vertical requirements for the data centre market 17052012

South Africa Companies Requirements within the Data Centre Environment

1

Data Centre EnvironmentOne Size Does Not Fit All

Date: 17th May 2012

Agenda

• Overview of the South African Data Centre Market

• Key product offerings

• Virtualisation

• End user requirements

• Last word

2

• Last word

Overview of South African Market

3

Overview of South African Market

•Industry Best Practices

2500

3000

3500

4000

4500

Re

ve

nu

es

(R

Mil

lio

n)

DC revenues are expected to grow at a CAGR of 9.6% to

reach R4.0 billion by 2016, from R2.3 billion in 2010

� A number of trends contribute

to growth:

1) Outsourcing of data centre

requirements

2) The SME sector which will

increasingly adopt a variety of

2010 Revenues:

R2.3 billion

2010 Revenues:

R2.3 billion

2016 Revenues:

R4.0 billion

2016 Revenues:

R4.0 billion

South African data centre market revenue forecast

4

0

500

1000

1500

2000

2500

2010 2011 2012 2013 2014 2015 2016

Re

ve

nu

es

(R

Mil

lio

n)

Source: Frost & Sullivan, data centre operators interviews

increasingly adopt a variety of

data centre services

3) Aging equipment that can no

longer keep up with

performance requirements

4) Insufficient power availability

for new high-density servers

Companies are increasingly considering centralisingtheir data centre architecture

South Africa Data Centre Market: Key Trends, 2011

Consolidation of data centresConsolidation of data

centres

5

Growing dependence on third-party

services

Going

Green

Bigger and bigger is better

Source: Frost & Sullivan


services

Going

Green

Bigger and bigger is betterMarket

Trends

Growing dependence

on third-party services

Going

Green

Virtualisation Market

Trends

Companies are outsourcing non-business-critical functions to third-party companies



centres

6


services

Going

Green




services

Going

Green


Trends

Growing dependence


Going

Green


Trends

Corporate responsibility and a need to lower power costs are influencing environmentally friendly DCs



centres

7


services

Going

Green




services

Going

Green


Trends

Growing dependence


Going

Green


Trends

Escalating costs of power, which contributes 50% of

OPEX spend, is driving uptake in virtualised technology



centres

8


services

Going

Green




services

Going

Green


Trends

Growing dependence


Going

Green

VirtualisationMarket

Trends

Data Centre Market Shares by Revenues, 2010

BCX 26%

MTN Business5%

Vodacom Business5%

Neotel4%

Teraco3%

Gijima2%

Continuity1%

Fujitsu1%

Other5%

Competitors 17+

Tier I

Systems integratorsMarket leaders, first to establish data centrese.g. Business Connexion, IBM , T-Systems

Tier IITelecoms operatorsEntered the market over the last 5 yearse.g. MTN Business, Vodacom, Telkom

Tier IIIInternet Service Providerse.g. Hetzner, MWEB

Competitive Environment

DC market of R2.3bn is dominated by system integrators who contribute over 70% of the total market share

9

Source: Frost & Sullivan, competitor interviews

IBM15%

DiData14%

Telkom3%

T-Systems9%

HP7%

5% Tier IIIe.g. Hetzner, MWEB

Degree of Rivalry High

Barrier to Entry High

Threat of Substitutes

The extent of leased vs. owned data centres threatening and impacting the market

Competitive Differentiators

Location SLAsValue Added Services Regulatory Compliance

The entry of telecom operators has intensified levels of competition which are expected to be

maintained going forward as data centres keep up with trends towards greater virtualisation

The entry of telecom operators has intensified levels of competition which are expected to be

maintained going forward as data centres keep up with trends towards greater virtualisation

The sizeable DC operations will meet customer demand for easily scalable storage and computing resources

Providers Data

Centres

Data Centre

Certification

Floor

Space (m2)

Footprint Product

Range

Specialisation Strength of

cloud offering

BCX 3 III, IV 8,300 NationalCloud and

virtualisation

Neotel 3 III 3,000 International Backup and WAN

MTN 4 III 3,300 International Backup and WAN

IBM 2 III 2,900 InternationalCloud and

virtualisation

10

IBM 2 III 2,900 Internationalvirtualisation

DiData/

IS6 III N/A International

LAN, Virtualisation,

cloud

2 III 2,100 International Cloud and WAN

Gijima 1 III 800 National Managed services

Vodacom 6 III 4,500 National Collocation, Backup

Telkom 6 III 9,700 National Collocation

Strong Weak

Product offerings

11

Product offerings


As traditional products mature, newer products are being introduced

Data Centre Adoption Trends A

do

pti

on

Rate

HighIntroduction Growth Maturity Decline

LAN

WANWeb Hosting

Hosted Enterprise Security

DRManaged servers

Basic Hosting

12


Bubble size represents revenue/subscriber size of service area

Ad

op

tio

n R

ate

Low

SaaS

Remote Backup

Cloud storage

Virtual Desktop

Hosted Managed Backup

Virtual Server

Cloud storage, virtual server and desktop, remote backup and

hosted exchange are promising service segments as traditional

product lines are maturing

Cloud storage, virtual server and desktop, remote backup and

hosted exchange are promising service segments as traditional

product lines are maturing

Remote Backup

SaaS

Virtual desktop

Virtual server

Web-Hosting

Virtualisation solutions and cloud-based services will

drive data centre revenues in future

CAGR � Virtualisation solutions

are a key technology

trend as they offer

significant efficiencies

and cost savings to

companies of all sizes

� As a result SaaS, virtual

desktop and virtual server

� Virtualisation solutions

are a key technology

trend as they offer

significant efficiencies

and cost savings to

companies of all sizes

� As a result SaaS, virtual


SaaS uptake will be

driven by hosted

exchange, CRM and UC

SaaS uptake will be

driven by hosted

exchange, CRM and UC

8%

13%

30%

23%

10%

Growth forecasts per product sector, 2010 – 2016

13

0 200 400 600 800 1000

Basic Hosting

Cloud Storage

Disaster Recovery

Hosted Enterprise Security

Hosted Managed Back up

LAN

Managed Servers

Source: Frost & Sullivan analysis


are expected to have the

highest growth rates to

2016

� The importance of core

services to overall data

centre revenues will

decline by 2016, as these

services also become

more commoditised


are expected to have the

highest growth rates to

2016

� The importance of core

services to overall data

centre revenues will

decline by 2016, as these

services also become

more commoditised

Cloud storage is a

small sub-product

of cloud-based

services

Cloud storage is a

small sub-product

of cloud-based

services

8%

2%

8%

10%

5%

12%

5%2010

2016

Virtualisation at the heart of the cloud business model

Cost avoidance

Expand capacity at minimal cost, by

Application Mobility

High availability, "always

Ease of Implementation

VM can be built in a matter of hours or

14

minimal cost, by maximising the use

of existing resources

Saves energy costs; and, by decreasing

the overall footprint, avoids or defers build out of

the data centre

availability, "always on" applications

Easy to implement business continuity

plans

matter of hours or even less

Frost & Sullivan expects virtualised

offerings to overtake the uptake of

managed services

Source: Frost & Sullivan analysis

Basic Hosting LANNetworking

Managed Server

Web Hosting SaaS Hosted Exchange *

Global Micro

Market leading companies are well represented in the top

5 providers per product segment

1

2

3

4

5

Hosted Exchange

forms part of the SaaS total

market numbers

15

5

Virtual Machines

Virtual Desktop

Cloud Storage Hosted Managed Backup

RemoteBackup

DisasterRecovery

Hosted EnterpriseSecurity

No other

companies

offer stand-

alone cloud

storage

Global Micro

1

2

4

3

5

End User Requirements

16

End User Requirements


Financial sector, government and ICT contribute two thirds of data centre revenues

Proportion of vertical sector spend for data centre services (2010)

Manufacture7%

Healthcare4% Mining

8%

Retail10%

� The financial services sector is dealing

with an explosion in IT needs, both for

data and infrastructure

o Large banks and financial institutions are turning to cloud and virtualisation solutions to address these challenges

� The government sector is likely to

continue outsourcing its DC services to

� The financial services sector is dealing

with an explosion in IT needs, both for

data and infrastructure

o Large banks and financial institutions are turning to cloud and virtualisation solutions to address these challenges

� The government sector is likely to


17

Source: Frost & Sullivan 2009, 2010

Financial22%

Government20%

ICT21%

Media3%

Transport4%

Oil&Gas1%


vendors to comply with good

environmental stewardship and carbon

emission reduction goals

� Retail relies heavily on service

providers to provide fast

service, adequate support and effective

solutions

o Price is a key criteria in the decision-making process


vendors to comply with good

environmental stewardship and carbon

emission reduction goals

� Retail relies heavily on service

providers to provide fast

service, adequate support and effective

solutions

o Price is a key criteria in the decision-making process

Expenditure on data centres can comprise as much as

85% of total ICT spend as for banks

Retail and mining

represent

opportunities for

virtualised desktops

Retail and mining

represent

opportunities for

virtualised desktops��

��

��

��

Number of potential PC’s for desktop management

Total spend per sector in the sample

78%

22%

66%

34%

60%

40%

Average PC Access

18

1 10 100 1000

Log of Sum of Expenditure (ZAR Million)) � = 4000 PC’s

Data Centre Spend

ICT Spend

Proportion of staff

With access to a PC

Without access

Financial services spend

on data centres is

high, but a large

proportion is in-house

Financial services spend

on data centres is

high, but a large

proportion is in-house

Note: Data is presented for the sample of 50 companies selected in conjunction with Telkom

��

��

�

��

��45%55%

55%45%

44%56%

82%

18%

Security will always be a concern but the financial sector

consistently are looking for ways to cut costs

Key solutions for the financial sector

Managed Servers

The safety of data is critical in the financial sector. Regulation

is a barrier to moving data off site, however. The management

of servers on site can be outsourced

SaaSSoftware as a Service (SaaS) allows the user to effectively rent

19

SaaSSoftware as a Service (SaaS) allows the user to effectively rent

the use of select software which saves on licensing fees

Virtualisa-tion

Virtualisation has been used as a means to reduce hardware

requirements within the financial sector. However, most

virtualisation has been restricted in house

High

Barrier

Medium

Barrier

Low

Barrier

Most retailers continue to keep data centres in-

house, but larger retailers are considering virtualisation

Key solutions for retail sector

WANConnectivity is important in the retail sector as information

must be shared and consolidated from different branches

Managed Servers

Many retailers choose to outsource data centre

management services and these are often lucrative

20

Managed Servers management services and these are often lucrative

contracts

VirtualisationThis includes virtual desktop, virtual server and cloud

storage, and addresses cost sensitivities in the sector

High

Barrier

Medium

Barrier

Low

Barrier

Due to the nature of the manufacturing sector, it is not

always conducive to build sophisticated data centres

Key solutions for the manufacturing sector

Basic Hosting

Manufacturing companies process large amounts of data

and often have sites all across the country, the servers

need to be hosted in a satisfactory manner

Virtualisation is a popular adoption trend within the

21

Virtualisa-tion

Virtualisation is a popular adoption trend within the

manufacturing sector. Companies see the value in it and

are taking steps to prepare for it

WANConnectivity is essential for the manufacturing sector as

various branches are scattered around the country

High

Barrier

Medium

Barrier

Low

Barrier

Control is rated as one of the most important factors influencing companies to keep DC management in-house

Factors influencing companies to keep data centres in-house (South Africa), 2009

Control

• Control relates to the level of trust companies has in service providers

when deciding on retaining a data centre inhouse or outsourcing to a

third party

• Corporations require guaranteed security of data

• Organisations require uninterrupted connectivity of its mission critical

22

• Organisations require uninterrupted connectivity of its mission critical

processes

• A number of companies are reluctant to outsource relate to the limited

reliability of IT networks

• Companies have a direct responsibility towards their customers to ensure data security

• Furthermore, in certain sectors, regulatory compliance also influences a company’s decision to keep data centres inhouse

Reliability Concerns

Security

According to most companies, cost savings would be a major driver for outsourcing in the future

Cost savings

• When considering to outsource, many companies weigh up the cost associated with outsourcing vs. investing in their own data centre infrastructure and expertise

• Cost savings are complemented with a customised offering and efficient service

• A lack of facilities is rated as an important driving factor for outsourcing

Factors influencing companies to outsource data centres (South Africa), 2009

23

• A lack of facilities is rated as an important driving factor for outsourcing data centre infrastructure and management services

• Many companies find that as the business’ data requirements grow, their current facilities are no longer sufficient and they need to turn either to upgrades or outsourcing

• Companies are looking to streamline their business in order to create efficiencies amongst the core business processes

• Integration and synchronisation is key to companies and are looking for vendors to assist them when outsourcing the data centres

Lack of facilities

Streamlining business

operations

Last word

24

Last word


Companies needs to make a decision to "make“ or "buy“ data centre solution

Outsourcing v. In-house

• Address the challenges of business continuity, scalability, financials and security

Application Outsourcing v. In-house

• Application outsourcing will address the challenges of business continuity, scalability and financials

Colocation v. In-house

• Colocation will address the challenges of business continuity, financials, energy efficiency and probably also

25

and security

• Difficult for an organisation to raise its public green profile

• Two major drawbacks, are control and labour relations

and financials

• However, the company will not meet the wider data centre challenges

• Application outsourcing should therefore be regarded as a quick fix or stop-gap solution

• Energy efficiency and security are two challenges that will likely not be addressed

efficiency and probably also security

• Not all colocation centres are equipped to offer high power densities

• Colocation centres offer scalability, but only to the extent that the centre itself does not run out of space

vertical requirements for the data centre market 17052012

Business

outsourcing of data

market leaders

data othertier icentres3

dc market of r2

green source

key trends

variety ofdata centre

international cloud