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Experts are suggesting that the need for low-latency communications is increasing as applications move increasingly to the cloud, and that companies are calling for faster access.

Gillis Cashman, managing partner at private investment firm M/C Partners, focuses on wireline broadband infrastructure and services. He said data centres are definitely moving further toward the edges of the Internet.

“We have seen people focused on maximising power economies, so there was a focus on putting data centres into large footprint areas,” said Cashman, who previously focused on M&A in the Global Telecommunications Corporate Finance Group at Salomon Smith Barney.

“As we have seen the growth of mobility, there really was a need to maximise application performance and that required a far different architecture than the one that had been built out,” he added.

Instead of architectures that put 50 servers in one data centre, companies will need 50 servers in 50 datacenters close to the edge, he suggested.

Do figures bear this out? According to 451 Research’s latest Voice of the Enterprise report on datacenters, six in every ten firms in North America use third party colocation or cloud-based data centres, with 10% of all companies using these exclusively. Each firm operated 5.2 local data centres on average, compared to 1.9 regional data centres and 2 premium centralized units.

However, over the next quarter, local data centres featured relatively low on the scale, with firms planning to open 0.7 of these on average, compared with 1.2 premium centralized data centres. Server rooms and server closets were predictably the most popular of all in terms of quarterly plans.

Where firms decided to switch colocation vendors, roughly an eighth did so because of a lack of capacity at an existing geographic location. Significantly, where companies were interested in additional colocation services, the availability of multiple facilities across different geographical locations ranked 6.7 on an interest scale of 1-10.

There’s some evidence to suggest that CIOs are looking at a more distributed mix of data centres, then. But do remotely hosted applications really need to worry that much about latency? High frequency traders do, but there aren’t that many of those. Two other big applications are online gaming and content. Low-latency is definitely an issue for the former, but most companies aren’t in that space and won’t care.

Content does matter increasingly for CIOs, though, especially if they move to video and other high-bandwidth content on sites, whether they happen to be customer or employee-facing. This piece of insight on Twitter was particularly interesting: web page size has grown from 700k four years ago to well over 2Mb now, and is approaching the size of the original Doom install image. Neat.

“It really depends on the application,” said Cashman. “I think you’re hearing about the online trading stuff because that’s been built out. But there are still a massive amount of applications going out on the public cloud right now. Companies are outsourcing mission-critical applications.”

He has an interest in this, of course. One of his investments is data centre and managed services firm Involta. “Involta will go into a market like that where there was no option for a maintainable, highly redundant tier 3-4 facility and they will get a contract for financing to buy the land and build the building and build out the fiber,” he said.

What will the growth of edge datacenters mean for CIOs? One of the biggest issues may be managing the whole thing, as applications and content must be structured to serve users in different regions. One potential business model here involves providing an intermediary service, managing cloud-based applications in addition to hosted apps in multiple data centre environments.

“It would be a nightmare dealing with lots of different providers for services. People are striving to be that trusted third party where they manage that for the enterprise and provide that SLA,” said Cashman.

“If your application is in Amazon Web Services and in my datacenter, I will provide a contract where I manage that for you. Very few people can provide that today but the guys that get there and execute will win.”



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