Edge-based data centres may address enterprise latency worries


By Danny Bradbury

Experts are suggesting that the need for low-latency communications is increasing as applications move increasingly to the cloud, and that companies are calling for faster access.

Gillis Cashman, managing partner at private investment firm M/C Partners, focuses on wireline broadband infrastructure and services. He said data centres are definitely moving further toward the edges of the Internet.

“We have seen people focused on maximising power economies, so there was a focus on putting data centres into large footprint areas,” said Cashman, who previously focused on M&A in the Global Telecommunications Corporate Finance Group at Salomon Smith Barney.

“As we have seen the growth of mobility, there really was a need to maximise application performance and that required a far different architecture than the one that had been built out,” he added.

Instead of architectures that put 50 servers in one data centre, companies will need 50 servers in 50 data centres close to the edge, he suggested.

Do figures bear this out? According to 451 Research’s latest Voice of the Enterprise report on data centres, six in every ten firms in North America use third party colocation or cloud-based data centres, with 10% of all companies using these exclusively. Each firm operated 5.2 local data centres on average, compared to 1.9 regional data centres and 2 premium centralized units.

However, over the next quarter, local data centres featured relatively low on the scale, with firms planning to open 0.7 of these on average, compared with 1.2 premium centralized data centres. Server rooms and server closets were predictably the most popular of all in terms of quarterly plans.

Where firms decided to switch colocation vendors, roughly an eighth did so because of a lack of capacity at an existing geographic location. Significantly, where companies were interested in additional colocation services, the availability of multiple facilities across different geographical locations ranked 6.7 on an interest scale of 1-10.

There’s some evidence to suggest that CIOs are looking at a more distributed mix of data centres, then. But do remotely hosted applications really need to worry that much about latency? High frequency traders do, but there aren’t that many of those. Two other big applications are online gaming and content. Low-latency is definitely an issue for the former, but most companies aren’t in that space and won’t care.

Content does matter increasingly for CIOs, though, especially if they move to video and other high-bandwidth content on sites, whether they happen to be customer or employee-facing. This piece of insight on Twitter was particularly interesting: web page size has grown from 700k four years ago to well over 2Mb now, and is approaching the size of the original Doom install image. Neat.

“It really depends on the application,” said Cashman. “I think you’re hearing about the online trading stuff because that’s been built out. But there are still a massive amount of applications going out on the public cloud right now. Companies are outsourcing mission-critical applications.”

He has an interest in this, of course. One of his investments is data centre and managed services firm Involta. “Involta will go into a market like that where there was no option for a maintainable, highly redundant tier 3-4 facility and they will get a contract for financing to buy the land and build the building and build out the fiber,” he said.

What will the growth of edge data centres mean for CIOs? One of the biggest issues may be managing the whole thing, as applications and content must be structured to serve users in different regions. One potential business model here involves providing an intermediary service, managing cloud-based applications in addition to hosted apps in multiple data centre environments.

“It would be a nightmare dealing with lots of different providers for services. People are striving to be that trusted third party where they manage that for the enterprise and provide that SLA,” said Cashman.

“If your application is in Amazon Web Services and in my data centres, I will provide a contract where I manage that for you. Very few people can provide that today but the guys that get there and execute will win.”

View source version here: https://www.itworldcanada.com/article/edge-based-data-centres-may-address-enterprise-latency-worries/376906

Cuba Burch Berner

Cuba Burch Berner is an Associate at M|C Partners, where he focuses on investment opportunities in digital infrastructure and technology services. Prior to joining the firm in 2022, Cuba was an Equity Research Associate at Citi covering infrastructure companies within the telecommunications industry, including data centers and wireless towers. He holds a B.S. in Mathematics with a specialization in Economics from the University of Chicago. Cuba currently lives in Boston’s West End and enjoys  a myriad of outdoor activities including running, swimming, hiking, and skiing.





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Jim Wade co-founded M/C Partners in 1986 with Dave Croll. He has been investing in communications and technology services since the advent of wireless and broadband, cornerstones of the firm’s sector focus. As Chairman, he manages the firm’s investment process, and continuously seeks out management teams, company prospects and financial resources to grow the portfolio. Jim’s successful track record includes MetroPCS (IPO), Lightower Holdings (acquired by Berkshire Partners), Cavalier Telephone (acquired by PAETEC), NuVox Communications (acquired by WindStream), Attenda (acquired by Darwin Private Equity), Melita (acquired by Apax Partners), PR Wireless (joint venture with Sprint affiliate in Puerto Rico), Thrive Networks (acquired/recapitalized by Court Square) and Involta (acquired by Carlyle Group). Today he serves as a director on the Board of Connectivity Wireless and has responsibility for Omega Wireless. Jim graduated from the University of Notre Dame a B.B.A in Finance and received an MBA from Harvard Business School. He lives outside Boston with his wife and four children. Jim was an avid boater and is now an average golfer.




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Abhishek Rampuria

Abhishek (A.B.) is a Partner at M/C Partners, where he leads origination, deal diligence and portfolio company support for investments in a variety of communications and technology services segments. He currently serves on the Board of Ascend Technologies, Connectivity Wireless, Edafio Technology Partners, TowerCom and serves as a Board Observer for Thrive Networks. A.B. previously served as a Board Observer for Ensono (acquired by KKR) and QOS Networks (acquired by Zayo). Prior to joining M/C Partners in 2015, A.B. worked at Altman Solon (formerly Altman Vilandrie), a technology, media & telecommunications focused strategy consulting firm, where he completed projects for both operating companies and private equity investors. A.B. received a B.S. in Materials Science & Engineering from the Massachusetts Institute of Technology. He lives in Boston’s South End and outside of work, enjoys skiing, cycling, traveling and cheering on his home-town Patriots and Celtics.




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