Michele McCANN, TeracoHyperscale is the latest evolution in the datacentre world, one already populated by many other business cases. From datacentres inside companies to co-location arrangements where equipment is hosted on third-party sites, many businesses are already invested in datacentres. Yet these models are being outshined by hyperscale, leading to the questions: are traditional datacentre businesses in trouble? And, what will the impact be on South Africa’s datacentre operators?
A natural step forward
Perhaps surprisingly, the short answer is: largely positive. The Margin asked South Africa’s numerous major datacentre players their views, and they mostly seem to be singing from the same hymn book. Vodacom Business executive head for products and services Sabelo mabena says: “Vodacom’s stance is that while they may seem competitors at face value, these hyperscale players do complement our services.
We’re helping most customers in terms of developing strategies to build redundancy and balance the benefits of a datacentre solution with a cloud-based solution to give customers a hybrid benefit. They also use some of our services in as far as connectivity and peripheral network services as enablers.”
This view isn’t unanimous. for example, MTN declined to comment, stating it’s reviewing its cloud strategies. But there's a lack of panic among the large datacentre providers — and for good reason. They’re partly responsible for the market reaching this level of maturity. Hyperscale is closely linked to cloud, which we can define as the new breed of development and delivery technologies supported by the triad of affordable scale, speed and power. Even cloud’s doubters, such as Oracle CEO Larry Ellison, have made an about-turn on the topic.
The simple fact is that local large datacentre service providers have been promoting cloud as the new business, of which hyperscale was one of several foregone conclusions in a maturing market.
“A diverse set of organisations will and have already benefited from cloud, whether that be from one of the hyperscale players or more niche players,” says Stephen Green, CTO, Dimension Data Middle East and Africa. “Typically, small to medium-sized companies that have server rooms are consolidating these and are moving their compute requirement to the cloud. A very attractive value proposition for these clients is to move their disaster recovery services to cloud, which gives immediate savings to their bottom line.
“Larger enterprise clients are using cloud and the hyperscale players in a number of ways. Some are migrating workloads because they allow them to achieve better access to their clients, by enabling mobile services and through leveraging the cloud platforms and services. Some are rationalising their datacentres and their hardware investments to move to a pay-as-you-use model. This has the promise of freeing up IT spend to allow investment in other areas.”
In summary, the datacentre operators that are worried about hyperscale’s competition are the ones that haven’t changed with the times. It’s the proverbial chickens coming home to roost.
Blood on the datacentre floor
Evolve or die: this has been the rallying call of technologists for the past number of years. Usually directed at clients, the message is increasingly being focused onto the channel. At a recent DELL EMC partner conference*, several speakers lamented the need for service providers to look beyond the hardware.
“Hardware will be a commodity in the near future,” noted Mohammed Amin, senior VP: META region at Dell EMC, during his keynote. “All of us will need to transform,” meaning that providing services is the major competitive field. This doesn’t mean hardware and infrastructure will become useless, but rather that it’s fast becoming a space for only a few niche players. Consolidation of the market is on the cards, but the leaders are already ahead of the pack.
In South Africa, Teraco is the lord of agnostic datacentre infrastructure. It has remained stoically neutral, not shifting into services other than to facilitate the migration plans of companies. This is the case with its Riverfields hyperscale facility, which exists to help companies shift and consolidate their IT stacks into these new datacentre environments.
For Michele McCann, Teraco’s head of interconnection and peering, there’s a sense of history repeating. When Teraco introduced interconnect services a few years ago, many small players took advantage to provide offerings to customers on the back of these. Today, those are sizable companies far beyond their humble roots. She expects the same to happen again with hyperscale.
“Local hyperscale datacentres take care of several barriers. Latency and data costs have been coming down, but this finally addresses data sovereignty concerns. The service operators will have great opportunities as a result. But there’s turmoil ahead. The biggest rumble will be for the channel, and it will impact big and small companies. They should look overseas, where this has already happened. The guys there have had to become nimble and innovative,” she says.
Services, not tech
It may be useful if channel companies don’t focus primarily on the cloud/hyperscale shift, says Ron Raffensperger, CTO for datacentre solutions at Huawei Enterprise.
“The particular technologies used to build a cloud, whether it’s hyperscale or not, is really not so important. what's most important is the availability of services that can be used by businesses and their IT departments to meet business needs. A properly designed and implemented cloud will hide the technologies used to provide the services. Having said that, there are certainly advantages to a hyperscale infrastructure if the capability being used requires massive amounts of computing.”
Major local datacentre operators that are still in the market can claim the virtue of growing with cloud’s rise. Those that haven’t just don’t know they’re in trouble. The local presences of Azure and AWS are broadly seen as a benefit, even if there are some competitive friction points, but none that will break the well-prepared datacentre operators. Practically all the major providers – including all featured here – have established relationships and investments with both Azure and AWS. It’s even tempting to call this business as usual.
But it’s not. The arrivals of Azure marks the end of South Africa’s immature cloud years and the start of a new age. This extends across Africa – Teraco alone already services 16 different African countries and demand for these datacentres is growing all over the continent. The losers are the companies that never thought this day would come…