Why co-location is the way forward

As digital transformation has accelerated globally it has shifted both consumer preferences and how businesses think about their core IT infrastructure. However, while emerging technologies are entering the market, they have not, as yet, been a key driver for Irish enterprises.

Dermot Lahey, head of client services at co-location data centre provider Digital Realty, said that it was not the case that Irish organisations were unaware of the benefits of moving to more modern infrastructure. Rather, Irish business had, to a greater degree than in other countries, stuck with on-premise infrastructure due to familiarity and the scale of existing investments.

However, this now means that these same businesses are growing concerned about their systems, so the arrival of compelling new technologies such as artificial intelligence (AI) looks like it may be enough to cause a reassessment.

“I was involved in two conversations this week with people looking at their data centre strategy for the next few years. They were looking at cloud and artificial intelligence in particular. Their core driver was basic fundamentals, resilience for instance. After that, they want to position themselves to take advantage of things like AI [but] they can’t leverage them from their current position in the computer room,” Lahey said.

Of course, the high cost of running on-premise infrastructure – and the need to amortise it over a number of years – means that a reconsideration of how IT infrastructure is provided makes sense. As a result, more are now seriously considering moving core applications to colocation.

“Their view is ‘in the short to medium term we need to put our compute in a place where we can use cloud on-ramps or take advantage of AI’,” Lahey said.

Beyond costs, this is also a recognition of the fast pace of technological change, something that has an impact on internal processes as competitors may be able to streamline and so gain competitive advantage, and also on customer preferences.

“The increasing pace of new technology is extremely significant,” Lahey said.

“A year ago, there was no generative AI. Two-and-a-half years before that, yes there was cloud, but not really at scale, and certainly not what we see today.”

Migrating from the server room to colocation is the core of any digital transformation strategy as it allows organisations to immediately reduce the complexity imposed by IT.

“One company recently signed with us and they’re about to migrate their on-prem to co-location with us. They’re nervous about their existing location where they have to absorb the cost and run it in a building – an office building that’s not designed as a data centre. They need security, biometrics, cooling, and are faced with 100 per cent of the total cost of ownership,” he said.

In order to become digital, to reduce costs, to realise hybrid IT strategies, organisations need to make the move

Energy issues are also a factor. Moving infrastructure to co-location means making savings, both in terms of costs and carbon emissions. Indeed, even the simplest move from on-prem to modern co-location has a benefit simply due to the move to a custom-designed environment. Redesigning applications so that they are spun up and down as needed, thus reducing the need for over-provisioning and ensuring servers do not run idle, creates further savings.

“A ‘lift and shift’ has 20 per cent saving, like-for-like,” Lahey said.

“On top of that there is a need for green credentials. We use 100 per cent renewables, so their IT processing load can be appropriately certified,” he said.

Sustainability, as part of a wider corporate social responsibility drive, is not simply a box-ticking operation, he said, with carbon accounting and Scope 3 guidelines coming into focus.

“At Digital Realty, we have no option but to discuss this up front. It’s simply becoming more and more important, and there is an obligation on everyone to rethink their energy use,” Lahey said.

However, moving core IT to co-location also means closer access to telcos, public cloud providers and the internet, resulting in better network performance and greater resilience.

“We offer diversity of carrier choice. We don’t mandate who you use. Whoever you use, chances are their connectivity backbone runs through one of our data centres,” Lahey said.

Ultimately, Lahey said, Irish SMEs have managed well by running their business with their servers in computer rooms within the building, but with the growing complexity of applications, a new focus on data and AI and, of course, hybrid working, co-location is the clear destination for digital transformation projects.

“On-prem is now, finally, no longer effective. In order to become digital, to reduce costs, to realise hybrid IT strategies they need to make the move,” he said.