Telecoms in numbers

99.995 per cent: Uptime availability that a data centre has to provide for tier four industry certification

70 per cent: Estimate of companies in the Middle East looking to adopt virtualisation

Source: IDC

The economic crisis has forced many companies to review how they spend their information technology (IT) budgets. This has resulted in a shift towards embracing operational, rather than capital, expenditure. Data centres are a prime example of how attitudes are changing and many companies are now looking at outsourcing the management of their data and some systems to third parties.

Despite the trend of moving to an offsite data centre, outsourcing is still in its infancy in the region

A data centre is a centralised facility that houses an organisation’s computer systems. This includes infrastructure such as communications, networking, storage equipment and software applications. It can sit within an organisation or be at a third-party facility, but will additionally provide the environmental controls to keep those systems working and the security needed to protect the data.

Third-party data management in the GCC

In small companies this is often referred to as the server room, while for medium and large organisations a data centre will take up a lot more floor space. Data centres are expensive to build and even more expensive to run. As a consequence, an increasing number of companies are seeking to outsource their data management, and in some instances applications.

IDC survey of datacentre usage in the GCC*
Should you reach full capacity, how will you address this demand?
Will build internal capacity by upgrading existing data centre 76
Will build internal capacity through green-field investment 11
Will use a mix of both 10
Will use off-site capacity of a data centre 3
* 90 respondents in Saudi Arabia and UAE
Source: IDC

This can take different forms. A company can opt to have their servers moved to a third-party data centre, where they are managed and run, with the facility also providing the power, cooling and in-built systems redundancy. Alternatively, a company can choose to lease space on the data centre’s own servers, and then have the same services provided.

Further levels of outsourcing include taking services such as back-up, storage and security, right through to software application management, although this is rarer in the Middle East. Some companies will only outsource those applications that they do not consider critical, although this is expected to gradually change as organisations embrace cloud computing.

Virtualised servers 
Middle East 10
GCC 13
Developed markets +20
Source: IDC

In other instances, Middle East companies are taking a hybrid approach, where they outsource to a third party’s facility, but insist that their data is run by one of their team at the facility. Another approach is to outsource the management of a company’s internal data centre, keeping everything onsite.

While there is no right or wrong approach, for many companies it makes economic sense to shift to a third party’s site. It removes the burden and cost of managing the infrastructure, data and future equipment upgrades.

While companies may have concerns about security and availability of their data, these facilities are designed to provide high levels of physical and IT security, and will have redundant equipment in place to ensure that should anything fail, a fast switchover will mean an organisation’s service continues uninterrupted or, that at the very least, any service disruption is minimised.

Despite the trend of moving to offsite data centres, outsourcing is still in its infancy in the region, and third-party providers have some in-grained attitudes to change. Earlier this year, US-based International Data Corporation (IDC) asked companies in the UAE and Saudi Arabia what they will do once their systems reach full capacity. Seventy-six per cent said they would build internal capacity by upgrading existing data centre, with only 3 per cent saying they would move to an offsite facility, and 10 per cent planning to use a mix of both offsite and internal systems.

Those companies that build and run their own internal data centres tend to be large institutions, sometimes in sectors that are subject to stringent rules and regulations around their data, such as financial institutions and telecoms companies. But while banks such as Emirates NBD and airlines such as Emirates in the UAE have chosen to build and run an internal data centre, others such as Abu Dhabi Commercial Bank (ADCB) have outsourced their critical IT infrastructure and systems.

ADCB signed an outsourcing contract in July 2009 with the local Injazat Data Systems, a joint venture company between state-owned Mubadala and HP of the US.

Tiered data services in the Gulf

The level of service and security available within data centres is broken into tiers, ranging from one (the lowest) to four (the highest). Injazat’s is the only facility in the UAE offering tier four.

To get tier four industry certification, a data centre has to meet a number of conditions. These include having multiple active power and cooling distribution paths – to help minimise the possibility of loss of service should one of those routes fail; in-built redundancy to provide an uninterrupted service should a piece of equipment fail; and the promise of 99.995 per cent uptime availability.

For most companies, renting costly tier four data centre space is unnecessary and expensive. Typically, a tier three or two facility will provide adequate service, security and protection. A smarter approach is to understand which tier the various types of data they hold falls into and adjust how this is then treated. For instance, email is critical for most companies, but tier three would cover their needs. By better understanding the importance of their systems and data, organisations can then reduce their data centre costs.

Calls for greener computing have also forced those operating data centres to revisit how they are run. A major issue for data centres is the ongoing power and cooling costs, which often exceed the initial capital expenditure. While third-party data centres understand the make-up of running costs, within internal facilities, the utility costs can become hidden. This is because companies running internal facilities often have the IT and utility costs separated and run by different departments, masking the true expense of running a data centre.

Cutting the cost of running data centres

Adopting green practices offers more than environmental benefits as more efficiently run facilities can reap huge financial savings. Server hardware, for instance, runs hot, due mainly to the central processing unit, so efficient air flow is a key consideration within data centres for keeping down the cost of cooling them.

In colder regions, this has prompted practices including locating data centres in areas where, during the winter months, they can use external air for cooling, rather than chilled air via air-conditioning units.

Whatever the local climate, better planning and placement of equipment to improve air flow will reduce utility costs, even in GCC states where electricity is among the cheapest in the world.

A technology trend called virtualisation is having the biggest impact on utility costs and changing the way both internal and third-party data centres are run.

In simple terms, virtualisation turns a single machine into a number of ‘virtual’ environments. Within many organisations – including data centres – servers, networks and storage are being virtualised.

Server capacity is often under-used, and virtualisation gives companies the opportunity to consolidate their physical servers into fewer machines, by using more of the capacity available on each one. It is the same for storage, where data held across the network can be consolidated.

Fewer servers running means less power is being drawn and less heat is being generated. With reduced power and less heat generated, a data centre’s cooling requirements can be reduced and with it the cost of running the facility. Other cost benefits are gained through reducing the floor space required and the need to buy and maintain fewer servers.

Virtualisation is still in its early stages across much of the Middle East – IDC estimates that about 10 per cent of Middle East and Africa servers are virtualised, with that figure rising to 13 per cent within the GCC. In more developed regions, this rises to 20 per cent or more.

However, the practice has gained traction during the economic downturn, as companies realised they needed to get improved returns on their investment made in IT in previous years. IDC says that 70 per cent of the Middle East companies it has spoken to are either adopting or looking at virtualisation.

“Virtualisation is very hot, and it’s not just hype, it is adoption,” says Margaret Adam, research director for IT services at IDC Middle East. “There has been an acceleration in the current climate. In the boom years money was less of an issue, but now companies are making more mature IT decisions.”

Virtualisation is often described as an early stage of cloud computing – the idea of running many of the functions and applications needed in IT as a utility service.

Few companies in the Middle East have yet embraced the scalable, pay-as-you-use model, but it is on the horizon. IDC estimates the region is three years from wide-spread adoption. The big advantage cloud computing offers is the flexibility of being able to scale up or down the amount of a particular service required, much as you would with utilities such as power or water.

This means, for instance, that the technology requirements when ramping up a company’s workforce, or opening a new branch office, should be easier and cheaper, because it takes away some of the capital costs and the need to install and set up additional systems.

“Cloud computing is making a lot of noise, but it’s still early for the region to go into it,” says Ahmed Tawfiq, head of data centre services at Injazat. “The data centre market needs to mature more and there needs to be some legislation and regulations, especially for the public cloud.”

Slow adoption of new technology in the Middle East

Virtualisation and cloud computing have long been pushed by IT suppliers and their adoption is further advanced in much of Europe and the US.

In the Middle East the picture is less clear. The GCC is further ahead with embracing new IT models than elsewhere in the region, particularly in the UAE, with Qatar and Saudi Arabia catching up.

The decision on whether to maintain an internally-run or externally-run data centre is one that is individual to a company and its approach to managing critical systems.

The global economic downturn though has focused organisations’ IT planning and encouraged them to shift some costs to an operational expenditure. With a new attitude to the exposure created by capital costs, this is expected to accelerate in the coming years, especially as companies look to once more expand their business reach.