NGD and the Welsh ‘white elephant’
It has built Europe’s largest data center yet but how is NGD going when it comes to bringing business to Wales?
By Penny Jones - DatacenterDynamics
Where size counts: NGD Europe's massive data center in Wales
It is almost mind boggling how something so large could be kept such a well-kept secret – at least to the local community surrounding it. We jumped in the taxi from Newport station in South Wales on our way to Next Generation Data (NGD) – the 750,000 sq ft data center in the 120-acre business park that is surrounded by other high profile operations – defence firm EADS and Airbus have quarters very close by.
The taxi driver looked confused at our first destination request and, providing a run down on the history of the town, which he said “these days has nothing much going for it” drew a blank. Second time around, with a street address, he got it. “Oh, you mean the ‘white elephant’, what on earth goes on inside there? I don’t know, very secretive this lot,” he said, before quickly taking the chance to express the town’s dismay at the history of the site.
The ‘white elephant’, you see, was originally a building that held a lot of promise for Newport. But economic conditions – not in the UK, but far away – removed all hope. But little do Newport’s community realize the success story that has since come out of the site (and NGD, with its four-metre high security fence and five-tonne ram-raid boulders and guards seems to want to keep it that way).
Behind the perimeter security, and the guards, lies the biggest data center facility in Europe. Like many data centers outside of London it is not full – but then there is a lot of space to fill up.
Simon Taylor, NGD's chairman and cofounder, says the building has 420,000 sq ft of net technical space over three floors, and to date, about 35 to 40% of that is used. But requests coming in for space at NGD seem to be big.
And while many of them choose the site because of its high security – Taylor could not name a number of customers – others choose the Wales location because they require a lot of space, cheaper or more reliable power (NGD has a private, direct connection to the National SuperGrid and can deliver 90MW of low-cost power from 100% renewable source) or backup offshore (the company has recently launched a sales offensive on the US market).
Talyor says NGD is currently building out between 80,000 and 100,000 sq ft of space – which will add another hall to the facility on the first floor, and also hopes to soon attract another client to fill its top floor, in its entirety.
“The requests we are now getting are big. We have two companies looking at the whole of the top floor, which is 140,000 sq ft of net technical space,” Taylor says. He has also been working with channel partners to open the flood gates to get smaller companies inside of NGD.
Current customers that can be named include IBM, BT, Logica, Dutch owned ERP and financial software provider UNIT4, Wipro, Dell, the UK and Welsh governments (though these contracts cannot be detailed) and Certus, a smaller IT consultancy and cloud services provider company that helps NGD reach the local Welsh market, and increasingly, UK-wide (Go Compare insurance is a Certus client hosted from NGD).
“We have six or seven (large scale) customers including government and they are all repeat buying, and we hope to add some further American clients in the next year (in addition to IBM),” Taylor said. “Not every American company wants to go into the City anymore when they are doing something on scale, because of risk, which is one part of the story I think we got right.”
Taking a risk
Locating outside of London’s M25 has always come with its challenges – the biggest of which is often finding large clients (different to local enterprises) to take up space.
Taylor and his partner Nick Razey have a 20-year history which began with Cable & Wireless. Following that they started a business called Interoute Telecommunications, which grew to take revenues of £200m. Razey, a chartered engineer by trade, left to build a boutique hotel in Brazil then returned to the UK to found IP telephony company Saiph. Taylor’s background has always been entrepreneurial in nature and while Razey was in Brazil, he founded NQuire, and then joined Razey for the Saiph venture.
Both eventually decided to bring the areas of real estate and IT together to form Next Generation Data (NGD) in 2007.
“After Nick went to Brazil we really wanted to get together and do something at scale again,” Taylor said. “We wanted something outside of London, in a rural area because you can get better cost and price for the product. At Interoute, we had always bought a lot of data center space, and we always scratched our head as to why it was so ridiculously expensive in London areas. We also had first-hand experience of the IRA bomb that went off in the late 90s that took out the front of our switch room in the Docklands, and then 911, during which Interoute’s New York office was demolished – luckily no lives were lost,” Taylor said.
The duo also knew data amounts were about to rise and data centers were likely to become a good sell. “So we started our project,” Taylor says. “I knew South Wales well, as I am from here, and I knew this area would have good land, low costs, low cost workforce, low risk and tones of power, and I knew that connectivity mapping in Wales had rapidly increased.” That is when Taylor found his ‘white elephant’.
The elephant in the room
The ‘white elephant’, as the Welsh people in Newport now know it, started as a government initiative with electronics company LG to boost the local economy, under former British Prime Minister John Major in the late 1990s. The site, initially built to be a semiconductor plant mimicking a similar LG facility in the earthquake-prone Silicon Valley, was 98% complete before it was “left out to dry”, as Taylor puts it.
“I got introduced to this site by the Welsh Government – we turned the corner and I said “wow", that is absolutely enormous, I am not sure we are looking for anything this big” but the government was willing to do a commercial deal with us and the site had everything, including security and a primary sub-station with capacity to provide 180MVA – enough to run a small city,” Taylor says.
LG and the Welsh Government had already invested a total of £133m in the buildings alone. Now NGD can provide between 6-7MVA but it is contracted to provide 90MVA – an amount Taylor says rises exponentially every six months under his agreement.
Korean-based LG’s exit from the site was sudden. “Apparently on the Wednesday there were about 300 Korean people walking around here – architects, surveyors and son on, and on the Friday every single one of them had gone home. They sent a plane in to Bristol airport to collect them all.”
LG pulled out of the deal when the Korean stock market collapsed, and following the event LG did everything it could to stop the government from re-letting the site out of fear of competition - and because so much had already been invested into it.
Between 2004 and 2005 the Welsh government regained control and started remarketing it – it almost became an assembly plant for Aston Martin but it only needed a quarter of the space. “Then we came along,” Taylor says, laughing.
NGD does not own the site but it does have a 125-year lease and a right to buy.
“You know, when we started this business everyone laughed at us – at least slightly tongue in cheek. Many had tried to do the same thing and not succeeded. But we were really confident, and once we got all our master planning done we realized this was an amazing site,” Taylor said.
The security sell
A large part of NGD’s sell, as a result of the LG build, is security. “I would say that everyone who has looked at this site has a very high security requirement. And we know, from talking to others, that our costs are considerably less for building a Tier III environment – we think we can do this at the cost of Tier II facility,” Taylor says. “Wales has 30-35% less labour costs in construction teams, and we can drive mechanical equipment machinery in and out of this building. We don’t have the restriction of being on the third floor in the Docklands – we can get things done really fast.”
As well as the large perimeter fence already in place, LG had also built its facility to be earthquake proof (legacy from the Silicon Valley design it copied). It has triple-skinned walls, each wider than Taylor’s arm-span, “and the amount of steal that has gone into it is incredible – if a 911 had happened here I don’t reckon the plane would have got through the exterior walls, let alone the interior ones,” Taylor says.
The top floor has been built to be movement free with only three supporting pillars holding what is literally three rugby pitches.
After taking over the site, NGD only had to spend £25m to turn it into a data center. It has direct on-site fibre interconnects enabling 1.4 ms latency to London and offers various tier 1 connectivity options including BT, Cable & Wireless, NTL, Virgin Media, Level 3, Geo, Neos and Surf Telecom – the latter has direct connections to 12 transatlantic submarine cables and provides a non-London transit alternative for added security and resiliency purposes.
While it is a far cry from the 3,500 staff LG promised, NGD only employs about 35 people, and Taylor says even when full he believes this could be as low as 100.
It now has nine halls built. Taylor says he believes it could still take another five to seven years to fill the facility. “We have a current run rate of growth of 30% a year.” But he admits the market is slowing under current economic pressures. “We do believe some clients have delayed their decision to come here because of the economy and austerity measures, and while we expect another 30% growth this year, we think the growth rate will be higher than this the next. The best thing is we don’t need to compete with those companies fighting like cats and dogs in the London market – they are the ones having a hard time and really having to put their prices down at the moment.”
That said, Taylor is first to admit the London market is dominant but he points to shifts being seen in the US following 911, and hopes a similar change in perception could happen in the UK. “Before 911, all roads led to New York. But now there is a massive data center market in New Jersey, Massachusetts, Pennsylvania,” Taylor says.