Consider Outsourcing
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This document discusses the benefits and considerations of outsourcing data center operations. It notes that outsourcing can help avoid capital expenditures and issues around limited IT skills and technology challenges. However, there are also cases where maintaining internal data centers makes sense due to assets, custom systems, security, or regulatory requirements. The document then summarizes trends in the global and Asian data center markets and drivers of outsourcing like cost savings, performance, and new technologies like virtualization and green IT. It profiles Tata Communications' data center strategy and global footprint to provide outsourcing services.
Consider Outsourcing
- 1. Consider Outsourcing Vinay Nagpal Director, Product Management Hosting & Data Center Services Tata Communications Computer World Forum Data Hot-House Summer 2008 ©2008 Tata Communications, Ltd. All Rights Reserved
- 2. Considering Outsourcing? Why buy the cow if you need only the milk? Why run your own data centers when you can just pay to have your machines hosted or have your computing resources supplied as a utility? There are cases where it may make sense to have your own farm! 2
- 3. The CIO’s conundrum “Need to show the value of IT to the business” “Need IT infrastructure to support mission critical applications" “SLAs aligned to needs of the business? – the performance – cost trade-off” “Business needs changes implemented quickly – but we need to get it right” “Users are getting more and more demanding. There is a deluge of information to manage, and the underlying infrastructure is complex" “Our internal admin costs are too high” “We need to improve business performance” “We don’t know what we have got out there” “We need to be more customer oriented” 3
- 4. Global Data Center Marketplace
- 5. The New World Globalization Web 2.0 India & China 5
- 6. Data Center Market Trends Various ‘Sourcing’ models Enterprise data center/IT consolidation Convergence of network & IT realms SPs adopting Virtualization/SaaS Utility Computing Increased volume of digital media Flexibility and support to scale IT infrastructure – web, apps, databases Increased power/cooling requirements Space constraints driving next-generation data center 6
- 7. Business Drivers for Outsourcing 7
- 8. Global Data Center Market IDC has forecast that the market will grow from $29.57 billion in 2005, to $48.37 billion in 2010 (CAGR of 10%). Worldwide IT and business services: Focus on SMEs, global assets, global sourcing for innovation, and industry focused BPO IDC’s latest forecast for the Asia/Pacific market (excluding Japan) in IT Services: 2010 China will overtake Australia In 2011 India will overtake Korea to become the third largest market in the Asia Pacific region. 8
- 9. India and China will improve their position in the APAC DC market APAC Data Center Market Split by Country (%) INDIA Data Center Outsourcing ($ million) “As China and India increasingly redefine the future of technology and innovation, knowing how to map a course into that future will be a core competency of the most accomplished travelers” … Gartner Source: Gartner 9
- 10. Asian Data Centre Space Forecast: 2006 to 2010 4500 China 4000 Hong Kong 3500 Indonesia India 3000 Japan 2500 Korea 2000 (South) Malaysia 1500 Philippines 1000 Singapore Taiw an 500 Thailand 0 2006 2007 2008 2009 2010 Chart 1 - Data Center Space Grow th Forecast 2006-2010 by country (Source: BroadGroup) 10
- 11. Asian Data Centre Market Forecast: 2006 to 2010 Country 2006 2007 2008 2009 2010 CAGR% China 600 725 900 1150 1450 35 Hong Kong 1100 1200 1300 1550 1750 13 Indonesia 320 360 400 480 530 40 India 1900 2500 3000 3500 3700 24 Japan 3800 3900 4000 4100 4200 3 Korea (South) 1000 1150 1250 1350 1400 10 Malaysia 900 1200 1300 1400 1500 15 Philippines 900 1000 1100 1150 1200 8 Singapore 1300 1500 1600 1700 1750 9 Taiwan 800 850 900 950 950 5 Thailand 1100 1150 1200 1250 1300 5 Total 13420 15335 16950 17330 19580 11.5 Asia Data Center Space Forecast 2006-2010 (figures in '000 square feet) Space forecasts are based on carrier neutral facilities, carrier owned data centers, and space provided by hosting or IT service firms. 11
- 12. Drivers of Data Center Growth Outsourcing of IT and application development demands infrastructure Globalization & and managed services Outsourcing Entry into new markets requires IT infrastructure and capabilities Regulation & Alternate IT infrastructure and services for business continuity and Business compliance, particularly for Banking and Financial Services companies Continuity Data privacy and security issues Serve customers quickly and locally to improve experience Time to Market Application and services roll out to emerging markets such as India, Considerations China and South East Asia Data Center Infrastructure easily available for applications Rising costs of real estate and power Reduced IT Technology obsolescence, manpower churn, management overheads Budgets Skills of M&E – not necessarily core to IT 12
- 13. Challenges in building your own Data Centers Availability and cost Space size and scalability Real Estate Proximity to fiber and Commitment - contract vs. lease choice of providers Statutory approvals and regulations Heating, Venting, Air Power infrastructure and costs Core Infrastructure Conditioning (HVAC) Fire suppression Security (manned, Environmental controls – M&E access, surveillance) 3 P’s: Pipe, Power, Ping Maintenance Operations 24x7 support (3 Shifts) Monitoring Security Staffing and retention of skills Multiple vendor contracts 13
- 14. Selection criterion to Outsource IT infrastructure Location: Globally expansive footprint Ability to deliver consistent services across multiple regions Data centers in mature markets and emerging markets Connectivity: Highly available, secure and integrated network People: Technically competent IT staff IT infrastructure and management: Well-defined and flexible roadmap Operational efficiencies Adherence to compliance Financial Viability 14
- 15. …and sometimes it makes sense NOT to Outsource Assets on the ground Custom/legacy system requirements Security requirements Extent and depth of management oversight Regulatory and compliance issues TCO consideration Footprint and facilities requirements 15
- 16. Data Centers Outsourcing Options in Asia Pacific Australia & New Zealand Hong Kong & Singapore Good IT infrastructure Good IT infrastructure Experienced IT staff Experienced IT staff Good service quality Excellent network coverage Network latency – far from Asia Good language skills No direct routes connecting India & High labor & real estate costs China South Korea, Japan & Taiwan India & China Good network to China & HK Growing markets Service quality and network Service quality improved but performance are good inconsistent Far from South Asian countries IT skills are improving Limited capacity to India Limited international connectivity High labor and real estate costs Huge domestic market 16
- 17. Tata Communications in the Data Center Market
- 18. Vision Deliver a new world of communications to advance the reach and leadership of our customers. Emerging Markets INDIA, ASIA incl CHINA, SOUTH AFRICA NEW WORLD OF NEW WORLD OF COMMUNICATIONS COMMUNICATIONS Converged IP Managed Solutions Services 18
- 19. Tata Communications Data Center Strategy Data center infrastructure in key geographies Global Footprint Presence in both developed and emerging markets Leverage extensive global network integrated with data centers Integrated with Network Services: IP, MPLS, Ethernet WAN for DC and end sites Network Services Carrier diversity to support redundancy requirements Consistent Data centers are based on consistent standards – Tier 3 specifications Service Based on global and industry standards – ISO 20000, 27001, SAS70 Capabilities Out-tasked Managed IT infrastructure services – servers security and network Managed Managed Hosting and Storage Standards-based management for consistent service capability Services Captive Data Leverage in-house experience and expertise along with partners to build Centers captive data centers 19
- 20. Data Center Services and Capabilities Multiple hosting and colocation facilities Infrastructure Network Colocation and IT Hosting suite of services Data Centers build to Tier 3 standards Integrated with backbone network Racks and cages Remote Hands Services Colocation IP and Bandwidth Services Managed Security- Firewalls, DDoS, and UTM Managed Hosting Services – Servers, Storage, Security, Network Virtualization, DB, Dual Site Recovery Replication in development Hosting 24 x 7- operations, management and monitoring and OS level Services management; Linux, Solaris, Windows, AIX Centralized Management Platform with customer view portal 20
- 21. Tata Communications – Global Footprint of Colocation and Hosting Facilities UK Stratford, London Highbridge EUROPE Peterborough Lisbon, Portugal Seixal, Spain Derio, Spain NORTH AMERICA Canada • Montreal • Toronto INDIA ASIA PACIFIC USA Shinagawa, Tokyo • Mumbai • New York, NY Toyohashi, Japan • Chennai • North Alameda, LA Singapore • Delhi • Santa Clara, CA • Bangalore • Portland, OR • Hyderabad • Wall, NJ • Pune • Guam 21
- 22. The Road Ahead…
- 23. The Next Wave Driving Data Center Outsourcing Energy use and power and cooling management and optimization Green IT New IT systems and infrastructures; alternate sources of power Cost reductions and savings; environmental impact Logical server installed base growth: 65 million versus 45 million of physical server install base by 2010 Virtualization Virtual Data Center; from consolidation to dynamic flexible infrastructure Anywhere Enterprise; DC, Application, Network and Desktop virtualization Captive Data BO, BOT models; for the enterprise, but operated, managed as a service Centers Issues of capacity management, infrastructure upgrades, aligned to business needs Anytime, anywhere information availability drives shift towards policy- Security based security management and administration Application/ Networks make it a reality; network as a delivery platform; orchestration of Content Delivery virtual resources 23
- 24. Summary Key drivers for Data Center Outsourcing Cost savings by avoiding capex investment Limited IT skill-set Technology challenges Improve performance and availability of IT systems and websites Asia Pacific region is positioned to take a significant portion of Global Data Center Market Singapore is currently the regional hub of Data Center business Increased focus on emerging markets – India & China 24
- 25. Thank you! Vinay Nagpal Tata Communications www.tatacommunications.com