Waukee data center exemplifies industry trend
More companies are looking to others to develop and maintain the facilities in which critical data are housed.
An annual study of the U.S. data center market released in March found that 83 percent of large corporations are planning data center expansions in the next 12 to 24 months.
Of those poised to expand this year, 83 percent plan to so with a partner that specializes in data center design and construction or data center leasing.
Campos Research & Analysis surveyed 300 top-level information technology (IT) decision makers for the online poll by Digital Realty Trust Inc., a wholesale data center provider based in San Francisco.
But you need not travel farther than Waukee to find a data center that exemplifies the trend.
Last November, Iowa Health System and Cedar Falls-based Team Technologies completed the $15 million first phase of their Des Moines Data Center.
Operating as Team Des Moines Partners LLC, each company has a stake in the development located at The Crossing at Alice’s Road.
The business relationship between the two organizations began in 2004, became official in 2006, grew during the floods of 2008, and solidified through the purchase of a five-acre lot at The Crossing.
Back in 2006, Iowa Health was leasing space for its backup data center in Team’s flagship Prairie Lakes Data Center in Cedar Falls. At the time, the health-care conglomerate operated its primary server farm in a leased office in Cedar Rapids.
“It was never really built from the standpoint of being optimal,” said Joy Grosser, Iowa Health’s chief information officer. “We added on a windowless room in the back and tried to cool it right and tried to power it right. We were always trying to catch up.”
The floods hastened an upgrade.
When Iowa Health was forced to evacuate its downtown Cedar Rapids office, Grosser said, Team quickly stepped in to “temporarily locate all of our work” to Cedar Falls.
The relationship blossomed.
Besides, Iowa Health had outgrown another one of its data centers in Windsor Heights and was looking for an opportunity to locate permanently in Greater Des Moines.
According to Digital Realty, financing is taking on a greater role in how companies select partners for data center developments.
As financial outlooks brighten, data center and IT budgets are both projected to grow by 8 percent in 2010, up from 7 percent and 6 percent rates, respectively, last year.
Lenders, however, continue to thoroughly scrutinize potential projects in a weakened economy, and data center developers have been forced to come up with more creative measures.
“Last year, many enterprise customers put their plans for new data center construction on hold as the capital markets dried up,” said Michelle Bailey, research vice president for Massachusetts-based International Data Corp. “As a result, we have seen IT organizations increasingly look to third-party suppliers with flexible financing strategies as a means to supplement their own aging data centers.”
The report also said C-level executives have replaced the IT department as the final decision maker for data center partner decisions, serving as the primary influencer in two-thirds of the cases.
According to the Dallas County assessor’s office, Team Des Moines Partners LLC paid $435,600 for the Waukee parcel, which is contiguous to a MidAmerican Energy Co. power substation.
The 2009 Digital Realty survey said the need for additional power was the fifth most frequent reason given for data center expansions.
This year it’s No. 1.
“One of the most interesting pieces of data in this study is the lead role that power is now playing in these expansions,” said Chris Crosby, Digital Realty’s senior vice president of corporate development. “The need for additional power has become the main driver for data center expansion plans as companies seek facilities with adequate power and favorable utility rates to control operating costs.”
During the past two or three years, data centers have also become more energy efficient, as 76 percent of survey respondents said they now meter their power use and 75 percent of companies are confident they can comply with future carbon emissions-related and energy-related regulations.
“The industry has gone from power metering being the exception to power metering being utilized by more than three quarters of respondents,” Crosby said. “These are very positive signs that companies better understand their data centers’ energy use and can make informed decisions to reduce energy consumption.”
Mark Kittrell, Team’s vice president of business development, believes data center demand will grow along with the need for IT upgrades to support the 24/7 nature of the Internet.
“Data center industry growth, like nearly all facets of the general economy, paused in 2009 while companies took stock of their own businesses and underlying financing,” he said. “Since (the first quarter) we have seen significantly higher levels of customer demand for data center space as these same companies completed their analyses.
“In the near term we believe demand will remain strong as companies develop creative solutions to meet these needs as capital constraints remain.”
Kittrell said: “The advantages of these partnerships are that they can help customers bring private funding and economies of scale to their IT infrastructure. By focusing on their key business and conserving capital, customers can expect quicker time-to-market and higher returns on their investments.”
For Iowa Health, that means saving the time and money that it would otherwise spend on managing and protecting vital records in a do-it-yourself data center.
Grosser said the partnership has freed Iowa Health to focus more on its core: 26 hospitals, 20,000 employees and 2.5 million annual patient visits.
And though only one of three phases of the Des Moines data center is complete, Iowa Health predicts it already contains enough space to cover 10 years of electronic data growth.
It now stores about 10 million patient, employee and financial records at the site.
“We’ve gotten a fully functioning data center with all of the things that a data center should be,” Grosser said, noting that the joint venture is meeting her organization’s needs by drawing on Team’s expertise.
“They are in this business; I don’t have to hire people to check the power grid, the heating and cooling systems,” she said. “We can spread that across the entire data center; we’ve got some economies of scale.”
Team owns and operates three data centers in the Midwest, including Waukee, Cedar Falls and Madison, Wis.
Team Des Moines Partners LLC was formed in January 2008. The entire 46,000-square-foot project is expected to cost between $40 million and $50 million.
Six Team employees manage the Des Moines Data Center, which includes redundancies for each core system: power generation, air conditioning, fire suppression. It was built to withstand an F3 tornado.
As tenants materialize, Kittrell said, Team may kick off phase two of the project on a speculative basis later this year.