Why Data Centre Providers Love the Greater Toronto Burbs

techvibes.com
January 9, 2013
By Irving Frydman

A digital onslaught, consisting of big data, social, mobile, and cloud is converging upon corporate data centres—secure, temperature-controlled facilities filled with servers and storage systems.

The consequences are enormous: more companies are now outsourcing to third parties to help alleviate growing demands on their Information Technology (IT) infrastructures. Global data centre providers are paying attention to Canada.  

Canada is recognized as a preferred destination for investors seeking safety and expansion when developing new data centres abroad.  Better still, Canada ranks as the 5th lowest-risk location for building and operating data centers, according to the latest installment of the Data Centre Risk Index report by real estate giant Cushman & Wakefield and consultancies Source8 and HurleyPalmerFlatt.

Randy Borron, global managing director, Data Centre Advisory Group, with Cushman & Wakefield in Toronto, lists many important criteria when selecting a data centre location, including “business objectives, timelines and targeted completion dates, future expansion plans, and the lifespan of the data itself,” to name but a few. Energy or power efficiency is routinely examined for data centre comparison purposes, by calculating the PUE (Power Usage Effectiveness) ratio. “It’s important to know the power load found in a data centre,” he said. A lower PUE is desirable and denotes potential cost savings to a provider.  

Data centre providers continue to arrive in the Greater Toronto Area (GTA): Witness the recent flurry of news releases by industry provider heavyweights such as Savvis, Digital Realty, and SunGard Availability Services, announcing significant multi-million dollar investments in the City of Markham, part of Greater Toronto’s York Region.   

Savvis will soon have its fourth data centre in Canada, offering managed and hosting services, co-location and cloud-based services. This is the company’s first Canadian ground level build (the other three were part of an acquisition) with the scheduled opening of a 100,000 square feet facility this summer.

Bik Dutta, director of product and market development in Canada at Savvis, explained the decision to build a Markham-based facility was “based on client needs for business continuity, disaster recovery, and geographic needs.” The Markham location meets the 50 km minimum required distance from its other facility in the GTA and is far enough from the downtown core; exhibits good proximity and accessibility to Markham and the GTA; and addresses growing demand from new businesses and the IT-related mid-market, according to Dutta. “We see great value in the area,” he said.

Many companies choose to house their data in Canada because of the U.S. Patriot Act, which allows the U.S. government to scrutinize data stored in the United States without a search warrant.  Existing privacy laws in Canada are much stronger than in the U.S. and offer additional comfort for Canadian-based businesses.  “We provide services on Canadian soil,” said Mr. Dutta. “Customers say, ‘I want my data to be in Canada.’ It matters, and we give customers that choice.”

In the Savvis 2013 Global IT Leadership Report, commissioned researchers Vanson Bourne found that within five years, 70 percent of Canadian IT leaders plan to outsource a majority of their infrastructure to co-location, managed hosting and cloud services.  The outsourced cloud is expected to be the dominant IT model, soon afterwards.

Mr. Dutta indicated that the cloud is based on “IT consumption” and offers companies many benefits such as “agility, security, time to market and flexibility.”  “It is an OPEX and hosting model ... customers bring their business applications and don’t acquire assets,” he said. “We provide the plumbing for resilient, stable environments to run on.”

THE YORK REGION DATA CENTRE CLUSTER
With growing demand for enterprise-quality facilities in the Toronto market, the global data centre battlefield has come to Canada.   However, limited supply and the lack of space for building new data centres are sending providers to the surrounding suburbs, including the North East region of the GTA, such as Markham, as mentioned.  

This has spelled good news for Markham, which also boasts the lowest business property taxes in the GTA as an added draw.  Mr. Borron described Markham as “a focal point in York Region,” and the city has huge appeal for data centre development. “Markham offers a good supply of IT talent, fiber, power, closeness to banking centres, and lots of tech companies,” he said.

The recent announcements of continued IT infrastructure building in Markham (and across the other southern York Region municipalities of Richmond Hill and Vaughan) reflect an established data centre cluster in the area, including recognizable names such as IBM, Rogers, Compugen, OnX, and HP. Of particular noteworthiness is Vaughn-based SCINET—Canada’s largest supercomputer data centre—a High Performance Computing consortium of the University of Toronto and affiliated Ontario hospitals.

New technology adoption holds great promise for Canada over the next few years: It is part of a process, as Mr. Dutta explained, beginning with an acceleration of customer comfort levels into the cloud, followed by creating customer success in the category.  “The cloud and data centre is scratching the surface” and Canadian companies will have a greater ability to “sink money into innovation and product development,” Dutta added. This is a great recipe for success, allowing more Canadian companies to have a stronger presence in the global economy.  

Data centres are the new symbols of economic prosperity—in a suburb near you.