as much on energy (power and cooling) as they will on hardware infrastructure,” Gartner Research analyst Rakesh Kumar said in a report entitled "U.S. Data Centers: The Calm Before the Storm.”

Although the paper was published almost 10 months ago, it was distributed Monday by IDG Connect, a unit of IDG Communications that is part of International Data Group.

Becoming a major player

Data centers house critical data of corporate clients in facilities that offer redundant power and communications that virtually assure computer servers are up and running without interruption 24/7.

Data center users in Oklahoma have little worry from disruptions caused by rising cost or space constraint issues, said John Parsons, chief executive officer at Perimeter Data Center, which operates commercial data facilities in Oklahoma City and Tulsa.

Corporate clients pay data center operators such as Perimeter to house their computer servers in a secure environment.

Data centers in "Tier 1” cities such as San Francisco, Boston and Dallas pay electricity costs that are two to three times that of Oklahoma, Parsons said. When floor space becomes scarce, price pressures will cause data center clients in major cities to look for alternatives.

"This is the primary reason that we have been beating the drum for two or three years that Oklahoma can really be a major player in North America in the data center business,” Parsons said.

What's ahead?

Perimeter Technology Center will open another data center in September adjacent to its site in far western Oklahoma City. The 23,000-square-foot center will offer 15,000 square feet of raised floor space and is the first of up to 10 similar facilities Parsons envisions on 21 acres of land Perimeter bought a year ago.

Perimeter already operates a 16,000 square foot center in Oklahoma City that offers 3,000 feet of data space. It also operates a 37,000 square foot facility in Tulsa that offers 8,000 square feet of data space.

"When the price pressure eventually occurs and supply and demand even out, then it's going to be a whole new ballgame,” Parsons said. "That's why it's going to be that five- to 10-year outlook where Oklahoma can be a huge player in the commercial data center business in North America.

"We're very bullish about it and getting more bullish every day.”

Perimeter already houses critical data for about 250 companies in its centers in Oklahoma City and Tulsa.

An even bigger commercial data center is under development by partners Terryl Zerby and Ron Ward in far west Oklahoma City along I-40 on the former Lucent Technologies campus.

Called OKCWorks, Zerby and Ward are refurbishing and repurposing the 1.8 million square feet center that once built telephone switching equipment for the old AT&T system. The first OKCWorks data center that offers 15,000 square feet of space opened this spring at the site.

Why costs should stay lower

While Oklahoma City power costs are considerably less than other areas of the nation, the city isn't immune to rising energy costs, Zerby said. But Oklahoma's costs are a percentage of the competition cities, he said.

"We should always be one of the low-cost states as it relates to energy,” Zerby said. "And in large part that is because we are part of the Southwest Power Pool and (because) OG&E has done an excellent job over the years hedging their energy costs.”

Still, the drive for more data center space isn't a "discretionary” choice for corporate America, Zerby said. The proliferation of digital data demands it, he said.

"We're in a time where more and more data is required,” Zerby said. "Yes, you are going to see a consolidation of data centers to more of a central location, if possible, because of the cost savings.”

PROJECTIONS

•By 2011, more than 70 percent of U.S. enterprise data centers will face tangible disruptions related to floor space, energy consumption and/or costs.

•During the next five years, the use of data center hosting providers for core data center services will grow rapidly in the U.S.

•During the next five years, most U.S. enterprise data centers will spend as much on energy (power and cooling) as they will on hardware infrastructure.

Source: "U.S. Data Centers: The Calm Before the Storm”

by Rakesh Kumar, Gartner Research

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