Steve Whatling, MD at Keysource, looks at the data challenges facing the financial sector and what lessons can be learnt from economic and political instability…
The financial sector has gone through phenomenal change over the past decade. If we go back 10 years to the mid 2000s, the banking sector was entirely different. It was all about growth, with some financial institutions putting together 25-year strategy plans confidently based on year-on-year growth.
The retail banking platforms were still relatively traditional with low adoption of electronic banking as many customers still visited the branch network to carry out transactions. The CIO/CTO was often not part of the senior team and the data centre was the responsibility of the real estate or property department.
Whilst banks have always been concerned with privacy and security issues at this time there was low confidence in the security of cloud provision so they retained total control of their operations. There was no real outsourcing model and, as a result, with the exception of one or two they decided to build and run their own data centres – and of course they could afford to! So they built huge facilities in anticipation of this predicted growth and invested heavily.
Ten years on things are very different. The industry’s promised growth predictions have proven to be incredibly flawed and recent years have seen the global system in crisis, with the UK government stepping in and rescuing some institutions.
At the same time we have seen a phenomenal uptake of electronic, online and mobile banking, which has created a greater emphasis on the importance of technology and data. It has also been used as an enabler to reduce headcount, creating much-needed savings.
As a result the CIO/CTO is now right at the heart of everything with the IT strategy fundamental to the business. The financial sector CIO/CTO has had to embrace outsourcing and consider cloud provision, but is now often responsible for the property and Facilities Management associated with IT too.
Looking forward it is unlikely that we will see any new data centres built in the UK for the financial sector for many years. The sector is quite simply overprovisioned after building huge, highly resilient Tier IV and secure facilities in the early to mid 2000s that even the increase in electronic banking is failing to fill. There has also been considerable consolidation in the sector which has further exacerbated the issue.
There are also some legacy facilities which are outdated and run inefficiently as unfortunately there hasn’t been enough investment available to upgrade in recent years.
What we are seeing today is institutions looking at their data centre facilities and trying to optimise the asset wherever possible by seeing how they can be more suitable for their current requirements and potentially commercially viable. This might involve selling, upgrading or subletting.
There are a number of additional challenges facing the sector. A key area is how to keep aligning the business to its fast-moving and ever-changing environment. There is no doubt that electronic banking will continue to grow and more IT investment will be required to meet the needs of the influential Millennial Generation.
Whilst we will continue to see significant growth within the electronic banking area, the real opportunities are in the emerging countries in Asia and Africa. Their systems are often years behind and the industry in some countries is really in its infancy. They will benefit greatly from the lessons learned by the West and our experience and expertise.
This article originally appeared on The Stack on the 6th October 2016. Continue reading it here
At the end of 2015, the then Communities Secretary, Greg Clark, said council funding would be reduced by 6.7% between 2016 and 2020. Not only does this put further pressure on local government schemes, such as adult social care and child support services, it means councils are going to have to prioritise where they spend the money even more. Getting the most value from every pound is vital which means councils may need to look at alternative ways of approaching key areas such as data storage.
In my experience most councils need to upgrade their data centres. Typically built in the 1980s, the majority of the facilities I have come across are out-dated and run inefficiently as unfortunately there isn’t enough investment available to upgrade due to on-going government spending cuts. As a consequence the majority of local authority facilities are a generation or so behind commercial standards.
To be fair few of us would have predicted the changes that have taken place over the past 30 years in terms of technology and at the time they may well have been leading edge. However with an increasing reliance on online data, they are simply no longer able to support the data storage needs.
Traditionally each district, borough or council tends to have its own on-premise server room, this is partly due to culture and also due to a concern that any other solution might compromise on security.
However the increase in the volume and the sensitivity of data being held means that this approach is no longer tenable and I would suggest rethinking this and finding a more cost effective and up-dated approach.
Initially the data stored mainly consisted of telephone numbers and addresses, but as society has become more digitalised the information being held online is more time critical, sensitive and needs to be secure. To offer a snapshot, councils now store census information, medical information, tax information, accounts and social care information on their servers. They may have invested in an IT refresh to handle the increase in data but what they haven’t got is the funds to upgrade the infrastructure. And it is only moving in one direction; as technology continues to rapidly advance and government funding decreases the budget available to councils, the data centres will only become more out dated and less able to cope.
One solution is to create shared data centres between adjacent councils. For example if we were to take three adjoining boroughs of London, say, Islington, Haringey and Camden. These would join together and invest in one shared data centre. This provides a number of cost-saving efficiencies resulting in a secure, optimised facility at a significantly lower cost.
A bigger data centre doesn’t necessarily cost more to build or run as there is an economy of scale. The increasing price of land per square foot means it is much more cost effective to group data centres together and by pooling resources it will save councils time and money. By implementing physical and logical security solutions within the data centre, each borough could be assured that their data is only accessible by them.
In light of continuing government cuts, an increase in governance and regulation of data, as well as the digitalisation of society, this problem is only going to get worse. Technology advances every six to nine months therefore it is essential that facilities are designed from the outset to allow upgrades in line with technology and capacity requirements with zero disruption or risk. When it comes to data centres, at Keysource, we recommend that organisations constantly review their facilities using intelligent monitoring and facility audits. Hiring a fresh pair of eyes that can identify and implement any necessary upgrades can help you achieve significant improvements in terms of efficiency, reliability and cost.
My advice to local authorities is to act fast. We are currently working with a number of local councils and assessing their range of solutions. However, as a template, taking into account the price of space as well as the investment involved in building and maintaining a new data centre, a more collaborative approach is a much more viable way for councils to face the data challenges moving forward.
Written by Jon Healy, Associate Director at Keysource.
This article originally appeared on The Stack on the 15th September
Integrated property services group, Styles&Wood Group plc, has advanced its successful diversification strategy with the acquisition of Keysource Limited – a provider of specialist technical services to the data centre and critical facilities sectors.
The acquisition will enable Styles&Wood to expand into the growing data centre services market and provide new opportunities to broaden work streams with both existing and new customers.
Based in Horsham, Sussex, and incorporated in 1998, Keysource specialises in delivering engineering and technology services for business critical environments. The Keysource executive management team, which will remain with the business, has over 50 years’ experience working with some of the world’s leading organisations across a diverse range of sectors, including finance and banking, education and industrial. Keysource will continue to operate under its existing brand and the deal has been designed to provide it with a stronger operational and financial platform to support its ambitious growth plans moving forward.
The acquisition is in line with Styles&Wood’s strategy to diversify its service offering across key sectors and enhances the Group’s capabilities in technologies and critical facilities.
Styles&Wood and Keysource have an established working relationship as delivery partners on a strategic framework for one of the world’s largest banking and financial services organisations. The Group envisages being able to offer Keysource’s services to its other banking framework customers.
Mike West, CEO at Keysource, said:
“This is a truly exciting strategic move for Keysource. The business is in strong shape and coming under the Styles&Wood umbrella will provide the company and all of our employees with great opportunities for growth in the coming years. In the meantime, it is still very much ‘business as usual’ in terms of client servicing and continuing to build on the fantastic momentum and performance we have delivered this year.”
Tony Lenehan, Chief Executive Officer of Styles&Wood, said:
“The data centre market is a sector we have been looking to enter for some time and believe it has exciting growth prospects, driven by a combination of macro and regulatory factors. Provision of critical facilities to this market will continue to be crucial as it grows.
The acquisition follows our successful joint venture with Keysource on an ongoing major banking framework and we have been very impressed with the team’s expertise and project delivery capabilities. With the prevailing market trend for the expansion and improvement of existing facilities, we believe the combined strength of both businesses’ expertise in working in live environments will make a compelling proposition.
Styles&Wood has a proven successful diversification strategy which has been instrumental in supporting clients across a range of sectors. This acquisition further reinforces our strategic vision and will enable us to broaden our service offerings to existing and new customers and I am excited about the future opportunities for the Group as a whole.”
Headquartered in Sale, Greater Manchester, Styles&Wood provides a full range of integrated property and project delivery services to some of the UK’s premier brands and blue-chip organisations. Its integrated offer includes design, building intelligence systems, facilities solutions and fit-out and refurbishment services which provide clients with the opportunity to optimise the performance of their property assets.
According to the AMA Research Data Centre Construction Market Report published in March 2016 the market for data centres is forecast to reach over £1.1bn by the end of 2020, representing annual growth of 3 to 4%.
At the beginning of this year we announced that we had evolved our strategy, in line with market needs, to a more consultative led approach. We’ve seen, as customer needs change, that a wholly owned on-premise solution may not be the best option, and that a hybrid solution of cloud, colocation and some on-premise may deliver better against technical and commercial needs.
We’ve been working hard this year delivering strategy and IT Asset advice for both public and private sector organisations across Europe with great success (watch this space for upcoming announcements!) and have launched a new company – Business Critical Solutions – to further support this offering.
But once your strategy is in place – how do you best implement it?
Whilst we have been historically known as the data centre design and build experts (and we have been recognised by leading award bodies across the globe for our projects) our Critical Facilities Management division is less well known. With over 30 critical engineering specialists (plus administration and helpdesk teams) supporting our 200+ contracts across Europe, our teams are constantly looking at new ways of supporting and optimising our customers facilities and operations.
With IT Asset consolidation or moves being required in some cases, expert support is needed to safely and securely transport your IT hardware. In order to further satisfy this need Keysource has recently taken delivery of a new set of bespoke Shock Mounted Portable Server Racks.
They have already had their first outing, transporting the Metropolitan Police Service servers and IT hardware from their old data centre operator across to their new one. Carried out under highly secure conditions and escorted throughout the process by two NPPV (Non Police Personnel Vetting) level 3 staff, the new portable racks ensured the move went as expected and integrity of the data was maintained throughout.
The impact of last months’s unexpected referendum result is yet to be fully defined, however it is likely to affect all of us in the data centre world and possibly acerbate some of the challenges ahead. The issues around the ‘Safe Harbour’ agreement is just one example of the confusion that we are facing, and are likely to continue to face, in the coming months.
It was last October that The European Court of Justice ruled that the “Safe Harbour” agreement, which was designed to provide a “streamlined and cost-effective” way for US firms to get data from Europe without breaking EU rules, was no longer valid. The result following the ECJ decision was several months of confusion and in some cases panic before the Privacy Shield Pact was introduced instead. The main difference is that US companies can no longer rely on self-certification and must seek to strike “model contract clauses” in each case. These agreements will then authorise the transfer of data outside of Europe.
The UK’s decision to leave the EU means that we will no longer be bound by decisions of the ECJ and we are likely to have to create our own regulations. However I don’t believe we should ignore its findings or the views of European Data Protection Supervisor Giovanni Buttarelli, who criticised the Safe Harbour’s replacement describing it as ‘not robust enough’ and needing ‘significant improvements.’ The UK will need to factor these in to ensure that its citizens’ personal information remains safe.
There is no doubt that the UK’s decision to leave the EU has added instability to an already uncertain market. Before the results of the referendum were known CBRE’s quarterly review of data centre supply and demand in Frankfurt, London, Amsterdam and Paris, reported that the amount of data centre space taken up during the first quarter of 2016 was well above average leaving spare capacity in short supply. In fact the amount of spare data centre capacity in four major European cities is at its lowest level since the end of 2013, as cloud providers respond to user demand for locally hosted services.
The report suggests that this is in part due to the uncertainty surrounding the successor to the Safe Harbour US data transfer agreement which is motivating more IT infrastructure firms to consider data centres in Europe. Whilst this is understandable it is likely to increase costs which will ultimately be passed along the supply chain.
At Keysource we are working closely with our clients who are affected by these issues and helping them to continue to operate cost effectively and remain compliant during this difficult time.
This was originally published on Data Centre Solutions blog on the 6th July 2016.