Ayotunde Coker, Managing Director of Rack Centre of Nigeria speaks about the changing business landscape in a golden era of technology and role that data centres play to drive efficiency and productivity, in an interview with Kolade Akinola of Technology Times
Technology Times: Quite a lot of policies and dynamics in the sector are triggering the takeoff players in the market space in which you play. In the case of Rack Centre, what were those local market opportunity that have led to the formation of this business?
Ayotunde Coker: Rack Center is a state-of-the-art, Tier III Design Certified data centre offering carrier-neutral collocation services.
Rack Centre is a member of Jagal investment. It is 100% owned by Jagal, a Nigerian conglomerate and the location here is about 20,000 square metres of space. It is an ideal location; 30 metres above sea level and we saw an opportunity in tech infrastructure to utilise the landscape where we could develop a data centre.
No industrialised country exists without collocation because the growth of industrialisation is driven by technology and technology can’t operate if you don’t have a data centre. Once your data centre is down, your technology is down as a nation. There is a dependency.
So in seeing that opportunity, Rack Centre and Jagal decided to set up a data centre about three years ago and that was a belief based on what we saw in the development of Nigeria. So in setting up the Rack Centre, we decided to take a modular approach. We have the first module that has been implemented and the benefit of that is to build in a progressive way as the market expands.
If we look at the Nigerian environment, we now have about 96.3 million Internet subscribers. That number has surpassed Russia, a country with the highest Internet subscribers in Europe. You find a significant increase in data volume and all that needs computing infrastructure that is resident in-country. So with that opportunity, we decided to set up a data centre.
After setting it up, we have also done a study of the market potentials in Nigeria. We did this with Broad Group, one of the reputable foreign market analysts and the assessment shows that there is about 120,000 square metres of demand in the country. And if we look at the data centre space collocation, it’s around 5,000 to 6,000 square metres. That’s about 5% of the demand. And if you look at Tier III certified data centre, it is only 20% of demand. So, we see a significant potential in the market.
As subscribers start to adopt 3G technology and 4G LTE, there will be increase in the numbers of subscribers and all those need for it to sit on a data centre. So, there is potential in Nigeria in the market for data centre collocation space.
TT: There is a little bit of myth in choice of locating a data centre. Traditionally, it is believed that data centers have to be near landing points of undersea cable, but yours is located further into the hinterland. How have you been able to scale up with this myth?
Ayotunde Coker: It is highly positive that we are here on the hinterland away from the sea because it protects us. We are 30 metres above sea level in an area that is much served with utility and highly protected. This is ideal for a data centre.
We have fiber connections to undersea cable and we are truly carrier-natural. All of the telcos and providers are at the Rack Centre. So with our partners connected to Rack Center, we have access to West Africa Submarine (WASC) undersea cable. We have Glo 1, Main One, MTN, Vodacom.
The other thing about the location here is the security. We have levels of physical security, it is another core competence. The assets kept here are highly secured in a position that is well secured from being at sea level or close to the ocean.
We also have access to gas power here. We currently run with diesel. Our industrial utility project is underway and by the end of February we would have 33KVA base station here connected to the local electricity distribution company and we are looking to building a gas generating capability over the next four years. Then IT power of this site here, because of the space we have, will scale up to 8.5MW of IT electricity demand.
TT: What we have seen is that pioneers in the data centre business in Nigeria encountered concern of customers not wanting to collocate their sensitive information with third party like yours. With banks and other corporates, are they now comfortable with collocating their information with providers like you?
Ayotunde Coker: Yes the facilities are there now. I go back to when I joined Access Bank in 2009 and I said why should we build a data centre? It is a critical infrastructure but we build it out of necessity because there was no choice of collocating. Some people took some of their data to collocate out of the country because there was no choice. However, over the last two years, that has changed. We have a high quality data centres as good as anywhere in the world.
Given this fact, I believe there is no reason why any bank needs to build a data centre. It is highly expensive, it needs technical capability to build and run it successfully. The demands for technology is growing significantly you need to plan expansion into it. So people are realising that the option is here. They are looking at the option of collocation and that is what we are finding. We are doubling our capacity right now.
The CBN started the shared service initiative. So they are encouraging banks to help reduce shared service in collocation and so on. With the new initiative from CBN, we can hardly find banks to collocate. What we find out is when CEOs of companies visit Rack Center, they says “why do I need to build something like this” when they have a high environment that collocates them so they just concentrate on their front end.
TT: You mentioned critical infrastructure within the collocation industry space, this has also been a key policy thrust for most private sector players that have been pushing for government to come up with law to safeguard critical infrastructure. How compelling is this need from the policy and regulatory point of view to further unlock potential for providers like you?
Ayotunde Coker: With the drive of National Content, if we don’t have the right quality here, it would be embedding mediocrity. Most advanced countries have the right laws that will encourage and drive the right behavior. So we have to make sure that what we have is completely efficient. So there is no need for people to be hosting their data outside Nigeria. Currently significant numbers of companies do that.
I think what we need to do is to create more awareness to drive that awareness. We have Internet Exchange Point of Nigeria. Where you serve a population of 180 million people, then latency becomes an issue. If you are hosted in Rack Center, and your customer base is here in Nigeria, you have little or no latency. You are connected to the people who are interconnecting with you locally.
We are working with the National Content authority to make sure they drive the awareness. By collocating your data, the impact on GDP will increase again significantly and the next two years, there is nothing stopping it to jump to 20% and that will be significant for the economy.
TT: The Internet Exchange Point of Nigeria has consistently highlighted the seemingly imbalance we have in the way that communication is passed through the Internet today. How real is the issue of unneeded expenditure on international bandwidth and what are polices needed to ensure we reverse that trend?
Ayotunde Coker: Being located here, one of the things we are doing here is we are working with partners to provide cloud services. It is locally hosted email service here in Nigeria; your data held here in Nigeria with .ng domain connected to Internet Exchange Point. It is an instantaneous trip and that is another growth area we have seen.
TT: Give us some idea of the investment that has gone out to build out this data centre?
Ayotunde Coker: Significant investment. I can say several billions of Naira has been sunk here. For some commercial reasons, I can’t make some specifics but it been some significant investment that have been made with the shareholders in bringing the facility to this level. The value proposition to the company is that we have made some investment to achieve the quality we deliver here. We have made a lot of investment and we would still make some more by the time we finish the entire site we would have been spending $100 million.
TT: Tier III data centres focus on large corporates. Do you sometimes in foreseeable future have packages and bouquets for SMEs?
Ayotunde Coker: We are already doing that. We have reseller partners that provide cloud services. Our reseller partners aggregate the demand for the SMEs and the uptake has been good. The SMEs are the heart of the economy. When we have request for collocation space for SMEs, we introduce them to our partners.
TT: You have seen a lot of policies, regulations and market dynamics that have shaped and define business segment in 2015. From the perspective of a CEO, what are the similar policy and market dynamics that will shape 2016 and beyond?
Ayotunde Coker: 2016 will be an interesting year. There is one side of it that given the price of oil, it will be a tough year. There is another view that actions being taken by the government, we would be more efficient if investment should go in the right place.
The government is already benchmarking $38 per barrel. It is interesting to see how 2016 shapes up the economy. 2016 will be a structuring year for a better Nigeria. I think we would continue to tighten our belt because of price of oil. For us at Rack Centre, it means a tightening of belt year and technology is highly essential for companies to be efficient.
It means that companies needs to invest in high quality technology. If they want to thrive in the economy by 2016, which means they need collocation space. It will create an economic balance for Nigeria given the price of oil, but our industry, we would see significant uptake of high cost efficiency of data service for companies.