Canadian CIOs increasingly outsourcing data centre functions, says IDC report

There are at least 18 quality third party data centre providers in Canada, with no sign that the number or their size is getting smaller, according to a new report from IDC Canada.

The report – which costs $15,000 – ranks the capabilities and offerings of most of the names in the industry as Leaders or Major Players on a points scale created by the market research firm. In an interview report author Mark Schrutt said the companies, ranging from Bell to 4Degrees, are “relatively closely bunched.”

However, CIOs and information technology managers may find details about particular providers will be more or less important to them depending on their environments.

“It’s a very, very competitive market,” Schrutt said. And the competition is about to get stiffer with the promise by Amazon and Microsoft to open data centres here.

One proof: “Many of the firms we looked at from a cloud prospective have basically tuned-down or de-emphasized their own cloud offerings in preference to [partnering with] the hyperscale providers AWS and Microsoft.”

For example, Telus has partnered with Amazon Web Services, Rogers is partnering with OVH for cloud services, Cogeco is partnering with Microsoft’s Azure, and Bell has adopted IBM’s SoftLayer service. As a result some have dropped their internally developed services to focus on core competencies.

Over the past three years, Canada has seen a build out of over one million square feet of data centre space, and well in excess of 100MW of power added to the market, the report says.

Meanwhile, over the past 24 months, the needs of a data centre have continued to increase. Data generated from corporate systems, mobile devices, and IoT networks continue to grow at a pace of 50 per cent a year. Digital technologies such as analytics, social business platforms, and high performance computing put an ever increasing stress on the best-in-class data centres.

Overall, IT spending on internal data centre continues to decrease, the report notes, with Schrutt estimating in the interview the percentage of budgets going to outsourcing (co-location, managed hosting, cloud or a combination) goes up two per cent every two years. In fact IDC calculates internal data centre floor space has shrunk by 7.5 per cent since 2014.

But, Schrutt added in the interview, “the transition is definitely accelerating over the past year, particularly as cloud providers like Amazon and Microsoft have announced they will have facilities here.”

The public infrastructure as a service (IaaS) spending alone is growing at 30 to 40 per cent a year, Schrutt said, while co-location spending is “in the high teens.”

The report lists IBM, Telus, Hewlett-Packard Enterprise, Cogeco Peer 1, Q9, Rogers Communications, CenturyLink, Equinix and Quebec-based OVH in the Leaders category.

Those counted as Major Players include SunGard, Bell Canada, Long View, Carbon60, CentriLogic, Cologix, Shaw Communications, 4Degrees (owned by Quebec cableco Videotron) and TeraGo.

Providers mentioned in the report were quick to issue press releases touting their placement. Rogers, which has 16 data centres, said the report “proves that our data centres and cloud services are helping to meet the needs of Canadian businesses.” CenturyLink, which has four data centres across the country, said its ranking “is continued validation of CenturyLink’s commitment to our Canada-based customers.”

As in the past, the insistence of organizations that their data stay within this country’s borders is a prime reason why third party data centres here continue to grow, particularly those that aren’t ready to move to the cloud.

The report also mentions when surveyed IT leaders say they want in a provider is, “good quality cost-effective delivery of services – which, Shurtt added, “you could say about anything.” But service levels, reputation and how close the data centre is to the customer are also important factors for some.

Most of the names are well-known, but some are newcomers. OVH, for example, has expanded tremendously since it bought property from miner Rio Tinto Alcan outside of Montreal in 2013 to serve North America. Schrutt believes it’s the largest data centre of any commercial provider in the country.

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Jim Love, Chief Content Officer, IT World Canada

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Howard Solomon
Howard Solomon
Currently a freelance writer, I'm the former editor of and Computing Canada. An IT journalist since 1997, I've written for several of ITWC's sister publications including and Computer Dealer News. Before that I was a staff reporter at the Calgary Herald and the Brampton (Ont.) Daily Times. I can be reached at hsolomon [@]

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