Werner HOLZAPFEL Smart Business
Belarus is stepping up presence on the global market of data center services
The development of digital economy based on bulk data is now a universal trend, including for Belarus. Several modern data centers have been built in Minsk already. By the end of the year the mobile carrier velcom intends to open the country’s largest Tier 3 data center that will become part of an international network. The reasons are obvious: in addition to satisfying the internal demand for storing and processing data, the company intends to offer its services internationally. Werner HOLZAPFEL, supervisor of the velcom data center construction project, told the Economy of Belarus Magazine what Big Data is all about and what appeal Belarus has for a broadband world.
Vigorous efforts have been poured into the development of the data center infrastructure in Belarus in the last few years. What can you say about prospects of this kind of business?
The market of data center services is rapidly evolving in Belarus right now. It is not a fluke since the demand for this kind of services has grown noticeably. Besides, it is now possible to offer these services to foreign companies that are ready to store their data in Minsk. The country’s transit position is also an important factor. So prospects of developing this kind of business in Belarus are rather optimistic.
Moreover, the emergence of major data centers is one of the conditions for creating a digital economy, in which telecommunication infrastructure and the creation of information products play the key role. In layman’s terms it is impossible to move on without it. It is doubly true for Belarus since the country pins its hopes on the development of information technologies. The Hi-Tech Park is a vivid example. Its resident companies are known far and wide. So, it is not a know-how, but a desire to follow global trends?
Exactly. The development of digital economy has been considered a global trend for many years. It is no secret. Certainly, it does not mean we should abandon conventional industries. Everything must be balanced. In addition to forming a large and promising market without virtually any geographical borders, information technologies also contribute to the development of other branches of the economy. We are talking about symbiosis, not replacement. The world around us is much more complicated than it may seem at first glance.
It is a large market. According to IDC projections, in 2016 companies all over the world will spend $204 billion on public cloud services, 16.5% up from the previous year. To compare, the global market of information technologies is expected to grow by only 0.6% if we are to trust Gartner.
How is the attitude of Belarusian companies to data centers changing? Are they ready to outsource data storage?
Their attitude is changing and rather fast. In the past many medium and large companies would set up their own server rooms. Now they have come to understand that the approach is dangerous, unprofitable, and, most of all, ineffective. The private sector now uses outsourced data centers to reduce costs and get quality service.
Data centers scale well. The more data centers you build, the easier you can equip and service them. Electricity consumption is a significant parameter in the performance of a data center. If you do it on a large scale, you can configure the network in a way to reduce electricity costs.
Data security and safety also play a major role and can be obtained only in a modern data center. Every small thing counts – from uninterrupted operation and data backups to 24/7 security and monitoring. A company that operates a data center as a non-core business can easily fail to take care of everything. There is a shortage of Tier 3 data centers in Eastern Europe. What main advantages do they give?
Many large foreign companies do not trust a data center with storing their data if the data center lacks a Tier 3 reliability certificate. By the way, the data center that velcom is building in Kolodishchi has already obtained the certificate. But what is all about in practice? First of all, the certificate indicates that the data center uses only modern equipment that can work 24/7/365. All the operations to replace and add equipment will be done without affecting the entire installation. A backup communication line is available to keep the servers online at any time.
The monitoring system in a Tier 3 data center tracks every detail from air temperature to electricity consumption. All the data can be accessed online in real time. If necessary, a video camera can be installed to let users see a specific server cabinet.
A Tier 3 data center is head and shoulders above your average run-of-the-mill data center. A Tier 3 data center compares to the average data center like a five-star hotel can compare to a roadside motel. Truth be told, there are only three commercial international-level data centers in Belarus for now. To compare, there are more than 30 of them in Poland, roughly the same amount in Ukraine, and about 50 in Russia.
However, proximity to Russia and the rising tendency to outsource things open up prospects for developing the market of data center services. It will also allow raising the investment appeal of the country and improving the business climate.
I assume the availability of Tier 3 data centers will also help improve the country’s information security since companies will prefer storing their valuable data in the home country…
Absolutely correct. Modern data centers guarantee 100% data safety in the event of natural disasters or lengthy power blackouts. In the past companies that needed servers like
The emergence of major data centers is one of the conditions for creating a digital economy, in which telecommunication infrastructure and the creation of information products play the key role
Modern data centers guarantee 100% data safety in the event of natural disasters or lengthy power blackouts
that had to find them in Moscow, Kiev, or Warsaw. Now they can do it in Minsk and on much more attractive terms.
What prompted velcom to build the country’s largest data center?
First of all, we needed a data center of our own since we push a lot of data as a mobile carrier. Besides, in the last few years the company has been putting serious efforts into business diversification. For instance, in September 2014 velcom started offering wired Internet access for legal entities. Over 100 business centers in Minsk now enjoy velcom’s wired broadband Internet access. We can see that many corporate clients would like to safely store a lot of data and access it 24/7.
Will you please tell us more about velcom’s future data center?
All in all, velcom’s data center will occupy 7,500m2. Inside you will find eight machine halls with 100 server cabinets in four modules in each hall. Customers will be able to access their servers physically and remotely. Their presence options will vary from dedicated server cabinets to dedicated server rooms with a separate entrance. The interior space can be flexibly configured using the open space format. If you so desire, you can create your own data center and separate your servers from the rest.
The data center’s working hours will be similar to a twenty-four-hour hypermarket or an airport terminal. Clients will be able to access their servers even at 2:00 in the morning, security personnel will be in position to assist. Nothing like that has been available in Belarus before. Besides, in addition to data storage space, as a telecommunication company we can offer a fiber optic communication line to any office.
What do you want more: satisfy the domestic demand or enter a promising market?
We are not trying to disguise the fact that it is an independent project with a clear monetization scheme. Velcom will use only 10–15% of the data center’s storage space. The rest will be available to customers, primarily those who work in Belarus. These are commercial banks, IT companies, logistics companies, and retail chains. Medium and large enterprises should be interested in data center services. At present velcom provides mobile communication services to 70% of the corporate sector, so we know the potential clients of the data center well.
Do Belarusian IT companies that cater primarily to Western markets use the Belarusian data storage infrastructure? Most of the resident companies in the Hi-Tech Park use outsourcing business schemes. It is important for them to be close to their clients. But we believe they will easily change their minds since data centers compliant with international standards are established in Minsk.
Some Belarusian IT companies have built their own data centers. In my opinion, it was a suboptimal decision since maintaining the infrastructure costs a lot. Besides, it is difficult to project the workload of your data center through the year. Projects come and go, you may finish your project today, while tomorrow the data center will be idle.
How much does velcom’s data center cost? How fast do you intend to recoup the investments?
A total of about $35 million will be invested in building the data center. The expected payback period exceeds five years. As you see, everything is rather optimistic. It is a new kind of business for Belarus, which we expect will grow rapidly in the next few years.
We are not re-inventing the wheel. Many companies, which are part of the holding companies Telekom Austria Group (TAG) and America Movil, have already built data centers of their own. But the data center in Kolodishchi will be the first Eastern Europe data center of America Movil. The data center will also become part of an international network that comprises about 30 data centers in various countries. Belarusian companies will be able to backup data all over the world. It will also enable more effective work with foreign markets. Belarus will be able to more actively export data storage and data processing services.
Will the construction of the data center reduce prices for data storage and data processing services?
Unlikely. It is more likely that customers will be able to store their data in a Tier 3 data center at prices close to those of lower-quality data centers. So, the market will undergo quality changes but you shouldn’t expect prices to take a nosedive.
What cloud technologies may Belarus get thanks to the development of the data center services market?
The development of virtualization technologies will be the next step after the opening of data centers. Companies will be able to buy virtual space from data centers instead of precise storage or a physical server. In other words, Infrastructure as a Service (IaaS), Platform as a Service (PaaS), and Software as a Service (SaaS) solutions will become more prominent. All these factors are expected to contribute to the development of innovative business in Belarus, which relies on modern information technologies.
What are Belarus’ chances of becoming an Eastern Europe leader in data storage and processing?
The chances are quite high. Truth be told, we need quality international communication channels in order to develop data center infrastructure for the benefit of foreign clients. If data center owners could build an external Internet gateway of their own, the prospects of exporting data center services would go sky high. Everyone would benefit from it, including the owner of the data center, end consumers, and the state. These are international trends, which Belarus is unlikely to dodge.
Many corporate clients would like to safely store a lot of data and access it 24/7