Firms taking datacentres outside M25

Firms are expected to follow the example of Dresdner Kleinwort's datacentre move

The recent datacentre moves of Dresdner Kleinwort and Citigroup from the Docklands area of London to other UK locations may signal a new exodus of firms moving server facilities out of the capital.

Concerns such as high property prices and power supply constraints are driving demand for sites beyond London ­ – especially just outside the M25, far enough for disaster recovery and close enough for low-latency links with the City.

According to a report by real estate firm CB Richard Ellis, the first quarter of the year was the lowest for take-up of London datacentre space since it began measuring demand in 2004.

“We expected to see a slow start to 2008, notably in London, where there was little activity. IT budgets have tightened among the financial services community and a number of planned projects were delayed for later in the year,” says the report.

“Although take-up in the first quarter has been low, we are aware of a number of large deals that will come to fruition in 2008, and while we will not see the same levels of take-up as last year ­ – 2007 was a record-breaking year ­ we do expect levels to exceed those of 2005 and 2006,” it says.

Advances in technology are allowing firms to reduce the need for constant physical maintenance of systems and mitigate data transfer latency issues, which means they can move beyond the generally accepted 45km limit from their primary site for real-time data replication, said Mike Hills, director of products and services at datacentre broker Adapt.

“If bandwidth costs are not prohibitive and companies are using virtualisation, fast real-time database replication removes geographic boundaries,” he said.

“These banks have capital constraints and liquidity issues but it does not mean that they do not have the money to make huge investments in their own datacentres. The datacentre structure is a critical part of their business as they need resilience and a solid infrastructure. But it does not have to be in central London.”

To rationalise costs, 76 per cent of UK IT directors plan to use more third-party datacentre services in the next two years, according to research from supplier Colt. This is also driven by challenges such as finding available space, security and running the building and systems – ­ including power spending.

Power costs remain close to the top of the agenda. Barclays Capital wants to consider environmental concerns in its datacentre restructuring through on-site energy generation, but is struggling to find a location.

“A lot of people are chasing very few datacentres or sites suitable for local power generation,” Barclays Capital environmental manager Paul Baglin told Computing earlier this year. “It might make sense to just stick it in Iceland where you have maximum free cooling, but that is not an option at the moment.”