Question Time: Simon Taylor, NGD’s Co-founder and Chairman
Following our recent story ‘The Rise and Rise of Next Generation Data’ Simon Taylor provides an insight into the key factors behind the NGD success story and discusses plans for further expansion.
What sparked the idea for creating NGD as a major out of town data centre hub?
In our previous business ventures our New York and London company data centres had been directly affected by the aftermath of terror attacks and the business disruption caused. It was this factor and the growing realisation - before anyone else - that the rapidly falling costs of network fibre could and would allow data centres to move away from their traditional locations in congested and expensive metro locations. We also realised that increasingly sophisticated remote diagnostics and the emergence of cloud computing, which by definition means IT can be hosted almost anywhere, would only add to the demand for safer, less expensive out of town data centres.
How did you negotiate favourable terms with the Welsh Government to acquire the building in South Wales?
We were in a good negotiating position as having identified the market opportunity we already had the courage of our convictions and were ready to act. They were also keen to see the building we had identified finally being put to good use. It had been derelict for more than ten years after the government had invested millions in helping LG, the Korean electronics giant, build it as a major semi-conductor plant with the promise of significant local jobs creation. But LG never actually used it due to the Korean stock market crash.
They also recognised the potential a major data centre would have for attracting businesses and jobs creation in the region – rather like the railways did a 100 or more years ago.
In the midst of the credit crunch, how did you secure the funding from RBS Bank to help with the development of the project?
We were able to show them a tangible asset right from the start. It helped enormously that we had purposely started with an existing fit-for-purpose building, rather than a greenfield site, in order to clearly demonstrate the business case for transforming it into a state-of-the-art data centre – a far more convincing approach than taking potential customers and financial partners to a muddy field and asking them to use their imagination!
We were also able to share with them the significant revenue projections from our first major tenants. We were refreshingly different to other building and particularly data centre development projects in that we were not still at the drawing board stage or awaiting planning permission or putting forward a business plan based on a 'build and they will come' strategy. We had a very compelling proposition based on reality and solid numbers.
Last, but by no means least, we found the right part of the bank to fund the data centre. Lombard, which initially put up £4m, approached the funding from the starting point of asset finance but had the flexibility to understand the risks of the business and structure a deal that satisfied their credit committee.
In the start-up phase how did you manage to attract and negotiate long-term contracts with your first major customers?
By thoroughly researching our target customer, understanding their future requirements, and then providing exactly what they were looking for. Right from the start, before we finally acquired the eventual site in South Wales, we had already identified BT and CGI's future data centre requirements and timescales, and shared with them our vision of what data centres of the future should be offering. This came down to more space, power and security as well as lower pricing compared to London and South East England. Armed with this knowledge, we were able to narrow down finding the ideal location. Once we found the former LG Electronics plant, we were able to show them the actual building we were planning on developing, rather than an artist's impression, and get their final buy in.
What other factors have contributed to the NGD success story so far?
We have a unique product. If the product had been identical to others in the start-up phase, why would any major customer have taken a risk with a new company? Our product was deliberately positioned as an “out-of-town” alternative which was 25 to 50% cheaper than the London market, much more secure and uniquely connected to the national grid for superior resilience. Our product was also designed by experts and used only the best products. This helped convince our initial – and future - customers that we knew what we were doing from the outset.
Since then of course we have added and enhanced our product. For example, alongside the large private custom data halls we’ve built shared colocation halls designed for businesses and service provider companies needing smaller amounts of data storage capacity. We were also the first data centre in Europe to source all our power from renewables and gain a UK Government Climate Change Agreement which apart from demonstrating energy efficiency credentials makes NGD exempt from carbon taxes.
With the support of Infravia how do see the next five years panning out?
W have the financial muscle available to accelerate our growth and take the business to the next level. This means being able to respond even more quickly to data hall build out requests from existing and new customers as well as bringing on stream a second site. The new site will make NGD increasingly attractive to customers who require a backup or data mirroring facility. We will also be enhancing out already wide and diverse carrier and ISP network infrastructure by connecting directly to the latest high speed transatlantic network.
The prevailing and forecast market conditions for the colocation and cloud markets are extremely encouraging which can only be positive news for the continued rapid growth of a world class facility like ours. The recent ‘Brexit’ situation is also potentially an added bonus as it may lead to an increase in demand for the onshoring of data.