Insider Redux: Data Barn in a Farm Town

I thought I would start my first post by addressing the second New York Times article first. Why? Because it specifically mentions activities and messages sourced from me at the time when I was responsible for running the Microsoft Data Center program. I will try to track the timeline mentioned in the article with my specific recollections of the events. As Paul Harvey used to say, so then you could know the ‘REST of the STORY’.

I remember my first visit to Quincy, Washington. It was a bit of a road trip for myself and a few other key members of the Microsoft site selection team. We had visited a few of the local communities and power utility districts doing our due diligence on the area at large. Our ‘Heat map’ process had led us to Eastern Washington state. Not very far (just a few hours) from the ‘mothership’ of Redmond, Washington. It was a bit of a crow eating exercise for me as just a few weeks earlier I had proudly exclaimed that our next facility would not be located on the West Coast of the United States. We were developing an interesting site selection model that would categorize and weight areas around the world. It would take in FEMA disaster data, fault zones, airport and logistics information, location of fiber optic and carrier presence, workforce distributions, regulatory and tax data, water sources, and power. This was going to be the first real construction effort undertaken by Microsoft. The cost of power was definitely a factor as the article calls out. But just as equal was the generation mix of the power in the area. In this case a predominance of hydroelectric. Low to No carbon footprint (Rivers it turns out actually give off carbon emissions I came to find out). Regardless the generation mix was and would continue to be a hallmark of site selection of the program when I was there. The crow-eating exercise began when we realized that the ‘greenest’ area per our methodology was actually located in Eastern Washington along the Columbia River.

We had a series of meetings with Real Estate folks, the local Grant County PUD, and the Economic Development folks of the area. Back in those days the secrecy around who we were was paramount, so we kept our identities and that of our company secret. Like geeky secret agents on an information gathering mission. We would not answer questions about where we were from, who we were, or even our names. We ‘hid’ behind third party agents who took everyone’s contact information and acted as brokers of information. That was early days…the cloak and dagger would soon come out as part of the process as it became a more advantageous tool to be known in tax negotiations with local and state governments.

During that trip we found the perfect parcel of land, 75 acres with great proximity to local sub stations, just down line from the Dams on the nearby Columbia River. It was November 2005. As we left that day and headed back it was clear that we felt we had found Site Selection gold. As we started to prepare a purchase offer we got wind that Yahoo! was planning on taking a trip out to the area as well. As the local folks seemingly thought that we were a bank or large financial institution they wanted to let us know that someone on the Internet was interested in the area as well. This acted like a lightning rod and we raced back to the area and locked up the land before they Yahoo had a chance to leave the Bay Area. In these early days the competition was fierce. I have tons of interesting tales of cloak and dagger intrigue between Google, Microsoft, and Yahoo. While it was work there was definitely an air of something big on the horizon. That we were all at the beginning of something. In many ways many of the Technology professionals involved regardless of company forged some deep relationships and competition with each other.

The article talks about how the ‘Gee-Whiz moment faded pretty fast’. While I am sure that it faded in time (as all things do), I also seem to recall the huge increase of local business as thousands of construction workers descended upon this wonderful little town, the tours we would give local folks and city council dignitaries, a spirit of true working together. Then of course there was the ultimate reduction in properties taxes resulting from even our first building and an increase in home values to boot at the time. Its an oft missed benefit that I am sure the town of Quincy and Grant County has continued to benefit from as the Data Center Cluster added Yahoo, Sabey, IAC, and others. I warmly remember the opening day ceremonies and ribbon cutting and a sense of pride that we did something good. Corny? Probably – but that was the feeling. There was no talk of generators. There were no picket signs, in fact the EPA of Washington state had no idea on how to deal with a facility of this size and I remember openly working in partnership on them. That of course eventually wore off to the realities of life. We had a business to run, the city moved on, and concerns eventually arose.

The article calls out a showdown between Microsoft and the Power Utility District (PUD) over a fine for missing capacity forecasting target. As this happened much after I left the company I cannot really comment on that specific matter. But I can see how that forecast could miss. Projecting power usage months ahead is more than a bit of science mixed with art. It gets into the complexity of understanding capacity planning in your data centers. How big will certain projects grow. Will they meet expectations?, fall short?, new product launches can be duds or massive successes. All of these things go into a model to try and forecast the growth. If you think this is easy I would submit that NOONE in the industry has been able to master the crystal ball. I would also submit that most small companies haven’t been able to figure it out either. At least at companies like Microsoft, Google, and others you can start using the law and averages of big numbers to get close. But you will always miss. Either too high, or too low. Guess to low and you impact internal budgeting figures and run rates. Not Good. Guess to high and you could fall victim to missing minimal contracts with utility companies and be subject to fines.

In the case mentioned in the article, the approach taken if true would not be the smartest method especially given the monthly electric bill for these facilities. It’s a cost of doing business and largely not consequential at the amount of consumption these buildings draw. Again, if true, it was a PR nightmare waiting to happen.

At this point the article breaks out and talks about how the Microsoft experience would feel more like dealing with old-school manufacturing rather than ‘modern magic’ and diverts to a situation at a Microsoft facility in Santa Clara, California.

The article references that this situation is still being dealt with inside California so I will not go into any detailed specifics, but I can tell you something does not smell right in the state of Denmark and I don’t mean the Diesel fumes. Microsoft purchased that facility from another company. As the usage of the facility ramped up to the levels it was certified to operate at, operators noticed a pretty serious issue developing. While the building was rated to run at certain load size, it was clear that the underground feeders were undersized and the by-product could have polluted the soil and gotten into the water system. This was an inherited problem and Microsoft did the right thing and took the high road to remedy it. It is my recollection that all sides were clearly in know of the risks, and agreed to the generator usage whenever needed while the larger issue was fixed. If this has come up as a ‘air quality issue’ I personally would guess that there is politics at play. I’m not trying to be an apologist but if true, it goes to show that no good deed goes unpunished.

At this point the article cuts back to Quincy. It’s a great town, with great people. To some degree it was the winner of the Internet Jackpot lottery because of the natural tech resources it is situated on. I thought that figures quoted around taxes were an interesting component missed in many of the reporting I read.

“Quincy’s revenue from property taxes, which data centers do pay, has risen from $815,250 in 2005 to a projected $3.6 million this year, paying for a library and repaved streets, among other benefits, according to Tim Snead, the city administrator.”

As I mentioned in yesterday’s post my job is ultimately to get things done and deliver results. When you are in charge of a capital program as large as Microsoft’s program was at the time – your mission is clear – deliver the capacity and start generating value to the company. As I was presented the last crop of beans harvested from the field at the ceremony we still had some ways to go before all construction and capacity was ready to go. One of the key missing components was the delivery and installation of a transformer for one of the substations required to bring the facility up to full service. The article denotes that I was upset that the PUD was slow to deliver the capacity. Capacity I would add that was promised along a certain set of timelines and promises and commitments were made and money was exchanged based upon those commitments. As you can see from the article, the money exchanged was not insignificant. If Mr. Culbertson felt that I was a bit arrogant in demanding a follow through on promises and commitments after monies and investments were made in a spirit of true partnership, my response would be ‘Welcome to the real world’. As far as being cooperative, by April the construction had already progressed 15 months since its start. Hardly a surprise, and if it was, perhaps the 11 acre building and large construction machinery driving around town could have been a clue to the sincerity of the investment and timelines. Harsh? Maybe. Have you ever built a house? If so, then you know you need to make sure that the process is tightly managed and controlled to ensure you make the delivery date.

The article then goes on to talk about the permitting for the Diesel generators. Through the admission of the Department of Ecology’s own statement, “At the time, we were in scramble mode to permit our first one of these data centers.” Additionally it also states that:

Although emissions containing diesel particulates are an environmental threat, they were was not yet classified as toxic pollutants in Washington. The original permit did not impose stringent limits, allowing Microsoft to operate its generators for a combined total of more than 6,000 hours a year for “emergency backup electrical power” or unspecified “maintenance purposes.”

At the time all this stuff was so new, everyone was learning together. I simply don’t buy that this was some kind Big Corporation versus Little Farmer thing. I cannot comment on the events of 2010 where Microsoft asked for itself to be disconnected from the Grid. Honestly that makes no sense to me even if the PUD was working on the substation and I would agree with the articles ‘experts’.

Well that’s my take on my recollection of events during those early days of the Quincy build out as it relates to the articles. Maybe someday I will write a book as the process and adventures of those early days of birth of Big Infrastructure was certainly exciting. The bottom line is that the data center industry is amazingly complex and the forces in play are as varied as technology to politics to people and everything in between. There is always a deeper story. More than meets the eye. More variables. Decisions are never black and white and are always weighted against a dizzying array of forces.

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Pointy Elbows, Bags of Beans, and a little anthill excavation…A response to the New York Times Data Center Articles

I have been following with some interest the series of articles in the New York Times by Jim Glanz.  The series premiered on Sunday with an article entitled Power, Pollution and the Internet, which was followed up today with a deeper dive in some specific examples.  The examples today (Data  Barns in a farm town, Gobbling Power and Flexing muscle) focused on the Microsoft program, a program of which I have more than some familiarity since I ran it for many years.   After just two articles, reading the feedback in comments, and seeing some of the reaction in the blogosphere it is very clear that there is more than a significant amount of misunderstanding, over-simplification, and a lack of detail I think is probably important.   In doing so I want to be very clear that I am not representing AOL, Microsoft, or any other organization other than my own personal observations and opinions.  

As mentioned in both of the articles I was one of hundreds of people interviewed by the New York Times for this series.  In those conversations with Jim Glanz a few things became very apparent.  First – He has been on this story for a very long time, at least a year.   As far as journalists go, he was incredibly deeply engaged and armed with tons of facts.  In fact, he had a trove of internal emails, meeting minutes, and a mountain of data through government filings that must have taken him months to collect.  Secondly, he had the very hard job of turning this very complex space into a format where the uneducated masses can begin to understand it.  Therein lies much of the problem – This is an incredibly complex space to try and communicate it to those not tackling it day to day or even understand that technological, regulatory forces involved.  This is not an area or topic that can be sifted down to a sound bite.   If this were easy, there really wouldn’t be a story would there?

At issue for me is that the complexity of the powers involved seems to get scant attention aiming larger for the “Data Centers are big bad energy vampires hurting the environment” story.   Its clearly evident reading through the comments on the both of the articles so far.   Claiming that the sources and causes have everything to do from poor web page design to government or multi-national companies conspiracies to corner the market on energy. 

So I thought I would take a crack article by article to shed some light (the kind that doesn’t burn energy) on some of the topics and just call out where I disagree completely.     In full transparency  the “Data Barns” article doesn’t necessarily paint me as a “nice guy”.  Sometimes I am.  Sometimes I am not.  I am not an apologist, nor do I intend to do so in this post.  I am paid to get stuff done.  To execute. To deliver.  Quite frankly the PUD missed deadlines (the progenitor event to my email quoted in the piece) and sometimes people (even utility companies) have to live in the real world of consequences.   I think my industry reputation, work, and fundamental stances around driving energy efficiency and environmental conservancy in this industry can stand on its own both publicly and for those that have worked for me. 

There is an inherent irony here that these articles were published in both print and electronically to maximize the audience and readership.  To do that, these articles made “multiple trips” through a data center, and ultimately reside in one (or more).  They seem to denote that keeping things online is bad which seems to go against the availability and need of the articles themselves.  Doesn’t the New York times expect to make these articles available on-line for people to read?  Its posted online already.  Perhaps they expect that their micro-fiche experts would be able to serve the demand for these articles in the future?  I do not think so. 

This is a complex eco-system of users, suppliers, technology, software, platforms, content creators, data (both BIG and small), regulatory forces, utilities, governments, financials, energy consumption, people, personalities, politics, company operating tenets, community outreach to name a very few.  On top of managing through all these variables they also have to keep things running with no downtime.

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Budget Challenged States, Data Center Site Selection, and the Dangers of Pay to Play

Site Selection can be a tricky thing.  You spend a ton of time upfront looking for that perfect location.   The confluence of dozens of criteria, digging through fiber maps, looking at real estate, income and other state taxes.   Even the best laid plans, and most thoughtful of approaches can be waylaid by changes in government, the emergence of new laws, and other regulatory changes which can put your selection at risk.  I was recently made aware of yet another cautionary artifact you might want to pay attention to: Pay to Play laws and budget challenged States.  

As many of my frequent readers know, I am from Chicago.  In Chicago, and Illinois at large “Pay to Play” has much different connotations than the topic I am about to bring up right now.  In fact the Chicago version broke out into an all out National and International Scandal.  There is a great book about it if you are interested, aptly entitled, Pay to Play.

The Pay to Play that I am referring to is an emerging set of regulations and litigation techniques that require companies to pay tax bills upfront (without any kind of recourse or mediation) which then forces companies to litigate to try and recover those taxes if unfair.   Increasingly I am seeing this in states where the budgets are challenged and governments are looking for additional funds and are targeting Internet based products and services.   In fact, I was surprised to learn that AOL has been going through this very challenge.  While I will not comment on the specifics of our case (its not specifically related to Data Centers anyway) it may highlight potential pitfalls and longer term items to take into effect when performing Data Center Site Selection.    You can learn more about the AOL case here, if you are interested.

For me it highlights that lack of understanding of Internet services by federal and local governments combined with a lack of inhibition in aggressively pursuing revenue despite that lack of understanding can be dangerous and impactful to companies in this space.   These can pose real dangers especially in where one site selects for their facility.    These types of challenges can come into play whether you are building your own facility, selecting a colocation facility and hosting partner, or if stretched eventually where your cloud provider may have located their facility.  

It does beg the question as to whether or not you have checked into the financial health of the States you may be hosting your data and services in.   Have you looked at the risk that this may pose to your business?  It may be something to take a look at!

 

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Sites and Sounds of DataCentre2012: My Presentation, Day 2, and Final Observations

Today marked the closing lot of sessions for DataCentres2012 and my keynote session to the attendees.    After sitting through a series of product, technology, and industry trend presentations over the last two days I was feeling that my conversation would at the very least be something different.   Before I get to that – I wanted to share some observations from the morning. 

It all began with an interesting run-down of the Data Center and infrastructure industry trends across Europe from Steve Wallage of The BroadGroup.   It contained some really compelling information and highlighted some interesting divergence between the European market and the US market in terms of adoption and trends of infrastructure.   It looks like they have a method for those interested to get their hand on the detailed data (for purchase) if you are interested.  The parts I found particularly industry was the significant slow down of the Wholesale data center market across Europe while Colocation providers continued to do well.   Additionally the percentages of change within the customer base of those providers by category was compelling and demonstrated a fundamental shift and move of content related customers across the board.

This presentation was followed by a panel of European Thought Leaders made up mostly of those same colocation providers.  Given the presentation by Wallage I was expecting some interesting data-points to emerge.  While there was a range of ideas and perspectives represented by the panel, I have to say it really got me worked up and not in a good way.   In many ways I felt the responses from many (not all) on the panel highlighted a continued resistance to change in thinking around everything from efficiency, to technology approach.  It represented the things I despise most about about our industry at large.  Namely the slow adoption of change. The warm embrace of the familiar.  The outright resistance to new ideas.    At one point, a woman in the front row whom I believe was from Germany got up to ask a question if the panelists had any plans to move their facilities outside of the major metros.  She referenced Christian Belady’s presentation around the idea of Data as Energy and remote locations like Quincy, Washington or Lulea, Sweden.   She referred to the overall approach and thinking differently as quite visionary.   Now the panel could have easily have referred to the fact that companies like Microsoft, Google, Facebook and the like have much greater software level control than a colo-provider could provide.   Or perhaps they could have referenced that most of their customers are limited by distance to existing infrastructure deployments due to inefficiencies in commercial or custom internally deployed applications. Databases with response times architected for in-rack or in-facility levels of response times.   They did at least reference that most customers tend to be server huggers and want their infrastructure close by.  

Instead the initial response was quite strange in my mind.  It was to go after the ideas as “innovative” and to imply that nothing was really innovative about what Microsoft had done and the fact that they built a “mega data center” in Dublin shows that there is nothing innovative really happening.  Really?   The adoption of 100% Air Side economization is something everyone does?   The deployment of containerized compute capacity is run of the mill?  The concepts about the industrialization of compute is old-hat?  I had to do a mental double take and question whether they were even listening during ANY of the earlier sessions.   Don’t get me wrong, I am not trying to be an apologist for the Microsoft program, in fact there are some tenets of the program I find myself not in agreement with.  However – You cannot deny that they are doing VERY different things.   It illustrated an interesting undercurrent I felt during the entire event (and maybe even our industry).  I definitely got the sensation of a growing gap between users requirements and their forward roadmaps and desires and what manufacturers and service providers are providing.  This panel, and a previous panel on modularization really highlighted these gulfs pretty demonstrably.   At a minimum I definitely walked away with an interesting new perspective on some of the companies represented.

It was then time for me to give my talk.   Every discussion up until this point had really focused on technology or industry trends.  I was going to talk about something else. Something more important.  The one thing seemingly missing from the entire event.   That is – the people attending.   All the technology in the world, all of the understanding of the trends in our industry are nothing unless the people in the room were willing to act. Willing to step up and take active roles in their companies to drive strategy.  As I have said before – to get out of the basement and into the penthouse.   The pressures on our industry and our job roles has never been more complicated.   So I walked through regulations, technologies, and cloud discussions.  Using the work that we did at AOL as a backdrop and example – I really tried to drive my main point.   That our industry – specifically the people doing all the work – were moving to a role of managing a complex portfolio of technologies, contracts, and a continuum of solutions.  Gone are the days where we can hide sheltered in our data center facilities.   Our resistance to embrace change, need to evolve with us, or it will evolve around us.   I walked through specific examples of how AOL has had to broaden its own perspective and approach to this widening view of our work roles at all levels.   I even pre-announced something we are calling Data Center Independence Day.   An aggressive adoption of modularized compute capacity that we call MicroData Centers  to help solve many of the issues we are facing as a business and the rough business case as to why it makes sense for us to move to this model.    I will speak more of that in the weeks to come with a greater degree of specifics, but stressed again the need for a wider perspective to manage a large portfolio of technologies and approaches to be successful in the future.

In closing – the event was fantastic.   The ability this event provides to network with leaders and professionals across the industry was first rate.   If I had any real constructive feedback it would be to either lengthen sessions, or reduce panel sizes to encourage more active and lively conversations.  Or both!

Perhaps at the end of the day, it’s truly the best measure of a good conference if you walk away wishing that more time could be spent on the topics.  As for me I am headed back Stateside and to digging into the challenges of my day job.    To the wonderful host city of Nice, I say Adieu!

 

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The Cloud Cat and Mouse Papers–Site Selection Roulette and the Insurance Policies of Mobile infrastructure

Its always hard to pick exactly where to start in a conversation like this especially since this entire process really represents a changing life-cycle.   Its more of a circular spiral that moves out (or evolves) as new data is introduced than a traditional life-cycle because new data can fundamentally shift the technology or approach.   That being said I thought I would start our conversations at a logical starting point.   Where does one place your infrastructure?  Even in its embryonic “idea phase” the intersection of government and technology begins its delicate dance to a significant degree. These decisions will ultimately have an impact on more than just where the Capital investments a company decides to make are located.  It has affects on the products and services they offer, and as I propose, an impact ultimately on the customers that use the services at those locations.

As I think back to the early days of building out a global infrastructure, the Site Selection phase started at a very interesting place.   In some ways we approached it with a level of sophistication that has still to be matched today and in other ways, we were children playing a game whose rules had not yet been defined.

I remember sitting across numerous tables with government officials talking about making an investment (largely just land purchase decisions) in their local community.  Our Site Selection methodology had brought us to these areas.  A Site Selection process which continued to evolve as we got smarter, and as we started to truly understand the dynamics of the system were being introduced to.   In these meetings we always sat stealthily behind a third party real estate partner.  We never divulged who we were, nor were they allowed to ask us that directly.  We would pepper them with questions, and they in turn would return the favor.  It was all cloak and dagger with the Real Estate entity taking all action items to follow up with both parties.

Invariably during these early days -  these locales would always walk away with the firm belief that we were a bank or financial institution.   When they delved into our financial viability (for things like power loads, commitment to capital build-out etc.) we always stated that any capital commitments and longer term operational cost commitments were not a problem.    In large part the cloak and dagger aspect was to keep land costs down (as we matured, we discovered this was quite literally the last thing we needed to worry about) as we feared that once our name became attached to the deal our costs would go up.   These were the early days of seeding global infrastructure and it was not just us.  I still laugh at the fact that one of our competitors bound a locality up so much in secrecy – that the community referred to the data center as Voldemort – He who shall not be named, in deference to the Harry Potter book series.

This of course was not the only criteria that we used.  We had over 56 by the time I left that particular effort with various levels of importance and weighting.   Some Internet companies today use less, some about the same, and some don’t use any, they ride on the backs of others who have trail-blazed a certain market or locale.   I have long called this effect Data Center Clustering.    The rewards for being first mover are big, less so if you follow them ultimately still positive. 

If you think about most of the criteria used to find a location it almost always focuses on the current conditions, with some acknowledge in some of the criteria of the look forward.  This is true for example when looking at power costs.   Power costs today are important to siting a data center, but so is understanding the generation mix of that power, the corresponding price volatility, and modeling that ahead to predict (as best as possible) longer term power costs.

What many miss is understanding the more subtle political layer that occurs once a data center has been placed or a cluster has developed. Specifically that the political and regulatory landscape can change very quickly (in relationship to the life of a data center facility which is typically measured in 20, 30, or 40 year lifetimes).  It’s a risk that places a large amount of capital assets potentially in play and vulnerable to these kinds of changes.   Its something that is very hard to plan or model against.  That being said there are indicators and clues that one can use to at least play risk factors against or as some are doing – ensuring that the technology they deploy limits their exposure.    In cloud environments the question remains open – how liable are companies using cloud infrastructure in these facilities at risk?   We will explore this a little later.

That’s not to say that this process is all downside either.  As we matured in our approach, we came to realize that the governments (local or otherwise) were strongly incented to work with us on getting us a great deal and in fact competed over this kind of business.   Soon you started to see the offers changing materially.  It was little about the land or location and quickly evolved to what types of tax incentives, power deals, and other mechanisms could be put in play.   You saw (and continue to see) deals structured around sales tax breaks, real estate and real estate tax deals, economic incentives around breaks in power rates, specialized rate structures for Internet and Cloud companies and the like.   The goal here of course was to create the public equivalent of “golden handcuffs” for the Tech companies and try to marry them to particular region, state, or country.  In many cases – all three.  The benefits here are self apparent.  But can they (or more specifically will they) be passed on in some way to small companies who make use of cloud infrastructure in these facilities? While definitely not part of the package deals done today – I could easily see site selection negotiations evolving to incent local adoption of cloud technology in these facilities or provisions being put in place tying adoption and hosting to tax breaks and other deal structures in the mid to longer timeframe for hosting and cloud companies.

There is still a learning curve out there as most governments mistakenly try and tie these investments with jobs creation.   Data Centers, Operations, and the like represents the cost of goods sold (COGS) to the cloud business.  Therefore there is a constant drive towards efficiency and reduction of the highest cost components to deliver those products and services.   Generally speaking, people, are the primary targets in these environments.   Driving automation in these environments is job one for any global infrastructure player.  One of the big drivers for us investing and developing a 100% lights-out data center at AOL was eliminating those kinds of costs.  Those governments that generally highlight job creation targets over other types typically don’t get the site selection.    After having commissioned an economic study done after a few of my previous big data center builds I can tell you that the value to a region or a state does not come from the up front jobs the data center employs.  After a local radio stationed called into question the value of having such a facility in their backyard, we used a internationally recognized university to perform a third party “neutral” assessment of the economic benefits (sans direct people) and the numbers were telling.  We had surrendered all construction costs and other related material to them, and they investigated over the course of a year through regional interviews and the like of what the direct impacts of a data center was on the local community, and the overall impacts by the addition.  The results of that study are owned by a previous employer but I  can tell you with certainty – these facilities can be beneficial to local regions.

No one likes constraints and as such you are beginning to see Technology companies use their primary weapon – technology – to mitigate their risks even in these scenarios.   One cannot argue for example, that while container-based data centers offer some interesting benefits in terms of energy and cost efficiencies, there is a certain mobility to that kind of infrastructure that has never been available before.    Historically, data centers are viewed as large capital anchors to a location.    Once in place, hundreds of millions to billions (depending on the size of the company) of dollars of capital investment are tied to that region for its lifespan.   Its as close to permanent in the Tech Industry as building a factory was during the industrial revolution. 

In some ways Modularization of the data center industry is/can/will have the same effect as the shipping container did in manufacturing.   All puns intended.  If you are unaware of how the shipping container revolutionized the world, I would highly recommend the book “The Box” by Marc Levinson, it’s a quick read and very interesting if you read it through the lens of IT infrastructure and the parallels of modularization in the Data Center Industry at large.

It gives the infrastructure companies more exit options and mobility in the future than they would have had in the past under large capital build-outs.  Its an insurance policy if you will for potential changes is legislation or regulation that might negatively impact the Technology companies over time.  Just another move in the cat and mouse games that we will see evolving here over the next decade or so in terms of the interactions between governments and global infrastructure. 

So what about the consumers of cloud services?  How much of a concern should this represent for them?  You don’t have to be a big infrastructure player to understand that there are potential risks in where your products and services live.  Whether you are building a data center or hosting inside a real estate or co-location provider – these are issues that will affect you.  Even in cases where you only use the cloud provisioning capabilities within your chosen provider – you will typically be given options of what region or area would you like you gear hosted in.  Typically this is done for performance reasons – reaching your customers – but perhaps this information might cause you to think of the larger ramifications to your business.   It might even drive requirements into the infrastructure providers to make this more transparent in the future.

These evolutions in the relationship between governments and Technology and the technology options available to them will continue to shape site selection policy for years to come.   So too will it ultimately affect the those that use this infrastructure whether directly or indirectly remains to be seen.  In the next paper we will explore the this interaction more deeply as it relates to the customers of cloud services and the risks and challenges specifically for them in this environment.

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Site Selection,Data Center Clustering and their Interaction

I have written many times on the importance of the site selection for data centers and its growing importance when one considers the regulatory and legislative efforts underway globally.   Those who make their living in this space know that this is going to have a significant impact on the future landscape of these electronic bit factories.   The on-going long term operational costs over the life of the facility,  their use of natural resources (such as power) and what they house and protect (PII data or Personally Identifiable Information) are even now significantly impacting this process for many large global firms, and is making its way into the real estate community.  This is requiring a series of crash courses in information security, power regulation and rate structures, and other complex issues for many in the Real Estate community. 

In speaking to a bunch of friends in the Real Estate side of the business, I thought it might be interesting to take a few of these standard criteria head on in an open discussion.   For this post I think I will take on two of the elemental ones in data center site selection. We will look at one major item, and one item that is currently considered a minor factor that is quickly on the rise in terms of its overall importance.  Namely Power and Water, respectively.

Watts the Big Deal?

Many think that power cost alone is the primary driver for data centers, and while it is always a factor there are many other facets that come into play underneath that broader category of Power.   While Site Selection Factors are always considered highly confidential I thought it might highlight some of the wider arcs in this category.

One such category getting quite a bit of attention is Power  Generation Mix.   The Generation mix is important because it is essentially the energy sources responsible how that area or region gets its energy.  Despite what politicians would lead you to believe, once an electron is on the grid it is impossible to tell from which source it came.   So ‘Green Energy’ and its multitude of definitions is primarily determined by the mix of energy sources for a given region.   A windmill for example does not generate an electron with a tiny label saying that is sourced from ‘green’ or ‘renewable’ sources.   Understanding the generation mix of your power will allow you to forecast and predict potential Carbon output as a result of Data Center Carbon production.   The Environmental Protection Agency in the US, produces a metric called the Carbon Emission Factor which can be applied to your consumption to assist you in calculating your carbon output and is based upon the generation mix of the areas you are looking to site select in.   Whether you are leasing or building your own facility you will likely find yourself falling into a mandatory compliance in terms of reporting for this kind of thing.

So you might be thinking, ‘Great, I just need to find the areas that have cheap power and a good Carbon Emission Factor right?’  The answer is no.  Many Site Selection processes that I see emerging in the generic space start and stop right at this line.   I would however advocate that one takes the next logical step which is to look at the relationship of these factors together and over a long period of time.

Generation Mix has long been considered to be a ‘Forever’ kind of thing.  The generation sources within a region, rarely changed, or have rarely changed over time.   But that is of course changing significantly in the new era that we live in.

Lets take the interplay (both historical and moving forward) of the Power Cost and its relationship with the Generation Mix.  As humans we like to think in simplistic terms.  Power costs for a specific region are ‘so many cents per kilowatt hour’ this changes based upon whether you are measured at a residential, commercial, or industrial rate schedule.   The rate schedule is a function of how much power you ultimately consume or promise to consume to the local utility.   The reality of course is much more complicated than that.   Power rates fluctuate constantly based upon the overall mix.   Natural disasters, regulation, etc. can have a significant impact on power cost over time.   Therefore its generally wise to look at the Generation Mix Price Volatility through the longer term lens of history and see how a region’s power costs oscillate between these types of events.     However you decide to capture or benchmark this it is a factor that should be considered. 

This is especially true when you take this Volatility factor and apply it the changing requirements of Carbon Reporting and impacts.  While the United States is unlikely to have a law similar to the CRC in the UK (Carbon Reduction Commitment), it will see legislation and regulation impacting the energy producers.  

You might be asking yourself, ‘Who cares if they go after those big bad energy companies and force them to put more ‘green power in their mixes’.  Well lets think about the consequences of these actions to you the user, and why its important to your site selection activity.

As the energy producers are regulated to create a more ‘green’ mix into their systems, two things will happen.  The first of course is that rates will rise.  The energy producers will need to sink large amounts of capital to invest into these technologies, plants, research and development, etc to come to alignment with the legal requirements they are being regulated to.   This effect will be uneven as many areas around the globe have quite a disparate mix of energy from region to region.   This will also mean that ‘greener’ power will likely result in ‘more expensive power’.   Assessing an area for the potential impacts to these kinds of changes is definitely important in a data center build scenario as you likely have a desire to ensure that your facility has the longest possible life which could span a couple of decades.  The second thing which may be a bit harder to guess at, is ‘which technology’ is a given region or area likely to pick and its resulting carbon output impact.   While I have a definite approach to thinking through such things, this is essentially the beginning of the true secret sauce to site selection expertise and the help you may require if you don’t have an internal group to go through this kind of data and modeling.  This is going to have an interesting impact on the ‘clustering’ effect that happens in our industry at large.

We have seen many examples like Quincy, Washington and San Antonio, Texas where the site selection process has led to many Data Center providers locating in the same area to benefit from this type of analysis (even if not directly exposed to the criteria).  There is a story (that I don’t know if its true or not) that in the early days when a new burger chain was looking to expand where it would place its restaurants, it used the footprint of its main competitor as its guide. The thinking was that they probably had a very scientific method for that selection and they would receive that same ancillary benefit without the cost and effort.   Again, not sure if that is true or not, but its definitely something likely to happen in our industry. 

In many markets these types of selections are in high demand.   Ascent Corporation out of St. Louis is in the process of building a modern facility just down the street from the Microsoft Mega-Facility near Chicago.   While Ascent was a part of the original Microsoft effort to build at that location, there has been an uptick in interest for being close to that facility for the same reasons as I have outlined here.  The result is their CH2 facility is literally a stones throw from the Microsoft Behemoth.  The reasons? Proximity to power, fiber, and improved water infrastructure are already there in abundance.  The facility even boasts container capabilities just like its neighbor.   The Elmhurst Electrical Substation sits directly across the highway from the facility with the first set of transmission poles within easy striking distance.  

The Generation mix of that area has a large nuclear component which has little to no carbon impact, and generates long term stability in terms of power cost fluctuations.   According to Phil Horstmann, President of Ascent, their is tremendous interest in the site and one of the key draws is the proximity of its nearby neighbor.  In the words of one potential tenant ‘Its like the decision to go to IBM in the 80s.  Its hard to argue against a location where Microsoft or Google has placed one of its facilities.’

This essentially dictates that there will be increasing demand on areas where this analysis is done or has been perceived to be done.   This is especially true where co-location and hosting providers can align their interests with those commercial locations where there is market demand.  While those that follow first movers will definitely benefit from these decisions (especially those without dedicated facility requirements), first movers continue to have significant advantage if they can get this process correct.

Tying into the power conversation is that of water.  With the significant drive for economization (whether water based or air-based)  water continues to be a factor.  What many people don’t understand is that in many markets the discharge water is clean to dump into the sewage system and to ‘dirty’ to discharge to retention ponds.  This causes all kinds of potential issues and understanding the underlying water landscape is important.   The size of the metropolitan sewage environments, ability to dig your own well efforts, the local water table and aquifer issues, your intended load and resulting water requirements, how the local county, muncipality, or region views discharge in general and which chemicals and in what quantities is important to think about today.  However, as the use of water increases in terms of its potential environmental scrutiny – water is quickly rising on the site selection radar of many operators and those with long term holds.

I hope this brief talk was helpful.  I hope to post a few other key factors and a general discussion in the near future.  

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C02K Doubter? Watch the Presidential address today

Are you a Data Center professional who doubts that Carbon legislation is going to happen or that this initiative will never get off the ground?   This afternoon President Obama plans to outline his intention to assess a cost for Carbon consumption at a conference highlighting his economic accomplishments to date.   The backdrop of this of course is the massive oil rig disaster in the Gulf.

As my talk at the Uptime Institute Symposium highlighted this type of legislation will have a big impact on data center and mission critical professionals.  Whether you know it or not, you will be front and center in assisting with the response, collection and reporting required to react to this kind of potential legislation.  In my talk where I questioned the audience in attendance it was quite clear that most of those in the room were vastly ill-prepared and ill-equipped to this kind of effort. 

If passed this type of legislation is going to cause a severe reaction inside organizations to ensure that they are in compliance and likely lead to a huge increase of spending in an effort to collect energy information along with reporting.  For many organizations this will result in significant spending.

The US House of Representatives has already passed a version of this known as the Waxman Markey bill.   You can bet that there will be a huge amount of pressure to get a Senate version passed and out the door in the coming weeks and months.

This should be a clarion call for data center managers to step up and raise awareness within their organizations about this pending legislation and take a proactive role in establishing a plan for a corporate response.   Take an inventory of your infrastructure and assess what will you need to begin collecting this information?  It might even be wise to get a few quotes to get an idea or ballpark cost of what it might take to bring your organization up to the task.  Its probably better to start doing this now, than to be told by the business to get it done.

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Reflections on Uptime Symposium 2010 in New York

This week I had the honor to be a keynote Speaker at the Uptime Institute’s Symposium event in New York City.   I also participated in some industry panels which is always tons of fun. However, as a keynote at the first Symposium a few years back it was an interesting experience to come back and see how it has changed and evolved over the intervening years.  This year my talk was about the coming energy regulation and its impact on data centers, and more specifically what data center managers and mission critical facilities professionals could and should be doing to get their companies ready for what I call CO2K.   I know I will get a lot of pushback on the CO2K title, but I think my analogy makes sense.  First companies are generally not aware of the impact that their data centers and energy consumption have, Second most companies are dramatically unprepared and do not have the appropriate tools in place to collect the information, which will of course lead to the third item, lots of reactionary spending to get this technology and software in place.  While Y2K was generally a flop and a lot of noise, if legislation is passed (and lets be clear about the very direct statements the Obama administration has made on this topic) this work will lead to a significant change in reporting and management responsibilities for our industry.

Think we are ready for this legislation?

Brings me back to my first reflection on Symposium this year.   I was joking with Pitt Turner just before I went on stage that I was NOT going to ask the standard three questions I ask before every data center audience.   Lets face it, I thought, that “Shtick” had gotten old, and I have been asking those same three questions for at least that last three years at every conference I have spoken at (which is a lot).  However as I got on stage, talking about the the topic of regulation I had to ask, it was like a hidden burning desire I could not quench.  So there I went, “How many people are measuring for energy consumption and efficiency today?”  “Raise you hand if in your organization, the CIO sees the power bill?”  and then finally “How many people in here today have the appropriate tooling in place to collect and reporting energy usage in their data centers?”  It had to come out.   I saw Pitt shaking his head.  What was more surprising, was the amount of people who had raised their hands on those questions. Why?  About 10% of the audience had raised their hands.  Don’t get me wrong, 10% is about the highest I have seen that number at any event.  But those of you who are uninitiated into the UI Symposium lore, you need to understand something important, Symposium represents the hardest of the hard core data center people.   This is where all of us propeller heads geek it out in mechanical and electrical splendor, we dance and raise the “floor” (data center humor).  This amazing collection of the best of the best had only had a 10% penetration on the monitoring in their environments.   When this regulation comes, its going to hurt.  I think I will do a post at a later time on my talk at Symposium and what you as a professional can do to start raising awareness.  But for now, that was my first big startle point.

My second key observation this year was the amount of people.  Symposium is truly an international event and their were over 900 attendees for the talks, and if memory serves, about 1300 for the exhibition hall.  I had heard that 20 out of the worlds 30 time-zones had representatives at the conference.  It was especially good for one of the key recurring benefits of this event: Networking.   The networking opportunities were first rate and by the looks of the impromptu meetings and hallways conversations this continued to be an a key driver for the events success.  As fun as making new friends is, it was also refreshing to spend some time and quick catch ups with old friends like Dan Costello and Sean Farney from Microsoft, Andrew Fanara, Dr. Bob Sullivan, and a host of others.

My third observation and perhaps the one I was most pleased with with the diversity of thought in the presentations.  Its a fair to say that I have been critical of Uptime for some time by a seemingly droningly dogmatic recurring set of themes and particular bend of thinking.   While those topics were covered, so too were a myriad of what I will call counter-culture topics.  Sure there were still  a couple of the salesy presentations you find at all of these kinds of events, but the diversity of thought and approach this time around was striking.   Many of them addressed larger business issues, the impact, myths, approach to cloud computing, virtualization, and decidedly non-facilities related material affecting our worlds.   This might have something to do with the purchase by the 451 Group and its related Data Center think tank organization Tier 1, but it was amazingly refreshing and they knocked the ball out of the park.

My fourth observation was that the amount of time associated with the presentations was too short.   While I have been known to completely abuse any allotted timeslots in my own talks due to my desire to hear myself talk, I found that many presentations had to end due to time just as things were getting interesting.  Many of the hallways conversations were continuations of those presentations and it would have been better to keep the groups in the presentation halls.  

 

My fifth observation revolved around the quantity, penetration and maturation of container and containment products, presentations and services.   When we first went public with the approach when I was at Microsoft the topic was so avant-garde and against the grain of common practices it got quite a reception (mostly negative).  This was followed by quite a few posts (like Stirring Anthills) which got lots of press attention and resulting industry experts stating that containers and containment were never going to work for most people.   If the presentations, products, and services represented at Uptime were any indication of industry adoption and embrace I guess I would have to make a childish gesture with thumb to my nose, wiggle my fingers and say…. Nah Nah . 

 

I have to say the event this year was great and I enjoyed my time thoroughly.  A great time and a great job by all. 

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Open Source Data Center Initiative

There are many in the data center industry that have repeatedly called for change in this community of ours.  Change in technology, change in priorities, Change for the future.  Over the years we have seen those changes come very slowly and while they are starting to move a little faster now, (primarily due to the economic conditions and scrutiny over budgets more-so than a desire to evolve our space) our industry still faces challenges and resistance to forward progress.   There are lots of great ideas, lots of forward thinking, but moving this work to execution and educating business leaders as well as data center professionals to break away from those old stand by accepted norms has not gone well.

That is why I am extremely happy to announce my involvement with the University of Missouri in the launch of a Not-For-Profit Data Center specific organization.   You might have read the formal announcement by Dave Ohara who launched the news via his industry website, GreenM3.   Dave is another of of those industry insiders who has long been perplexed by the lack of movement and initiative we have had on some great ideas and stand outs doing great work.  More importantly, it doesn’t stop there.  We have been able to put together quite a team of industry heavy-weights to get involved in this effort.  Those announcements are forthcoming, and when they do, I think you will get a sense of the type of sea-change this effort could potentially have.

One of the largest challenges we have with regards to data centers is education.   Those of you who follow my blog know that I believe that some engineering and construction firms are incented ‘not to change’ or implementing new approaches.  The cover of complexity allows customers to remain in the dark while innovation is stifled. Those forces who desire to maintain an aura of black box complexity  around this space and repeatedly speak to the arcane arts of building out  data center facilities have been at this a long time.  To them, the interplay of systems requiring one-off monumental temples to technology on every single build is the norm.  Its how you maximize profit, and keep yourself in a profitable position. 

When I discussed this idea briefly with a close industry friend, his first question naturally revolved around how this work would compete with that of the Green Grid, or Uptime Institute, Data Center Pulse, or the other competing industry groups.  Essentially  was this going to be yet another competing though-leadership organization.  The very specific answer to this is no, absolutely not.   

These groups have been out espousing best practices for years.  They have embraced different technologies, they have tried to educate the industry.  They have been pushing for change (for the most part).  They do a great job of highlighting the challenges we face, but for the most part have waited around for universal good will and monetary pressures to make them happen.  It dawned on us that there was another way.   You need to ensure that you build something that gains mindshare, that gets the business leadership attention, that causes a paradigm shift.   As we put the pieces together we realized that the solution had to be credible, technical, and above all have a business case around it.   It seemed to us the parallels to the Open Source movement and the applicability of the approach were a perfect match.

To be clear, this Open Source Data Center Initiative is focused around execution.   Its focused around putting together an open and free engineering framework upon which data center designs, technologies, and the like can be quickly put together and more-over standardize the approaches that both end-users and engineering firms approach the data center industry. 

Imagine if you will a base framework upon which engineering firms, or even individual engineers can propose technologies and designs, specific solution vendors could pitch technologies for inclusion and highlight their effectiveness, more over than all of that it will remove much mystery behind the work that happens in designing facilities and normalize conversations.    

If you think of the Linux movement, and all of those who actively participate in submitting enhancements, features, even pulling together specific build packages for distribution, one could even see such things emerging in the data center engineering realm.   In fact with the myriad of emerging technologies assisting in more energy efficiency, greater densities, differences in approach to economization (air or water), use of containers or non use of containers, its easy to see the potential for this component based design.  

One might think that we are effectively trying to put formal engineering firms out of business with this kind of work.  I would argue that this is definitely not the case.  While it may have the effect of removing some of the extra-profit that results from the current ‘complexity’ factor, this initiative should specifically drive common requirements, and lead to better educated customers, drive specific standards, and result in real world testing and data from the manufacturing community.  Plus, as anyone knows who has ever actually built a data center, the devil is in the localization and details.  Plus as this is an open-source initiative we will not be formally signing the drawings from a professional engineering perspective. 

Manufacturers could submit their technologies, sample application of their solutions, and have those designs plugged into a ‘package’ or ‘RPM’ if I could steal a term from the Redhat Linux nomenclature.  Moreover, we will be able to start driving true visibility of costs both upfront and operating and associate those costs with the set designs with differences and trending from regions around the world.  If its successful, it could be a very good thing.  

We are not naive about this however.  We certainly expect there to be some resistance to this approach out there and in fact some outright negativity from those firms that make the most of the black box complexity components. 

We will have more information on the approach and what it is we are trying to accomplish very soon.  

 

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CIO Magazine Data Center Roundtable

On Wednesday January 13th, I will be co-hosting a Roundtable Dinner with Chicago area CIOs on the topic of data centers and the data center industry at large.   The event is sponsored by CIO Magazine and is likely to be a wide ranging conversation given the mix of executives slated to come.  The group will be made up of technology leadership from a diverse set of industries including Universities, Manufacturing, Financial Institutions, and Hospitality.  

I am betting the topics will range from data center legislation, impact of the cloud, technologies, and key trends.

I am looking forward to some good mid-western steak, great conversation, and walking away from the meeting with more important perspectives on what we are facing as an industry. 

I will try and post a summary of topics discussed later this week. 

 

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