Malaysia’s data centre industry needs to better sell itself: Emerson

  • Country’s data centre industry grows, but potential to do better in near future 
  • One key challenge is IP transit connectivity prices, which can impact industry

Malaysia’s data centre industry needs to better sell itself: EmersonMALAYSIA'S ambition to establish itself as a preferred data centre hub in the region, while promising, still faces a number of impediments, according to an executive with Emerson Electric Company.
 
Tony Gaunt, Asia director for Emerson’s Internet data centres and global enterprise accounts, said Malaysia is overall a good country for co-location data centre providers to choose, but suffers somewhat from a lack of exposure and publicity of its capabilities.
 
“I think Malaysia is not as established as Hong Kong and Singapore,” he told Digital News Asia (DNA) in an interview recently. “But in some sense, Malaysia has advantages such as land availability and a stable environment for it to thrive. But the country must do better to sell itself more.”
 
Headquartered in Missouri in the United States, Emerson is especially known for being a producer of power equipment for large industrial and manufacturing facilities, including data centres.
 
Gaunt said Malaysia has good government incentives and backing, good industry bodies, an educated workforce and can potentially compete with the best. But it is at a point where it needs better recognition, he added.
 
“Many of the international banks and multinationals (MNCs) see Singapore and Hong Kong as the safe comfortable places to move to,” he said. “But they don’t recognise that Malaysia is absolutely no different.”
 
Gaunt however said that there are still some challenges facing Malaysia in terms of connectivity, as well as the availability and control of the telecom arena, including international IP (Internet Protocol) transit connectivity prices, which he believed may impact the industry.

“More competitive pricing is available from providers in neighbouring countries," he said. "Competition is key to driving down costs and making it more viable in the local and regional market.”
 
Despite this, Gaunt said that there is a growing recognition that Malaysia can succeed, adding that he believes it will. "We are at that turning point where we will start to see serious investment in Malaysia as a data centre hub,” he opined.
 
Asked to elaborate on what he meant by saying that Malaysia has to “sell itself better,” Gaunt said data centre co-location providers often choose countries to set up in markets where they have the most customers, adding that these providers like to remain in comfort zones.
 
“When Emerson talks to a number of co-location providers about their plans, Malaysia may not always be on their map,” he explained. “What we see is that a lot of co-location providers tend to partner a local entity first to establish its footprint to test the market.
 
“Malaysia may not immediately come to mind as a co-location destination, so it must do better in selling itself as a possible location,” he said.
 
Still, Gaunt believes that Malaysia will make good its potential as there are interests in areas such as Iskandar Malaysia, a southern economic region earmarked by the Government in the state of Johor; and Cyberjaya, part of the Multimedia Super Corridor, to achieve its potential for data centres.
 
“I think we’ll reach a tipping point soon, in terms of how dynamic the market is, especially with the cloud and enterprise in the fore. It’ll take some time, maybe a couple more years when enterprises will need to make a decision to embrace co-location data centres.
 
“Local providers will have also to better sell their capabilities and services as well, and once we reach critical mass, then we’ll see the full engagement and investment in Malaysia as a data centre hub,” he said.
 
Where are we?
 
Malaysia’s data centre industry needs to better sell itself: EmersonIn 2010, Prime Minister Najib Razak announced a national masterplan comprising public-private sector economic activities to transform Malaysia into a high-income nation.

Dubbed the Economic Transformation Programme (ETP) and facilitated by the Performance Management and Delivery Unit of the Prime Minister's Department (Pemandu), the scheme seeks to double the country's per-capita income to US$15,000 by 2020.

The ETP encompasses 131 entry-point projects (EPPs) which outline actions required to grow the local economy. One of these EPPs involves the upgrading and development of the data centre industry, aimed at turning the nation into a data centre hub.

Last October, Malaysia’s Minister of Communications and Multimedia Ahmad Shabery Cheek said the half-year revenue for the data centre industry was RM292 million (US$92.7 million). This is set to hit RM562 million (US$178.4 million) for 2013, marking a 20% growth from 2012. 
 
According to Dan Fadalini Sukia, senior analyst for Asean services research at IDC, the local data centre landscape has evolved quite well in the past two years, especially in the level of awareness, sophistication, demand and expectations of the market.
 
Sukia told DNA via email that there is an increasing demand for data centre capacity and services in the country, and this is driving competition among the data centre players within the region, with more new and cutting-edge facilities. 
 
“While Malaysia is generally faring quite well against the competition, the more important question is understanding the driving forces behind the increasing demand,” he said.
 
He said the global expansion of business means that businesses have to go where new customers and markets are.
 
In tandem with this expansion, organisations are dabbling in new services and new applications, such as in mobile, social, and analytics, all of which are needed keep customers happy, Sukia said.
 
Companies have also begun to realise that the existing way of running the data centre is just not working, and thus they need to change their models, he added.
 
“There is clearly an increased level of awareness in the role of data centres in Malaysia. Players are realising that the data centre is not just a place where an organisation keeps its data and computers, but is the first point of contact with an organisation's customers.
 
“So it needs to be as well-equipped as the business itself in order to provide the best service to those customers,” he added.
 
That said, Sukia noted that while the building up of new data centres around the region has added pressure on Malaysian players to compete better, he isn’t seeing its uptake as had earlier anticipated by the industry.
 
“In regards to Pemandu's efforts to drive the data centre industry forward in Malaysia, there are potentially more multiple factors that need to be looked into other than [lowering] operational costs.
 
“Some issues include customer reach as customers are still mainly located in Singapore and Hong Kong,” he pointed out. “Another challenge is the supply of talent, both local and foreign.”
 
Yet another challenge facing Malaysia are global players such as Amazon, Google and other similar global cloud providers, all of which are ramping up their services and offering a multitude of choices to customers in the region including Malaysia, Sukia said.
 
“Local players are exploring their niches according to the verticals that they are strong in, but the good news is their advantage lies in the capability to provide direct local support to organisations which may be nervous about moving into the cloud [for the first time],” he said.
 
Sukia said that while the usual challenges of telco infrastructure, energy and space remain, Malaysian data centre players must plan for the future and not be caught out focusing on the present.
 
“Today’s issues encompass [ad hoc] capacity planning according to customers’ business demands, but tomorrow's data centre will be about capacity planning as a continuous activity that will be key to operational and business success,” he added.
 
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