Converting IT Capex to Opex with Colocation Data Centre

Vipin Shirsat, General Manager, Princeton Digital Group India

Princeton Digital Group launched its first colocation data centre in India, but what is a colocation data centre and how is it any different from your in-house server room? To find out answers to these questions, read on to know what Vipin Shirsat, General Manager, PDG, has to say…

Q. What is a colocation data centre?

A. Data centre is a broad term and it generally means one of these three things – colocation, managed hosting, or cloud. We operate a colocation data centre here. What happens in collocation is that you’re constructing a building in which there is conditioned power that will never go down. If the power goes down, there is diesel backup so that your generators can run and support the building for 48 hours. Secondly, the cooling in this building will be in the desirable range as per the customer’s needs. The third is the building has got multiple network paths. So if one path gets affected due to digging or floods, the second, third and fourth paths will still be active and keep the data centre connected. The fourth point is that this building has multiple layers of physical security.

The customer comes with their equipment which can run continuously for three, five, seven or even ten years. There is another layer added to this where the data centre provider also manages the equipment for the customers. This is where you’re moving from electrical and mechanical infrastructure to IT infrastructure. So if you are managing the database for the customer, their equipment, the operating systems and the security patches, it is called managed hosting, but then you’re in the domain of IT operations. The third layer on top of that is if you’re also managing the application, that is called cloud service. We operate in the first layer, which is called colocation.

Q. How will this colocation data centre benefit your clients as opposed to an in-house data centre?

A. So whenever you build an in-house server room, there are multiple challenges. One is the kind of infrastructure that we can build at a larger scale is not something that can be replicated in-house. Second is the way we maintain the data centres, which cannot be done in-house. And one common challenge that all the customers have seen, is that they always size the data centre, but in a couple of years, they outgrow that capacity. So to manage that it’s best if you’re sitting with someone like us when we can do the expansion of the same building.

Q. Why can’t the clients go to a bigger provider who is already established? Why come here to a new facility?

A. PDG is a pan-Asia data centre operator. We make sure that our data centres are built to global standards and we do offer that in India. Our engineering team is highly experienced. Each of our core engineering team members comes with more than 10% of India’s industry experience. They can construct data centres at locations with the specifications that our customers desire. So it’s a very easy choice for our customers. We also have a lot of focus on softer aspects like safety, and sustainability.

So we are Mumbai’s first IGBC platinum data centre which is an achievement because the bar for the IGBC platinum certification is high. We are also covering a significant amount of this data centre through renewable energy, almost 40%. When it comes to safety, we have certain internal principles. We owe safety and dignity to every person coming to the site, even if it is a contractor or subcontractor or labourer or employee. Now, this is a philosophy that we are extending to our vendor partners and to all the people that we work with. As a responsible enterprise, our customers like this part, and they see these as differentiators with PDG, the predictable delivery, monitoring engineering, and the focus on sustainability and safety. This identifies us apart from our competition.

Q. Who are your competitors in this domain?

A. If you look at the number of organizations in the colocation domain, there are quite a few, but only when we put the lens of how many of them can provide a quality product that will deliver and focus on safety and sustainability aspects, I think the competition is fairly limited. Also, this is not an industry where the winner takes it all. There is a healthy competition network from a customer standpoint so that the latter has options to choose from, essential for any entrepreneur also like this book right. Some of these organizations prefer to have multiple points of presence in the same city. So, typically, they will also want different operators for different points of presence in the same city.

Q. How are you improving the efficiency of this data centre?

A. Any digital transformation, business or IT processing that you see ultimately runs on IT equipment, which is kept in data centres. Data centres consume a lot of power. There are two parts to it. One is the power that is consumed by its equipment. And second, the power that is used to hold it. So when we’re looking at the efficiency of a data centre, we’re trying to reduce the second part, the cooling of the IT equipment. And that’s where there are different stages where efficiency is required while building the data centre.

Stage one is designing. We make sure that we design the data centres in such a way that power is saved. For example, our diesel generator building is stacked in such a way to ensure that the diesel generator is sitting as close as possible to the data centre floor so that the ketone levels between the diesel generator and the IT equipment are reduced so that the loss of power in the cable is reduced.

Secondly, while choosing the equipment, we ensure two things. One, they should be standard equipment, and more efficient as compared to others. So for example, there is a parameter called IKW, which tells us how much power is the chiller using to cool 1kW. Third is, where you are doing your operations, which is where your customers also come into play, whether the data centre’s temperature is 22 degrees, or whether it is 29 degrees, which changes the efficiency of the data centre to a significant extent. The fourth parameter is again related to design and customer-related changes.

The data centre should be built in a manner that is future-proof so that you’re able to customize the requirements that may come four or five or six years down the line. If you build that ability today, you’re making sure that the data centre is efficient. So all these steps over the lifecycle of the data centre help to reduce stored power that is utilized for cooling. And that’s how you increase the efficiency of the data centre.

Q. How much time will it take for this entire data centre to be fully functional at 100% capacity?

A. To some extent, it depends on our customer data. But we expect that to happen in a year, or a year and a half for the first building, and another year and a half with the second building.

Q. When do expect the construction of the second building to get over?

A. The second building will go live in less than 24 months. This building went live in 20 months.

Q. Did you run into any legal challenges along the way?

A. No, as a responsible organization we were very sure of whatever decisions we took, and ensured that we are on the right side of things. We have also partnered with an extremely tenured set of people. We always make sure that we are putting time into getting adequate approvals from the government authorities.

Q. Can you tell me what is the initial cost of investment and the running costs for a client?

A. There is an initial cost of investment in an in-house data centre, creating the centre, whereas when clients come to us, they’re converting their capex to opex. So there is no initial cost of investment for the client. So that’s a great benefit, and because there is no capex, there’s no concept of ROI for the services. Second is on top of that, we offer them a better quality of services for them scalability as and when required within the same premises. And we also offer the sustainability quotient. So that’s how you generally end up comparing capex to opex.

Q. For you what was the initial cost of investment?

A. So for this centre of 48 MW, we went with an investment of $300 million.

Q. How was this project funded?

A. So our funding term comes at a pan-PDG level and not at the project level. But yes, we have three private equity investors who are blue chip, global private equity investors – Warburg Pincus, Ontario Teachers’ Pension Plan Board (Ontario Teachers’), and Mubadala Investment Company.

Q. The second round of funding amounted to $350 million and the third round of funding amounted to 500 million. Is that correct?

A. Yes.

Q. What is your target segment for this data centre?

A. So, our target segment, across regions is global hyper scalars typically the cloud service providers, BFSIs, MNCs, eCommerce players, and internet organizations.

Q. Could you tell us what parameters were considered for the IGBC Platinum certification?

A. There are different stages of design – choosing equipment, operation and flexibility. So all of that goes into the IGBC Platinum certification evaluation. One of the key parameters is PUE (Power Usage Effectiveness), which is how much power is utilized for cooling. The IGBC has extremely stringent PUE requirements and they assessed our data centre based on that.

Q. How do you maintain precision cooling in the data centre?

A. In the centre, the cold air is released from the bottom, and there are sensors at the top that measure what is the temperature of the air. The input from the sensors goes back in terms of defining what is the cold air that is being pumped in. The second way it happens is this cold air comes from water, the servers use it and then the hot air goes back to the power units. The power unit will also look at what is the temperature of the air that is coming in. If it is hotter than what was anticipated, then it will pull more cold air, if it is colder than what it was anticipating then it will push this hot air forward.

Q. What other automation have you employed in this data centre? Is there any chance to employ AI?

A. So, this was one example of automation when I was talking about where the equipment sense what is the temperature of the air and accordingly takes the decision. So as a philosophy, we ensure that these kinds of controls are inbuilt into each of our properties. At a central level, we monitor all of these to make sure that the system is running live. In general, this is called a building automation system.

What is required for AI is a large amount of data, which a large number of data services providers should share and somebody parses that information. It’s something I think, as an industry, we could potentially evolve to that stage, but currently, that’s not something that we’ve built here.

Q. Is there a potential for cloud adoption?

A. We have partnered with cloud service providers, and we will become the backbone by providing the physical infrastructure. So to that extent, we are partnering with them.



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