This Day Live, June 18, 2015
Managing Director of Rack Centre, Mr. Ayotunde Coker
Managing Director of Rack Centre, a global service provider in data and shared services, Mr. Ayotunde Coker, spoke with journalists on the need for collocation and business outsourcing, among other key industry issues. Emma Okonji was there. Excerpts:
The general elections that ushered in the new government of President Muhammadu Buhari was postponed by six weeks for security reasons. What impact did the postponement create on businesses?
We are delighted and relieved that the elections went well. People around the world acknowledged the elections as successful. But even at that, a lot of people will testify to the fact that the speed of businesses was slowed down due to fears of uncertainty. But the fears are all gone following the successful conduct of the elections and the peaceful emergence of the initial opposition party as the current ruling party. Businesses are beginning to pick up even though a lot of industries are behind their targets for this year in many ways, due to the postponement of the elections. Thankfully, we are beginning to see the increase in the prices of oil. With good governance, I think we can build a sustainable economy. Companies and businesses need to be ready to harness the enormous opportunities available in the marketplace, but they have to do that rapidly and in a cost effective manner. They need to reduce cost of business because many of the industries are probably behind their targets now. What Rack Centre and the shared services industry can do to cushion the effect is to speedily deliver services in a manner that has never been. Therefore, companies in this post election era, have to look at the most cost-effective way to achieve their goals. We strongly believe that the business environment will pick up.
Looking at the prevailing economic situation such as the dwindling oil prices and devaluation of the naira, how would all of these impact on your business directly?
It has been challenging doing business in Nigeria following the prevailing economic situation in the country. But the only solution that will address the situation is for businesses to keep investing. We have to invest in infrastructure and we need to localise the business as much as possible. We are passionate about local content, and we will continue to strive to grow local content development in the country.
However, in order to maintain our world-class company status, we also blend with some key facilities that are imported. We have done a lot of work into making sure that in our business plan, we make the necessary adjustment to ensure long-term sustainability. In more advanced economies, currencies fluctuate, which also affects businesses, but what has happened globally is that the dollar has appreciated.
We keep talking about naira depreciation but we forget to talk about dollar appreciation, which is a global issue to contend with in business. But even with all these challenges, both locally and internationally, Rack Centre, as data service provider, has in place a very sustainable long-term plan for the business.
Rack Centre has some form of partnership with Internet Exchange Point of Nigeria (IXPN) and Vodacom Business. Looking at the entire internet ecosystem, what benefits can consumers derive from the partnership?
We are carrier neutral, based on the kind of services we offer, which are not tied to any particular network carrier. It is a unique positioning for us. We are integrated into the IXPN, which means that for online traffic, the inter-change is pretty much instantenous. There is no latency in a high-quality, high-reliability environment that we have here. We are delighted to have this partnership and I think it is indeed transformstional for the economy. No advanced economy exist successfully without fundamental technology infrastructure. Two things play out- broadband collocation and fixed internet facilities. These are fundamental to the growth and sustainability of any business, and having internet exchange point in Nigeria, actually raises the game in moving nigeria foward as far as international core infrastructure capability is concerned.
We have world class and highly reputable pan-african companies as partners. They are reseller partners and as part of their overall proposition to the marketplace, they provide collocation services as well as other value added services in cloud computing, shared infrastructure and connectivity services. So, we either go to the market through them or we go direct to the marketplace. We work hand-in-hand with all partners either as reseller partners or as network carrier partners, and they are all connected to the Rack Centre business. We are the most connected data centre in West Africa, and this is an advantage for direct and indirect consumers of our services.
As data service provider, what in your view, is the response of the Nigerian market to data centre services?
The response is changing and improving, when we look at it from the addressable market. Our analysis shows that there is a significant addressable market in Nigeria. However, we will have to unlock that market a bit, just like it happened in the telecoms market over the last 10 years. We have been doing a lot of work in that regard, and we must give credit to journalists for the articulate presentation of the changes in the marketplace, through their objective reportage.
Businesses have to thrive through technology. Banks, telcos and oil and gas firms need to have high-reliability technology to support their systems. Energy companies coming in after the privatisation, need to put in technology in place very quickly, in order to efficiently run the business.
For banks, if customers find out that their debit or credit cards do not work effectively, they will shift patronage. So banks must put in place, electronic systems that enable their corporate customers function effectively. To achieve this feat, banks need efficient data centres. If the data centre is down, the business is in jeopardy. If the Information Technology (IT) department of a bank is down, it will affect the bank’s business and the only way out of it, is for banks to continue to invest in core infrastructure, such as networks and data centre.
Experience has proved it right that organisations require millions of dollars to build reliable data centres, and that it takes a minimum of 18 months to build a data centre. I see all of these as additional cost on the organisation, which could be avoided, if the organisation decides to host its data with Rack Centre. Assume, you are a bank and you have to spend all this money in 18 months, it automatically means that the bank will be spending so much for the same service it could get from Rack Centre at a reduced cost. From an operations point of view, Rack Centre has not had one second of downtime in an environment that is highly challenging. We are seeing significant improvements. It is been projected that the compound annual growth rate (CAGR) over five years (2014-2019) in Middle East and Africa (MEA) is about 17 per cent, and this has to be maintained through a reliable data centre service offerings.
Rack Centre tends to focus more on the large corporates and multinationals. What sort of solutions do you have for Small and Medium Enterprise (SME) segment of the market?
In as much as we focus on large corporates and multinationals, we also have solutions for SMEs. Some of the things we do with our reseller partners, are particularly targeted at the SMEs. We provide an opportunity for SMEs to have base technology that are of high standard. They dont have to scratch their head to say because I am an SME I would patronise a cheap organisation. We have solutions designed specifically for the SMEs. Do you know what would transform SMEs in this country? Cloud computing. Now, you dont need two layers of IT expertise. Payment companies only exist through technology. You can just buy the quantity of Information Technology (IT) resource you require to run efficiently. Beyond that, existing SMEs that have been around for sometime now realised that they need to be much more efficient in their business offerings.
Looking at the entire data centre and shared service industry, there are mobile operators such as MTN, Globacom and Etisalat, all coming up with their own data centre offerings. What sort of value proposition can you offer to a customer that is miles apart from what the telcos are offering?
We are carrier neutral, which is a plus to our customers, based on the kind of data centre and shared services that we offer. Telecoms companies, with their own data centre service offerings, are also our partners in business. We have MTN, MainOne, Globacom, Vodacom Business, and so on. These are the networks our clients use. When customers come into our data centre, basically they have a choice of carriers. They can have their primary backup and they can switch to any network. That is the value proposition we give to corporates. Our value proposition to partners in the telco space also opens up the opportunity for them to have their network to be fully utilised. So, it is a symbiotic relationship. Co-opetition is not a bad thing. We need to increase the capacity in the Nigerian economy.
For businesses in Nigeria, is outsourcing the way to go?
I would rather say that right sourcing is the way to go. The world has moved on. The old days when big multinationals actually build their own network has changed. Now, they build unto networks, and the essence is to ensure that the right technologies are in place to protect your data. Right sourcing therefore means that you outsource the things that are not core in your business, and allow IT focused companies to manage those outsourced businesses effectively. With this, you ensure that they are aligned to your corporate needs and strategy and you manage the risk in your outsourcing.
If a business Information Technology (IT) chief is thinking about very import but non-core infrastructure issues, then he or she has automatically diverted from focusing on the core transformational aspect of the business.
Do organisations still have the old mentality of not collocating their business?
Yes, it is a global issue not just a Nigerian issue. It is, however, not practiced any longer in the telecommunications industry, but it is still widely practiced in the distributed business environment. In advanced economies, around 30-40 per cent of data centre space is collocated. In the less developed economies, its only about five per cent. So for Nigerian to advance to between 20-30 per cent of collocated environment, is has to reflect on what has happened in the more advanced economies.
Part of the critical objective for us is to create the much needed awareness on the benefits of collocation. Interestingly, we help partners and clients to figure out how to optimise their in-sourced to outsourced relationship for those that have invested in some form of data centre investments. So they not only gain value out of their existing investment, but they also gain value from working with Rack Centre.
Is there any role that regulation could play in compelling businesses to collocate?
I think businesses would have to come to terms with it. It is a straight-forward business issue. It is a matter of available capital, time to market, skills and competencies. Technology savvy Chief Information Officer (CIO), will convince their Chief Executive Officers (CEOs) to move in that direction. I have not seen any CEO who comes into Rack Centre premises and go away with the idea of still wanting to build his or her own data centre. It has never happened once. There is a lot of value in collocating. We do not need legislation, what we need is more awareness. The interesting aspect is local content. Nigeria still has a significant amount of outsourced hosting that takes place ouside the country. With this hosting, you have to contend with the latency of data traffic going out of the country.
Why go abroad to host data, when you can have better service in Nigeria? Will legislation help? I think is very much more of awareness. Three years ago, people did not have a choice, so they went broad to host their data, but as of today, majority have come to realise that the same service is available in-country, and they are making u-turn to Rack Centre in Nigeria.
There is dearth of skills in Nigeria’s ICT industry. What is the contribution of Rack Centre in addressing the issue?
It is an issue that has to be addressed here in Nigeria. We need to build IT professional leadership capabilities. There is need to create more IT commercial business leaders who are technology savvy at engaging at the executive level. What are we dong about it? We are very proud of the capability of the people we have here.
We have a structured framework in terms of how people learn and are trained. 20-30 percent of people’s training is related to course work. A lot of it is around leadership and mentoring. We have a great leadership team here. We put a lot into mentoring our own people.
Because this is our DNA, we can take somebody from another company and build them up. It is not just about Rack Centre. In terms of our corporate social responsibilities, we are putting significant efforts into the things we can do, working with universities, government agencies and banks. We want to build the core competencies from the grassroots right through. We have got some interns working with us right now. As Rack Centre grows as a business, its impact on developing industry competencies will increase.
How competitive is the industry now?
The industry is very competitive. Rack Centre was the first to be certified as a Tier 3 data centre in Nigeria by the Uptime Institute, which is the global body in certifing data centres. We are delighted that MTN and MainOne are also certified by the same global institute. We will continue to provide leadership in that area. It is good for Nigeria and it is good for the data centre capacity that is available for Nigeria. How many countries in Africa or Asia have three certified data centres. It is great that we have that recognition in Nigeria, which is a testament of how we as an industry can step up to global standards.