http://www.investinkainuu.com/index.php?id=88

12.11.2012

Former Yahoo! data center expert evaluates

Kajaani

Derek Webster is a data centre expert who has

been involved in the industry from the early

1990’s, right from when the industry was

evolving. He got interested of the new growing

business sector while it was still developing its

rules. Webster has had a long career with data

centers. Until recently he headed Yahoo!’s

EMEA data centre development. His expertise

among other things is in new data centre builds,

county and site selection.

On his visit to Kajaani during the Data Centre

Investment Forum in October 2012 Webster evaluated Kajaani as a data center location and

explained his views of the industry. According to Webster the recent investments to the

Nordics and especially the heavy work that Sweden has done to promote data centre locations

have raised the Nordic region and also Kajaani’s profile. Even if Sweden is one of the biggest

competition, they have done a good promoting ground work for Finland and Kajaani as well.

As the world is going through an economic crisis investments have been on hold on many

other industries. The data centre industry, when assessed as a real estate investments, offer

much better returns and margins than other industrial type investments, even though the

investment to the infrastructure is heavier than in many other types of investments. Especially

in the economic environment where commercial, retail and industrial investments have

slowed down, comments Webster.

The Kajaani site reminds Webster of a similar case he was involved during his Yahoo! years.

For example in Switzerland they converted an old industrial site to a data center. In Kajaani

there are two data centers located inside an old UPM paper mill. For Yahoo! 2nd Swiss Data

Centre it was important to utilize the site to create a story and preserve old premises. The

example case resulted as a carbon efficient data center with a social value, even if the process

took slightly longer and was little more expensive than building a green field site.

Kajaani isn’t suitable for all data centre businesses. For example banking, where the speed of

transactions is essential, may not work in remote locations for trading functions and activity.

According to Webster, Kajaani’s fiber connection is suitable for a specific kind of data centre

businesses such as social media, email, search engine, data backup, archiving and cloud

computing, because they don’t require as fast connections. Especially applicable for cloud

computing solutions which is a big growth area now and for the future. In addition, tax

advantages which are usually greater away from major cities, make this type of location

lucrative for the specific data center business.

The neighboring Russian market makes Kajaani interesting, says Webster. It is a growing

market, and there are companies who want to access this market, without actually locating to

Russia. Webster also hints that it might be worth for Kajaani to explore the possibility to

access China through Russia. There are fiber connection issues in this vision, but there might

be a possibility to service Asia from here.

Based on his long career with data centers and site selection Webster explains the process

how data centers locate. Things to be evaluated include such as speed to market, permitting,

quality of the fiber and getting the power that is needed. Data centers are one of the most

expensive types of real estate to build, and therefore tax plays an important part in the process

to have an efficient data centre. If the legislation is favorable for data center business it makes

a location attractive. Planning is one of the crucial issues. Webster was impressed that the

Minister of Public Administration and Local Government was in Kajaani to open the data

center event. According to Webster global players don’t start the site selection by looking for

plots of land. They proceed directly to the high decision maker level to make sure the

permitting issues won’t delay the process. If Finland and Kajaani can offer ease of permitting

a data center, it is an advantage to the region.

in addition, a thing to considerate is the needed skill set to build a data centre. Educational

gap definitely exists, since there isn’t a clear educational path on the data center industry.

According to Webster, the knowhow on how to operate a data centre would make an export

advantage. USA, Ireland, Britain and Netherlands have a good base of knowledge from the

dot.com era, but the data center world is growing faster than those countries can offer the

skills. Other regions are looking at data centre skills and education as a national skill set and

to address a pressing need.

For this reason Webster comments that he is fascinated to learn what kind of data centre

education the Kajaani UAS offers. He sees Kajaani taking a bit of lead to its competitors by

offering a data center education. However, it would be important that the course would have

an international recognition. In Webster’s view data center education also supports the

investment attraction. It eases the locating decision, if a company can have knowledgeable

work force and don’t have to bring in all the skills.

Webster admits that the data center industry isn’t very labor intensive. However, the industry

seems to be monitoring the sites where data centers locate. And those locations seem to

attract more inward investments. For example a small town called Quincy in the US has

attracted six global datacenter companies. Therefore, even if the data centre isn’t a big

employer on its own, there is a cluster effect, according to Webster. Positive effects come in

the form of attracting more global inward investment and utilizing services like maintaining

the site. Buildings and digital infrastructure are maintained by local companies.

Derek Webster’s 5 highlights of the Kajaani site:

1. Strength of the power grid and diverse power feeds from multiple locations from

separate power generating sources

2. Green and sustainable energy - fits nicely to corporate responsibility

3. Good fiber connection (for a specific niche sectors)

4. The ease of doing business and ease of permitting. Finland understands the datacenter

business and is an innovative nation that gets ICT

5. Incentives to invest and Tax advantages