If you represent an IT organization that relies on colocation companies for some or all of your business operations, you’re facing a very ugly situation right now. And what about your vendors?
The ongoing scandal of Equinix, as reported by Hindenburg Research, is just the tip of the proverbial iceberg:
Per the report, by diverting maintenance budgets to other projects that created the illusion that the company was growing faster than it was, and covering up those acts with apparent accounting tricks to disguise their efforts, the executives of Equinix boosted the value of their stock ~$3 billion, and then collected some $300 million in bonuses for a job “well done.” The diversions of maintenance monies began when Equinix became a REIT, and the pursuit of higher stock prices seemingly became the sole driving force behind their business decisions, back in 2015. At that point, they halved their maintenance budgets.
After the Hindenburg Research report, their stock prices dropped ~20%. They immediately commenced an “internal investigation,” and unsurprisingly announced they’d done nothing wrong.
And yet, the financial numbers that came out demonstrated that they’d halved their maintenance budgets yet again, for Q1 2024:
It’s almost impossible to overstate how important this graph is. For veterans of the industry, it isn’t just a red flag, it’s a neon sign flashing “DANGER!”
Why?
Data centers have dedicated “safety nets” that clients pay for and expect to be fully operational even when utility services are interrupted. These safety nets consist of backup power systems including batteries, generators and associated switchgear, and specialized cooling systems for the IT equipment itself. All these systems require meticulous maintenance which is relatively expensive.
Think of commercial aircraft, which are superbly designed and built (*cough!* except Boeing cough!). Once they are sold to an airline, it’s up to the airline to properly maintain. If the airplane is not properly maintained, the results are certain:
RAMIFICATIONS
Information technology (IT) touches every aspect of society, enabling “just-in-time” economics to flourish throughout the West, streamlining everything from logistics to inventory control, from customer-service to accounts payable and receivable. This in turn has maximized productivity and profitability, while eliminating waste wherever possible. But when unplanned outages occur in a colocation facility- which may have dozens or hundreds of client companies- the ripple effects are impossible to predict.
Issues in cloud configurations (which an expert recently informed me is about 95% of cloud applications) means the cloud is not guaranteed to behave predictably during an unplanned data center (or colo) outage. And meaningful testing is rare because IT departments are afraid of test failures which could cause the outages they are trying to prevent.
The improper (on nonexistent) maintenance of mission-critical facilities that your IT assets depend on, means you’re exposed to unplanned outages; the backup systems don’t work when you really need them. And if you think Equinix is the only company facing these risks, guess again. At the DICE trade show last week, several seasoned engineering managers who’d worked in the colo space quietly told me that the industry is rampant with this kind of fraud. My professional experience- >800 audits, ~20,000 reports examined- would indicate roughly 75% of the colo market suffers from similar problems.
Overlay this with the Impacts on the Electric Grid
The colo market has grown massively from infancy in 2010, when power purchase agreement volumes from local utilities from local utilities totaled just 0.1 gigawatts (gW). By 2021, it had reached 31.1 gW.
The 14% YOY demand growth, combined with the growth of electric vehicles occur at the same time the Biden Administration has been aggressively compelling electric power production companies to retire their fossil-fuel and nuclear power plants and replace them with renewable power facilities.
According the North American Electric Reliability Corporation (NERC), this will create a gap of 83 gigawatts (gW) of power. In comparison, New York City consumes 5.5 gW. The resultant shortfalls represent risks of brownouts or blackouts, where utility distribution companies must shut off power to customers to keep the grid from total collapse:
What we’re looking at is “the perfect storm” for the data center industry; cost-cutting colo companies leaving YOUR company exposed to unplanned outages, at a time when utility outages are going to increase both in terms of frequency and severity.
As colo failures become more common, many businesses will see operational interruptions which would manifest in everyday life: food and fuel deliveries, cellular and internet failures, lost personal records and data, etc. One failure won’t cause big problems, but multiple failures of multiple colos? Ugly doesn’t begin to describe it…
WHAT’S THE SOLUTION?
You’re faced with two choices:
1. You stay and hope things get better. The latest maintenance expenditure graph from Hindenburg should tell you everything you need to know about that option.
2. Alternatively, you could move to another colo provider (who may be as bad- or worse- then where you’re at now), at a cost of millions of dollars.
You need a 3rd option, OUTSIDE the status quo.
The Amerruss Resilience Program IS that third option.
Our success story with Vanguard, a global financial giant with over $7.5 trillion in assets, epitomizes our capability. Over 6 ½ years, Vanguard's extensive portfolio of more than 60 sites, including Tier-II and Tier-III facilities, experienced zero unplanned outages, a feat considered statistically impossible according to industry standards.
The Amerruss Resilience Program offers a profound value proposition: guaranteeing data center uptime in line with their Tier level specifications, with the ultimate aim of achieving 100% uptime.
This is not just a “money-back” guarantee. We can insure our services, to whatever financial coverage level you need. There is no other company, anywhere in the world, which can make this claim; we’re it.
Our approach is not just about compliance but about exceeding industry standards and expectations, a necessity underscored by the current landscape marked by potential rolling blackouts and escalating cyber threats.
Our program is based on deep technical expertise, real-time feedback through quarterly audits, and a proactive stance on maintenance and risk management.
It is an economical, extremely effective system that allows you to wrest agency back for your organization and have direct visibility of any risk elements that would put your company at risk. And it should be noted, that any required repairs are the financial burden of the colocation company to mitigate.
The cost for a small location, such as a POP site, would typically be in the low five-figures, and a medium-sized enterprise IT presence in a colocation facility would typically be in the low six-figure range, depending on size, complexity, amounts of records to be reviewed, how much historical documentation is desired, etc. [Insurance coverage costs would vary, of course, based upon your needs.]
Compared to relocation with a new colo company, these costs are orders of magnitude smaller than trying to move to another colocation company, where you may just get more of the same.
Call to Action:
As IT and C-suite executives, you face a critical decision point.
The integrity of your operations hinges not just on the promises of uptime but on the actual reliability delivered by your colocation data center.
Don’t settle for uncertainty and risk; choose a proven— and insured— solution.
The Amerruss Resilience Program provides not only a safeguard against operational disruptions but also a strategy for real assurance and control. Our approach is about far more than compliance; it’s about setting new standards in reliability and operational excellence.
Ensure your data infrastructure is not just maintained but thrives.
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