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11/15/16

The Evolution of the Data Center: What a Difference 17 Years Make

Dany Bouchedid

Founder & CEO, COLOTRAQ

When I started my company, COLOTRAQ, back in 1999, the data center landscape was vastly different than it is today. The majority of service providers had come from the world of Commercial Real Estate and Construction and that culture had permeated much of how things were done. Back then, it was primarily about selling space with associated power and bandwidth or “power, pipe and ping” as we used to call it. Even the way the providers billed the customers and compensated the channel partners was indicative of that heritage. Customers were charged for the square footage their racks took up in the data center. The agents who brought the deal in were paid an upfront commission based on the total contract value (TCV).

Over time, many of these types of data center companies started to offer their clients managed services. The industry was quickly becoming commoditized. By moving further up the value chain (to managed services) data center operators were able to address the tightening of their profit margins. It was also a way for them to differentiate themselves from the competition. But many data center providers remained strictly entrenched in offering pure colocation and in some cases raw space. This segment grew to what we call today the “wholesale colocation” providers.

Along came the high density server environments, several data center providers found themselves losing out on much of the revenue growth as clients were able to do much more in the same amount of space in their data centers. So in order to capitalize on this trend, these data center providers changed their billing model from charging for space taken up in their data center to charging the customers based on their power consumption. The argument there is that clients who were using high density blade servers were consuming far more power per square foot than clients with a traditional server footprint.

The other segment of the data center providers continued to evolve beyond simply offering managed services for their colocation clients. Some of these “retail colocation” providers began offering full blown managed hosting, whereby the client didn’t have to be bothered with sourcing and maintaining their servers and equipment at all. This group of service providers became very appealing to the mid-market sector who either didn’t have the internal resources required to manage raw data center space and equipment or simply wanted to focus on their core competencies and outsource the IT infrastructure management that supports their main business. This thought process was the genesis for the rise of cloud computing.

The other segment of the data center providers continued to evolve beyond simply offering managed services for their colocation clients. Some of these “retail colocation” providers began offering full blown managed hosting, whereby the client didn’t have to be bothered with sourcing and maintaining their servers and equipment at all. This group of service providers became very appealing to the mid-market sector who either didn’t have the internal resources required to manage raw data center space and equipment or simply wanted to focus on their core competencies and outsource the IT infrastructure management that supports their main business. This thought process was the genesis for the rise of cloud computing.

While security and control remain major deterrents for the major enterprises to completely migrate their entire IT infrastructure to the cloud, many have either taken a hybrid cloud strategy or deployed certain non-mission critical applications on the cloud throughout their various business units. While many experts began touting that cloud computing will be the end of colocation and traditional data center deployments, nothing could have been further from the truth. What this cloud computing revolution has done is raise the whole ocean for data center infrastructure. Many companies are pulling the trigger on initiatives that in the past would take a back burner because of the commitments involved with traditional data center contracts. But in today’s world, IT organizations throughout all industries are able take advantage of this new computing environment. They can keep their most sacred mission critical infrastructure in a more traditional data center environment, while at the same time deploying various other applications, including pure concepts, in a cloud environment.

I’ve often compared the world of cloud computing to the auto industry. There was a time when the only way to get into a car was to buy it outright. Then chattel mortgages came about and many more people were able to drive a car by financing it. Then thanks to the growth of leasing, even more people were able to get into a car. And now with the advent of ZipCar and Uber, which I like to refer to as the cloud of the auto industry, even more people can use a car on demand and not be committed to using nor owning it for years. If you view mileage you travel as computing cycles, these business models are not just different ways to deliver the same service but really just a different way to bill the client for that service. The auto industry will not be suffering from this evolution as more cars will be needed along with parts and equipment and a growing civil infrastructure of roads and highways to support that growth. Certainly, no one is getting rid of their cars because they now have access to Uber and ZipCar. Quite the contrary it has generated more demand for auto transport and higher auto sales since Uber started making its mark in 2010.

At the end of the day, while there will certainly be a slight shift in demand for traditional data center services, the rubber has to meet the road at some point. Since the cloud lives in the data center, many of COLOTRAQ’s largest projects in recent years have come from cloud providers who are expanding their physical data center footprint. But the growth from their new segment of colocation users has far outpaced the decline in traditional data center projects driven by the mid-market and large enterprise market. As for the small businesses, we have definitely seen all of the 1U/2U projects disappear as these low value, high volume, high churn projects have gone to the public cloud.

Over the last 17 years, having built the largest master agency focused purely on data center infrastructure (colocation, managed hosting and cloud), I can tell you that we and our channel partners have not missed those types of projects at all.

Press Releases

COLOTRAQ Launches Cloud Readiness Review Service

January 30, 2017 -- COLOTRAQ, the only master agency dedicated to data center infrastructure, announces the launch of a Cloud Readiness Review for enterprise clients.

COLOTRAQ Celebrates Banner Year with a Business Partner Appreciation Event

March 04, 2016 -- Company will host an epic celebration at The Drai's Nightclub in Las Vegas in recognition of the colocation, managed hosting and cloud partners that helped make 2015 so successful..

COLOTRAQ CEO Dany Bouchedid to speak on Cloud and Connectivity Strategies

November 11, 2015 -- Bouchedid will present at NexGen Cloud Conference taking place December 9-10, 2015 in San Diego, CA..

COLOTRAQ CEO Dany Bouchedid to Present on Hybrid Cloud Strategies

August 24, 2015 -- Bouchedid will present with Internap at Cloud Partners Conference taking place September 16-18, 2015 in Boston..

COLOTRAQ CEO Dany Bouchedid to lead Panel Discussion on Cloud Migration Strategies

May 04, 2015 -- Bouchedid will moderate a panel at IMN’s Forum on Financing & Investing in Data Centers & Cloud Services Infrastructure taking place May 28-29, 2015 in New York City

COLOTRAQ Unveils DCI Traq: The Industry’s First Cloud-Based Software for Sourcing Data Center Infrastructure Services

March 16, 2015 -- The software will enable users to dynamically research, compare and purchase colocation, managed hosting and cloud services through COLOTRAQ’s unrivaled network of over 400 service providers in practically every market worldwide.

COLOTRAQ Sets the Stage for its Highly Anticipated Software Release

February 23, 2015 -- COLOTRAQ secures the venue for the unveiling of its exclusive, industry-first cloud based software for sourcing data center infrastructure services.

COLOTRAQ Celebrates 15 year Anniversary in Grand Fashion

August 05, 2014 -- The foremost global sourcing advisory firm and master agency for data center services will be throwing a grand party in New Orleans in celebration of its 15 year anniversary.

COLOTRAQ Dedicates July to Community Service and Corporate Social Responsibility

August 14, 2013 -- COLOTRAQ and its employees participated in three distinct community service events during the month of July.

COLOTRAQ CEO Dany Bouchedid to Speak at IMN’s Data Center Event

May 21, 2013 -- Bouchedid will present at Information Management Network's Financing, Investing & Real Estate Development for Data Centers taking place May 30-31, 2013 in New York City

COLOTRAQ Puts Partners First with Major Changes to Its Master Agency Program

February 20, 2013 -- Higher Commission Splits and Free Sales Support Highlight Leading Global Colocation Advisory Firm’s New Master Agency Program

COLOTRAQ to Sponsor Blood Drive

July 25, 2012 -- Sourcing advisory and master agency for data center services plans end-of-July blood drive in Morris County, NJ.

COLOTRAQ Demonstrates Its Commitment to Social Responsibility with Its First Annual Day of Service

March 29, 2012 -- Global Technology Firm Teams with Morris County, NJ Habitat for Humanity to Help Build Affordable Housing

COLOTRAQ Closes 1,000th Data Center Services Deal

September 22, 2011 -- Sourcing advisory and master agency, COLOTRAQ, has closed more than 1,000 deals with a total value of over $45 million in annually recurring revenue.

COLOTRAQ Pioneers as the Industry’s First 100% Certified Telecom Professional (CTP) Master Agent

April 04, 2011 -- COLOTRAQ, the foremost global sourcing advisory firm and master agency for data center services, is proud to announce that its entire professional and executive staffs have satisfied the conditions for accreditation as Certified Telecom Professional by the Technology Channel Association (TCA).

COLOTRAQ Launches the Telecom Industry's First Master Agency for Colocation and Managed Hosting

June 17, 2010 -- Independent telecom agents are now empowered to sell colocation and managed hosting worldwide.

COLOTRAQ Announces Groundbreaking Telecom Expense Audit Service

October 23, 2008 -- COLOTRAQ's no-risk telecom expense audits return 100% of savings to clients -- no contracts required.

Avega Inc. Joins Technology Channel Association (TCA) as Charter Member

October 08, 2008 -- Avega Inc joins an initial group of North American Telecom and Technology Agencies to build an association whose mission is to promote the growth and success of Indirect Sales channel Partners.

COLOTRAQ's CEO Named President of New Telecom Industry Trade Association

September 12, 2008 -- COLOTRAQ CEO, Dany Bouchedid, has been elected president of the newly formed Technology Channel Association (TCA). TCA's mission is to promote the telecom industry's indirect sales channel

PHONE+ and Channel Partners Conference Announce 2008-09 Advisory Board Members

August 18, 2008 -- PHONE+ magazine and the Channel Partners Conference & Expo have selected the 2008-09 members of their joint advisory board. The advisory board is composed of master agents, independent agents, carriers/service providers, VARs, resellers, dealers/interconnects, attorneys, consultants and representatives from several industry associations, including the Agent Alliance, Technology Channel Association, WIBOC and TAG National.

COLOTRAQ Unveils Equipment Sourcing Capabilities

August 03, 2008 -- COLOTRAQ, the sourcing company for IT and telecom services, announces the launch of its telecom and IT equipment sourcing business. COLOTRAQ Equipment Sourcing (CES) specializes in servers, storage, routers and switching products and is currently an authorized reseller for Dell, HP, IBM and APC.

COLOTRAQ, The Telecom Marketplace, Relocates Corporate Headquarters after Banner Year

February 12, 2008 -- Driving the move to the new facilities is the need to accommodate increased staff.

COLOTRAQ™, The Telecom Marketplace, Launches the Most Lucrative Referral Program in the Industry

April 26, 2007 -- Telecom B2B marketplace pioneer provides a unique opportunity for referring partners by combining the telecom industry's top referral commissions with access to its unrivaled global network of participating service providers.

Crisis in Middle East Focuses Attention on the Importance of Business Continuity and Disaster Recovery

July 22, 2006 -- Activity from Israeli businesses is up this week on COLOTRAQ’s Web-site which acts as a telecom marketplace for procuring colocation, dedicated hosting, bandwidth, dark fiber, business continuity, and managed services. Since the commencement of hostilities against Hizbolla in Lebanon nine days ago, the number of searches initiated from Israel has already equaled that of the first six months’ of 2006.

It’s Official: COLOTRAQ™ Announces Its New Real Estate Division

June 08, 2006 -- Enterprise clients needing real estate brokerage services benefit from unique combination of telecom infrastructure technical experience and market savvy.

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