The Great British datacentre

As US cloud giants Microsoft and Amazon Web Services plot UK datacentres, what does this means for existing British datacentre players?

The number of US exports that have made their way to Blighty is huge - from KFC to the Kardashians, Mickey Mouse to M&Ms, the list is seemingly endless. And now something else can be tagged onto the end: datacentres.

While Microsoft and Amazon Web Services (AWS) each have a well-established presence in the UK - and have done for a while - the duo recently announced tthata t they will open UK datacentres, or so-called "regions".

The former's chief executive Satya Nadella was in London at the company's Future Decoded event when he made the announcement, claiming the plan to open a UK datacentre is a "huge milestone" for the firm and represents "huge commitment" on its part.

AWS was equally optimistic about its datacentre ambitions, with its chief technology officer Werner Vogels claiming the UK "region" shows how his company is "committed to meeting customers' increasing needs for capacity and for powerful AWS services".

The pair's enthusiasm for their respective moves is hardly surprising given the potential boost it will have on their profile and profits. But the UK is already a thriving industry for datacentre providers, with figures from DataCentreMap claiming about 250 companies are running datacentres in the country already.

With data sovereignty and privacy hitting the headlines regularly in recent months and years, UK providers have been keen to hammer home the message that their customers' data stays on British soil - something which until now has acted as a significant differentiator for them.

Some providers even go so far as to offer guided tours of the datacentres in order to convince customers of the safety and privacy of their data.
But as the cloud giants step across the pond, how will this change the current UK landscape, and is it good news for the channel?

Size matters?

Few datacentre providers in the UK will even come close to matching the likes of AWS and Microsoft when it comes to size alone. When Amazon broke out AWS revenue for the first time back in April, it claimed the subsidiary is a "$5bn business and still growing fast", and Microsoft has vowed its cloud revenue will reach a massive $20bn (£13.2bn) by 2018.

But according to TechMarketView analyst Michael Larner, being big doesn't always beat being first when it comes to customer opinion.

"I think first of all [UK-based datacentre providers] will rejig the marketing spiel to ‘we've always been UK-centric'," he said. "They will allude to it, I would have thought, but not directly address it [AWS' and Microsoft's arrival]. Datacentres here for x number of years - you'll see a different strapline."

But with the "stored in the UK" message no longer acting as a differentiator, British firms will have to do more to stand out, he said.

"Obviously, they will not compete on price," he said. "They won't go up against AWS on pricing. Like with other industries, they will have to provide more value-added services."

UKFast is one firm which claims to be doing just that. The Manchester-based company has a datacentre complex which represents a £22m investment. It owns, manages and maintains all 30,000 square feet of the facilities and claims this enables it to have "total end-to-end control".

Its chief executive Lawrence Jones (pictured) said the imminent arrival of Microsoft and AWS datacentres in the UK "doesn't change a huge amount" for his company because of the extras it offers customers.

"The guaranteed data sovereignty we offer is just one aspect of the UKFast eCloud range," he said. "Our biggest selling point is that we're a lot more bespoke than the huge cloud providers, and in fact most of the smaller ones too. With most providers you just buy what they're offering and that's it. There's no negotiation and no technical support without paying an extra premium.

"We also find that people have an issue talking to a huge, faceless corporation. With UKFast you're one level away from being able to talk to a member of the board if you need to and get face-to-face interaction with the people who actually built the system."

He said that even when the cloud giants open UK facilities, it will not allay all customers' fears.

"There are still underlying questions about US government's access to data stored by US firms on UK shores. We don't have that risk," he said, adding that supporting British businesses is a bonus for many local customers.

"We're a British company that is proud to be in the UK and [we] pay our way - taxes and all - to play a part in growing our economy."

Safe Harbour ‘scramble'

AWS and Microsoft's UK datacentre announcements came within a week of each other - and perhaps not coincidentally - about a month after the landmark Safe Harbour ruling.

Back in October, the European Court of Justice ruled that the Safe Harbour, which once protected transatlantic data transfers involving the personal data of EU citizens, is now invalid, following a long-running and high-profile court case.

According to Alastair Mitchell, president of Huddle - which provides cloud services from its own datacentres - the ruling caught the cloud giants off guard and caused panic among them.

"Unlike Huddle, which maintains datacentres in the UK and Europe, as well as in the US, many of the US vendors offering cloud services within the UK did not have pre-existing datacentres there," he said.

"With the end of Safe Harbour, these vendors have been left to scramble to provide their customers with a datacentre option in the UK."

A Huddle survey undertaken this year of 4,000 government and public sector IT staff found that having data stored in the UK was important to two thirds of them.

UKFast's Jones agreed that the Safe Harbour news played at least some part in the duo's plans to open UK datacentres.

"I would very much doubt that the Safe Harbour change hasn't had a definite impact on the timing of this decision, or at least the announcement of it," he said. "It has given them a kick in the pants. Launching a datacentre takes an incredible amount of planning - so it was probably in the planning phase.

"But the absence of a clear message from the global hosting p

roviders about how they will respond to the Safe Harbour decision was creating uncertainty in the market. This announcement is a clear indicator that they are trying to demonstrate a response to their problem."

Chirpy channel

Resellers have welcomed the news that AWS and Microsoft are launching UK datacentres, with some having hailed the news as "fantastic".

The public sector is extremely strict when it comes to data sovereignty, with some departments and bodies insisting that data is stored in the UK, with absolutely no negotiation. With the public sector making up a huge chunk of the channel's business, the issue can be make or break on lucrative deals.

But according to Microsoft partner TechQuarters' chief executive Chris Dunning, privacy concerns are spread across the board.

"It's absolutely crucial," he said. "When you're talking to businesses, the old ‘whereabouts is [the data]? Is it in the UK?' comes up all the time. It precludes too many businesses. You go in there [to customers] and you're having to put their data on your own rack in your own datacentre. We have three datacentres we deal with ourselves - we'd provision our own customers on those if there was a problem with data privacy."

He said this will not need to happen when Microsoft's UK datacentre is up and running.

"We don't own the datacentre; we have a rack with a bit of kit in," he said. "It's useful for backing up data... as a disaster recovery solution. We are paring down and are not investing at all in our own datacentres - everything goes in Azure or [Office] 365.
"[But] if we're in a tender position, we would still need the capability if Microsoft didn't have the datacentre in the UK. Now it has, it's absolutely awesome. We won't be putting anything on our own datacentres, I can guarantee you."

Joseph Spear, marketing director for AWS partner Smart421, agreed that it is welcome news.

"It doesn't come as any surprise to us that these manoeuvres are happening," he said. "We're enthusiastic about it, we genuinely are. It means an increasingly better deal for the customer community and the playoff between Amazon and [Microsoft] Azure will mean increasingly better competition for those customers.

"You could argue that Microsoft owns the enterprise because they have such an entrenched position in many UK organisations - at SMB level right up to enterprise and government level - Microsoft is everywhere, right? For them to announce what they have, it represents a step change in the minds of Microsoft, driven by what they see is the next step for their growth.

"It matters to us because it matters to our customers."