Does a Global Data Center Footprint Matter for U.S. Companies?

In a world so digitally connected, do companies really need geographic proximity to access foreign markets? Many companies have decided that they do need a global data center footprint. Data sovereignty and latency are two reasons why.

Later this month, IO CEO George Slessman will be moving to Singapore (he’ll split his time there and in the States). Why? Because IO has a tremendous opportunity to serve companies looking for a trusted colocation provider in Asia Pacific. In fact, 82 percent of U.S. companies are looking to international expansion, half of which are targeting Asia Pacific, according to IDC. Asia Pacific is the fastest growing multi-tenant data center market in the world, according to 451 Research.

Why would a U.S.-based company want a data center in Asia? The standard answer to that question is: For access to rapidly developing emerging markets. Most U.S.-based companies that colocate a data center in Asia do it from a strategic hub. Singapore is one of the best-suited Asian cities for exactly that. Why? Let us count the ways:

  • While Singapore itself is a mature data center market, it is in close geographic proximity to countries with among the world’s biggest economies but still underdeveloped data center markets – China, India, and South Korea, for example.[1]
  • Singapore has the most seamless connectivity in Asia and one of the widest telecommunications networks in the world, according to The World Economic Forum.
  • Singapore is the No. 1 country with the best investment potential, according to Business Environment Risk Intelligence (BERI).
  • Singapore is named the second most competitive city in the world with world-class infrastructure.
  • The country’s strategic geographic location, global network connectivity, strong legal system, and attractive tax system make it a top nation for foreign trade and investment.

But in a world so digitally connected, do companies really need geographic proximity to access foreign markets? Do U.S.-based companies really need a data center in Singapore to access markets like China, India, and South Korea?Many companies have decided that they do. Data sovereignty and latency are two reasons why.

Data sovereignty

Whose laws govern the data in a data center? The laws of the country in which the data center is located? The laws of the country in which the data center provider is based?

These data sovereignty questions aren’t new, but they rose to the fore in June 2013 when the former NSA contractor Edward Snowden released the first of a trove of classified documents revealing that the NSA had been collecting, mining, analyzing, and storing the digital information of U.S. citizens and foreigners – much of it out of the U.S. data centers of telecommunications, Internet, and cloud service providers.

In response to the Snowden revelations, a number of foreign governments – most notably in Europe – launched inquiries into the rules governing their citizens’ data privacy. Some suggested implementing rules that would require the data of their citizens to be kept within the country.

Concerned that such rules could hurt business, many U.S.-based companies moved to globalize their data center footprints, so they could keep their customers’ data in regional data centers, rather than consolidated in the U.S. “The NSA disclosures have undermined worldwide confidence in U.S. infrastructure,” explained David Snead, founder of the Internet Infrastructure Coalition. “Our members [more than 100 companies in the hosting and data center business] are seeing a very real shift in putting data outside the U.S. rather than inside the U.S.”

A global data center footprint is only part of the solution to complex data sovereignty and data custody challenges. To learn more, download the C-Suite Primer on Data Sovereignty & Data Custody.

Latency

Another key reason U.S.-based companies are globalizing their data center footprints is latency. The importance of low latency – delivered in part by geographic proximity – is most well documented in the high frequency trading industry, where exploiting latency advantages has been estimated to account for $21 billion in profit per year. But even companies that aren’t in the business of high frequency trading can be negatively impacted by millisecond delays in communication. Writing in LightReading, Philip Carden (founding partner at Number Eight Capital) explains:

There will be more and more applications that have much lower latency requirements. There are those where humans are not involved – such as process or car control, automated trading, and the virtualization of IP or radio network functions. For those machine-to-machine applications, millisecond latencies can be significant. But there are also some emerging categories where low latency is important to the human experience – virtual workspaces, remote control of network video, augmented reality and immersive cloud-based gaming. For those, tens of milliseconds can be acceptable.

So what does that mean in terms of geographic location? At the speed of light in fiber, round-trip latency according to Carden is less than 1 millisecond (ms) within a city; less than 10ms within a region; 40ms in a straight path across the U.S.; 60ms across the Atlantic (London-New York); and 120ms across the Pacific (Sydney to San Jose). In other words, for latency-sensitive machine-to-machine and human interaction apps, geographic proximity does matter. For U.S.-based companies looking for access to foreign markets, a local or regional data center can be an important competitive advantage.

DCIM for a consolidated view of a distributed data center footprint

One of the downsides of a distributed data center footprint – whether distributed across the country or around the world – is the added management complexity. That’s where data center infrastructure management (DCIM) comes in. Leading companies with global data center footprints rely on DCIM software for a consolidated view of and ability to manage activity in all of their data centers.

Does a global data center footprint matter? For many U.S. companies, the answer is yes. Data sovereignty and latency make it important for companies to have a data center footprint in the regions they’re expanding to, including Singapore for Asia Pacific.

 

IO gives companies a global data center footprint, with colocation data centers in the U.S. (Arizona, Ohio, and New Jersey), plus a Singapore data center in Asia, and a London data center in Europe coming online this spring. Tying it all together is DCIM software, branded IO.Conductor, which enables clients to monitor and manage their data center environments from any device, anywhere in the world. Learn more.

 

[1] In 2013, China was the world’s second largest economy. India was the tenth and South Korea was the fifteenth. All three countries received data center market maturity ratings of “emerging” by 451 Research. See Multi-tenant Data Center Global Providers – 2014.