By Frank Eleanya, Businessday, March 19, 2018
Setting up a Tier III quality data centre business anywhere in the world requires significant amount of capital. This is despite the fact that it is becoming increasingly necessary in order to sustain business uptime and availability for almost all organisations in the digital age. Ayotunde Coker, managing director of Rack Center spoke to Frank Eleanya about the maturity of the market in Nigeria and Africa and plans for expansion. Excerpt
What has the journey been so far for Rack Centre?
It has been a fantastic journey. We went live in October, 2013. We have operated without a second of downtime since then. We were the first in 2014, to achieve the design certification of the Uptime Institute. We were the first to get the constructed facility certification in April, 2017. So we set the pace. We have doubled our capacity since we went live. We went live with what half of what we have now in 2016. That project has won numerous award globally; in the UK, West Africa, East Africa and in Nigeria. We are carrier neutral, what that means is that you are not owned by a carrier in any aspect. You do not have any owner interest in any carrier aspect. Hence, carriers are comfortable with being with you, there are no competitive issues.
We now have at least 25 carriers directly connected to Rack Centre. All the Undersea cables are now connected to us. You can access most of the undersea cables; you know some of them are consortia. We have about five partners in here that can provide access to wax. For Ace, we have about three different partners, we connect to the MainOne cable, Glo One and Mtel SAT III. We have a great relationship with Mtel and all the carriers. Carrier relationship management is important for us. We had Vodacom as our anchor client. We also have the top five banks here. There is also the stock exchange and the Internet Exchange Point operating in Rack Centre. We set out our store with establishing cloud on ground as a brand that has continued to grow. That in itself has been a fantastic journey. We are a globally recognised brand and we are clearly the top player in West Africa. We always make sure we focus on those.
As a tier III certified constructed facility we are the most connected in Africa. Thus we connect Nigeria to the whole of Africa. It therefore makes Nigeria a great anchor point for international companies that want to host across Africa. We have quite a number of international companies that host here in Rack Centre. We are the first African data company that have won the Data Centre Dynamics in the United Kingdom and have been a finalist in a row in four different categories; including finalists in data centre solutions in the UK. It is like when you are climbing Everest, it is quite a journey to get to Base Camp itself. In the whole strategic journey that we are on, I think we have got to Base Camp pretty well. We are also proudly Nigerian. Anywhere we go to collect an award; we remind ourselves that it is not about Rack Centre but about Nigeria. We are truly African because we do connect Africa in its entirety. We have a couple of wholesaler carriers that provide connectivity across the whole of Africa. We have a very strong global recognition and we continue to work on the fact that we are the most respected provider in the whole of Africa.
In view of the journey, how much investment has gone into setting up Rack Centre?
For us to have a constructed facility certified – and the only one of a carrier neutral nature in Africa, we’ve put a significant amount of investment in this – billions of naira. Over the next three years, we will be spending over N30 billion on what we are doing. We are currently doubling our capacity here and we are touching the surface of what we call the addressable market potential for Lagos and Nigeria. But the addressable market has gone beyond Lagos and Nigeria because we connect Africa.
What do you mean by addressable market?
Addressable market could refer to the latest possible demand for data centres collocation facilities in the market. We did an analysis three years ago, and identified 5,000 kilowatts. Data centre capacity is not just measured in racks; you have to consider the amount of power you consume. We identified 45,000 latent market total demands – it is actually beyond that, because we factored it to 30 percent. Look at Rack Centre’s expansion capacity capability which is the largest in West Africa of getting to 8.5 megawatts of power – equivalent to 8,500 kilowatts of power, and look at what other players have which is about 4,500 kilowatts of power, and could go to about 6,000 kilowatts of expandable capacity. We are only covering around 15,000 kilowatts of 45,000 addressable market that we factored down 30 percent from the analysis to have a headroom. So we are only scratching the surface.
The challenge has been this, creating the awareness and the knowledge in addressable market to unlock the market. We have spent three years of this journey trying to send the message out. Why would you want to build a data centre? In the old days, when we didn’t have a Rack Centre, when we did not have the quality around, I can understand. Now there is no way you can build your data centre that will be at the same quality as the experts without putting a significant amount of capital in place. That is starting to change with the Central Bank of Nigeria (CBN) putting in place a guideline requiring each bank to have at least one leg in a Tier III data centre. That is starting to happen. We have some major banks that are hosted with us. We are now moving to what we call the “inflation point” where we get this take off and recognition that there is no need to build your own data centre, you have to outsource.
In Europe and in the US, they outsource, unless you are some form of a specialist facility. Before I came back to Nigeria in 2009, I had spent a few years being the chief technology officer for the criminal justice in the UK, I was the group director for information technology for the ministry of justice. We did not build data centers. Police, courts, prisons, crown prosecution service, youths, we outsourced to very high facilities where we have the right kind of relationship in our contractual arrangements in place. It is also the same for multi-country companies in Africa. We connect Africa, so if you want to connect your business to Africa you host it here. We certainly have an expansion to have multiple locations in Nigeria and multiple locations in West Africa.
What specific places in Nigeria do the multiple locations include?
Abuja is on our list and one or two other locations. Then, we can have a multi-connected carrier neutral interconnected framework across the country. Other players have said they are doing that which is fine because it is a big country. We need to provide those services.
Who does your target market include? Are you for every business out there?
Both, and I will explain why. For scale collocation, bigger companies need significantly more room. We actually started off in that vein. We also see a lot of companies that want less than a rack, which is what we call sub-scale. You have to accommodate them because a lot of companies want your quality. Hence, we are now configured to deliver to those companies. A significant thing we realised three years ago, was that you need to have an ecosystem that supports a cloud computing base. So we created Cloud on Ground. Cloud on Ground has been making fantastic progress. So you don’t have to go abroad to get your cloud services. You can be hosted here in Rack Center. What that means therefore, is that our market place is corporate in all verticals. Financial services are important; fintech is a real opportunity and a challenge for financial services companies. They can host here and get much higher performance than they can get elsewhere. Why? We are the most reliable point; we are the most connected point.
We have some insurance companies here. The opportunity is huge for the insurance industry but it will not happen without technology. If you were an insurance company would you spend $1 million dollars building a data center? No. Put your $1 million in the front-end of your business where you need to acquire customers and then automate the customer management system. We have some insurance – in Nigerian and across Africa – companies hosted in the Rack Center. We have some major oil and gas companies here too. There is a Nigerian content law that you have to host your data in Nigeria if you are an oil company. Where else would you put it but in a quality data center that supports your need?
The SMEs and MSMEs are under automated in Nigeria. If they want to have their data on cloud, right now they can come to Rack Center and host their website right here in Nigeria. Our website is hosted right here in Nigeria and we get international feedbacks about how great the website is. Cloud is an ever increasing innovating journey. Imagine if we are offering cloud services in a pay-as-you-go basis, an SME can pay N20,000 a month as they go, to add technology to their businesses. They can bring their mobile phones alive with cloud services and run the customer contact system as they want on a pay-as-you-go basis. It would transform the efficiency of our SMEs. One of the issues we have in the Nigerian economy right now is productivity. You can have ten people doing a certain amount of work, so your income per head becomes quite low and the productivity is low. If you galvanise productivity through automation, through cloud services here in Nigeria, you would transform those SMEs. And we will see our cloud footprints improve significantly.
We have the capability to bring government data on cloud. We are well placed and we are working on that and we partner with the government and the MDAs and agencies. We have worked with NITDA and other agencies to host government data here. We will continue to increase our relationship because e-government is part of efficiency in governance. There is no country that does not have core infrastructure to support the technology. Nigeria has got 30 percent broadband target to deliver this year, and it is good to see that the government is working to make this happen. Some of the infracos that are being licensed are our partners. We are providing core underpinning infrastructure for business in Nigeria. You do not go from being Tier III constructed facility just for the sake of it. It is an indisputable attestation by a global body saying this is quality of construction you. It also compels international companies that come here to believe that by any global standard we can host their data.
Looking at Rack Centre and other players in the market, would you say that Nigeria has gotten to a point of maturity in data centre technology?
Not at all; there is still a lot to do. 2016 saw an economic situation that caused many people to really think about where things were going. It put a pause in the thinking of people building and investing. In 2017, we saw that starting to change and we anchored ourselves in the business that we built and part of our global respect in the business and brand that we have created. In 2018, we started seeing the investment coming through. The micro economic data began to show it. If you look at our Q1, from some of the data coming out, you will see that it has become much more broad based, much stronger growth.
There is an investment that is coming and what that means is the need to automate. That means we are now going back to meeting the addressable market. What is going to happen is that we have to be able to scale up quickly, efficiently and in the right quality to meet the market. It is a very challenging thing to do to invest just ahead of the market and just in time to meet that market. You will see significant increases in data centre capacity. You will see significant increases in the market up-taking those capacity that have been built. Then you will see that data centre players will find their niche in the market that they satisfy. They will find their own space in the ever growing market.
What is your take on declaring data centres as national assets?
They are national assets by the criticality that supports their existence. We have to set our own store to be well positioned to be one of those national assets that are run efficiently. And the government creates the right micro environment that allows running, getting the right level of efficient capital and getting the right efficiency. There are no data centres in the UK. However, we can partner with government to provide core data centre capability because you know we connect the whole country. We can provide the type of framework that allows government data to be securely hosted. If you have to build this quality it takes time and a lot of expertise. I do not necessarily think the government need to issue a statement on that.
Should government mandate every company in Nigeria to host data in-country, do you think we have the capacity to host every business?
There are two sides to that. If you need capacity you build the capacity. If someone tells me that we need another 10,000 kilowatts in 24 months and it is validated and I see the commitments coming in I will build. We have the ability to build. We certainly would not go and build 10,000 kilowatts hoping. But our expertise and modular capabilities means we build very rapidly.
On the data side I think and I believe that it is government’s priority to mandate that every MDA host their data in-country as they have done with the oil and gas sector. With every company, it is down to sovereign data centre rules. Sovereign data rules have a global standard. Singapore, UAE, US and the UK all have theirs. We have to make sure that what we do is in line with international best practice, so we do not lose the confidence of the international community.
What I counsel is this, in Nigeria we can say that our sovereign data rules will align with economic blocs like with ECOWAS. You can put Ghana data in Nigeria and vice versa. It gives us a scale and more to do that. We can even do it at the African Union level. The African Union has been creating the Internet Exchange Point. We have worked with IXPN in Nigeria to get the mandate to host the regional exchange point for ECOWAS. It allows us to interconnect all exchanges, so if you were in the region, you will domicile the data in the region. What Internet Exchange does is that your internet traffic is localised. T does not need to go outside the country; it is straight into the exchange. It gives us a much more efficient internet. It is up to players like us to have the core footprints and connectivity.
How are you addressing the issue of low talent in the industry?
Every member of our staff is African. We ensure that we create a continuous learning environment. It is also a continuous environment of innovation. Every single person in Rack Centre is in the context of what the strategy of Rack Centre and what their role is here. You cannot go to the university and find a finished article. We are setting a new pace and standards of everything in Nigeria. Nobody has done it before to the standard that we have. We have fantastic raw talents in Nigeria.