‘We are the core of supporting carrier neutral capabilities’

Businessday, June 19, 2015, by BEN UZOR

We are delighted and relieved that the elections went well. All around the world the election were acknowledged as successful. A lot of people will testify to the fact that thing were very slow leading up to the elections. We are seeing things pick up now. However, a lot of industries are behind their target for the year in many ways. Thankfully, we are starting to see the increase in oil prices. With good governance, I think we can build a sustainable economy. This also plays into the kind of solutions the company is offering to the marketplace. Companies and businesses need to be ready to take on the enormous opportunities in the marketplace. However, they have to do that rapidly and, cost effectively. They cannot take on the Capital Expenditure (CAPEX). It takes a great deal of time to arrange the CAPEX to deploy a world-class data centre facility. They need to reduce cost because many of them are probably behind their target now. What Rack Centre and the shared services industry can do is to deliver the sort of services quickly. 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.

It’s been challenging. As a lot of companies have been doing, we have been assessing the impact on our operating cost. We have to invest in bringing in the infrastructure and we do localise as much as possible. We are passionate about local content. However, to be world-class, we also mix that with key facilities that are imported. We have done a lot of work into making sure that in our business plan we’ve made the necessary adjustment to ensure long-term sustainability. In more advanced economies, currencies fluctuate. What has happened globally is that the fact that the dollar has appreciated. We keep talking about naira depreciation but we forget to talk about dollar appreciation. Companies have to deal with this issue globally. Actually, falling oil prices could also be linked to that appreciation. Just like any global business, we have to factor this into our current issues and long term plans. Without a doubt, we have a very sustainable long-term plan for the business.

We are carrier neutral, which means that our facility is not tied to any particular network carrier. It is a unique positioning for us. We are integrated into the IXPN, which means therefore that for online traffic, the inter-change is pretty much instantaneous. 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 transformational for the economy. No advanced economy exists successfully without fundamental technology infrastructure. Two things – broadband, collocation and fixed internet facilities are very fundamental to developing a robust internet ecosystem. Having an exchange point here actually raises the game in moving Nigeria forward as far as international core infrastructure capability is concerned.

In our partners, we have world class, highly reputable, pan-African companies. 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 of all partners either as reseller partners or the increasing number of network carrier that are connected into Rack Centre. We are the most connected data centre in West Africa. It is increasingly becoming the core of supporting carrier neutral capabilities.

It is changing and we talk about 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 like it happened in telecoms market over the last 10 years. We have been doing a lot of work in that regard. It is also credit to the journalism that we are having in that you are giving good airtime and articulate presentation of the changes in the marketplace right now for connectivity and shared collocation services. Businesses have to thrive through technology. Banks, telecommunications and oil and gas firms need to have high-reliability technology to support their systems. Energy companies coming in after the hugely successful privatisation exercise need to put in technology very quickly to efficiently run and thrive. For banks, if a customer finds that there debit or credit card does not work, they will move to another bank. Financial services companies must put in place electronic systems that enable their corporate customer function effectively. Given that massive change and demand from customers, they need data centres. If a data centre is down, your business is in jeopardy. If IT is down and your business is down, you have to invest in core infrastructure – networks and data centre. Data shows all around that you require millions of dollars to build reliable data centre. You also need 18 months to build a data centre.

Assume, you are a bank and you have to spend all this money in 18 months. You competitor spends Operating Expenditure (OPEX), comes to collocate with Rack Centre and they are in business within 6-8 weeks. You’ve lost the race. That’s the reality of things right now. These are the things unlocking that addressable market. Of course, we had to put in a lot of hard work in a variety of areas – bringing the awareness to the marketplace, making people realise that there is an alternative to building a data centre, amongst others. From an operations point of view, Rack Centre has not had one second of downtime in an environment that’s 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 percent. We actually project with these changes occurring, the growth rate in Nigeria will be around 20 percent. I hope that with elections being stable, good governance and increased Foreign Direct Investments (FDIs), that projected growth rate will definitely be realised.

 From my interactions with Rack Centre, you tend to focus more on the large corporate organisations and multinationals. Do you ever consider the SMEs? What sort of solutions do you have specifically for this segment of the market?

We don’t turn away our attention away from SMEs. Some of the things we do with our reseller partners are particularly targeted at the SME. We provide an opportunity for SMEs to have baseline technology that are the same standard. They don’t have to scratch their head to say because I am an SME I would patronise a cheap organisation. We package out the solution specifically for the SMEs. Do you know what would transform SMEs in this country? It is cloud computing. Now, you don’t need two layers of IT expertise. Payment companies and so on 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 some time now realise that they need to be much more efficient.

We are carrier neutral – so that’s a plus. Telecoms companies, with their own data centre are also partners of ours. We have MTN, MainOne, Globacom, Vodacom Business, and so on, connected to our world-class facility. These are the networks our clients use. When a customer comes in here, basically they have a choice of carriers. They can have their primary, backup and they can switch to any network. That’s the value proposition we give to prospective corporate customers. Our value proposition to partners in the Telco space is that as we build out the range of customers we have, it also opens up the opportunity for them to have their network fully utilised. So, it is a symbiotic relationship. Co-petition is not a bad thing at all. In fact, it is necessary for increasing the capacity in the economy.

I would rather say right sourcing is the way to go. The world has moved on. The old days when big multinationals actually built their own network is gone. Now, they build unto networks. The right technologies are in place to protect your data, so cyber-security is not so much a big problem. Right sourcing therefore means that you outsource the things that are not core and get IT to focus on managing those outsourced relationship effectively. You ensure that they are aligned to your corporate needs and strategy and you manage the risk in your outsourcing. However, there are certain thing you have internally that are core in a way that it enables your IT leadership to be transformative for the business. If a business Information Technology (IT) chief is thinking about very important but non-core infrastructure issues, then their attention has been diverted from focusing on the transformational aspect of the business. So, if you take a right sourcing approach, you outsource the right things that are not core. For certain things that are very important, you put the right contractual relationships in place to manage the risk and enable you derive the best value for the business. Then, you can now focus on those things that help you get competitive advantage. It is delivering the customer experience that matter at the end of the day.

Yes, it is a global issue not just a Nigerian issue. Not so much for the communications industry, it is more widely accepted than in a distributed business environment. In advanced economies, around 30-40 percent of data centre space is what’s collocated. The biggest competitors are the in-house provisioning, but that’s changing. In the less developed economies, it’s only about 5 percent. For us to move to 20-30 percent of collocated environment is to reflect on what has happened in 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 or clients to figure out how to optimise their insourced to outsourced relationship for those that have invested in some form of data centre facility. So, they not only gain value out of their existing investment but also they gain value from working with Rack Centre.

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. Savvy Chief Information Officer (CIO) will convince their Chief Executive Officers (CEOs) to move in that direction. I’ve not had a CEO come into Rack Centre and go with the intention of building his 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. An interesting aspect is local content. Nigerian still has a significant amount of outsourced hosting that takes place outside the country. With this hosting, you have to contend with the latency of data traffic going out of the country and round-tripping.  So, the customer experience of your online transactions are limited and constrained. Why go abroad, 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. Now, when they realise that this service is available in-country, they come here. One way the Central Bank of Nigeria (CBN) for instance can take a different approach. They can say if you going to paying for data centre services abroad that are here, you won’t get your Foreign Exchange (FOREX) at CBN rates. You can pay for it however you like because the services are available in Nigeria and the services are here at world-class standards. Last year, Rack Centre was the only African company to reach a finalist at the Data Centre Dynamics Award in London. If a Nigerian company can be celebrated at world-class levels, why would anybody want to host your data abroad?

It is an issue for us here in Nigeria. It is one for the IT leadership to take on right from a grassroots. We need to build IT professional leadership capabilities. It is one thing being a technical IT expert; we have to create more IT commercial business leaders who are savvy at engaging at the EXCO level. What are we doing about it? We are very proud of the capability of the people that work here. We are quiet about it but we spend a significant of time developing our people to world-class standard. 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 working with universities, government agencies and banks to develop initiatives geared towards building requisite ICT capacity. We want to build the core competencies from the grassroots right through. We’ve got some interns working with us right now. As Rack Centre grows as a business, the impact it can have in developing industry competencies will increase.

The industry is very competitive. Rack Centre was the first to be designed certified tier 3 by the Uptime Institute, which is the global body in certifying data centres. We are delighted that MTN and MainOne are also designed certified. We will continue to provide leadership in that area. It is good for Nigeria and it is good for the 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 situation and recognition. It is also a testament of how we as an industry can step up to global standards.