2016 State of the Dutch Data Centers The new foundation
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Dutch Data Center Report 2016 State of the Dutch Data Centers The new foundation 2016 Dutch Datacenter Association 3
COLOPHON The Dutch Data Center Report 2016: State of the Dutch Data Centers is published by the Dutch Datacenter Association. Edition State of the Dutch Data Centers 2016: June 2016, year 2 Contributions Dutch Datacenter Association (Stijn Grove, Noor van den Bogaard, Luuk ter Weeme) PB7 Research (Peter Vermeulen) CBRE Data Centre Solutions (Mitul Patel) Editor-in-Chief Stijn Grove Managing Director Dutch Datacenter Association Marketing & artwork Noor van den Bogaard (DDA) Michiel Cazemier, Gaby Dam, Wouter Pegtel (Splend) Research by Peter Vermeulen Principal Analyst PB7 Mitul Patel Associate Director CBRE Print quantity First release, 14 Jun 2016: 100 Availability Our publications are free to download on www.dutchdatacenters.nl DDA thanks all people who made this report possible. A special thanks to Simon Besteman, Micky van Vollenhoven and Marc Gauw. 2016 Dutch Datacenter Association TERMS OF USE AND DISCLAIMER The Dutch Data Center Report 2016: State of the Dutch Data Centers (herein: Report ) presents information and data that were compiled and/ or collected by the Dutch Datacenter Association (all information and data referred herein as Data ). Data in this Report is subject to change without notice. Although the Dutch Datacenter Association takes every reasonable step to ensure that the Data thus compiled and/or collected is accurately reflected in this Report, the Dutch Datacenter Association: (i) provide the Data as is, as available and without warranty of any kind, either express or implied, including, without limitation, warranties of merchantability, fitness for a particular purpose and non-infringement; (ii) make no representations, express or implied, as to the accuracy of the Data contained in this Report or its suitability for any particular purpose; (iii) accept no liability for any use of the said Data or reliance placed on it, in particular, for any interpretation, decisions, or actions based on the Data in this Report. Other parties may have ownership interests in some of the Data contained in this Report. The Dutch Datacenter Association in no way represents or warrants that it owns or controls all rights in all Data, and the Dutch Datacenter Association will not be liable to users for any claims brought against users by third parties in connection with their use of any Data. The Dutch Datacenter Association, its employees do not endorse or in any respect warrant any third-party products or services by virtue of any Data, material, or content referred to or included in this Report. 4 2016 Dutch Datacenter Association
TABLE OF CONTENTS Colophon 4 Preface 7 About the report 8 Executive summary 9 The new foundation Data centers 11 Data center types 12 How a data center works 13 Infographic 14 Data center expertise 16 Data center customers 18 Regional data centers 19 Digital hub 21 Campuses 22 Digital Gateway to Europe 24 Representation 26 Related associations 28 Digital clusters 29 Market research State of the Dutch market - PB7 31 Key EU data center market - CBRE 41 Impact Effects on the economy 47 In- and outbound 48 Sustainability 49 Energy use 50 Trust 51 Future trends & growth 52 Data center myths 56 Recommendations 10 + 1 Recommendations 59 About Dutch Datacenter Association 63 PB7 66 CBRE 67 2016 Dutch Datacenter Association 5
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PREFACE The Dutch data center sector is in excellent shape. Every online services originate from data centers. The online sector is growing rapidly and so is the data center industry. Especially in the Netherlands as it is the Digital Gateway to Europe. The reality is that without data centers our economy comes to a halt. Data centers are therefore the main enablers of the digital economy. They are the new foundation. Digital services play an increasingly important role in our lives and the economy. Data centers are essential for these services to operate properly. All these online services, such as cloud, mobile apps and other digital applications are provided from within data centers. Data centers thus form the foundation of our (digital) economy. Data centers underpin a wide spanning range of activities across government, business and society. They form an important part of our national critical infrastructure. A whole ecosystem grew inside and around the Dutch data center precense and that is why many industry giants in the cloud, internet, hardware, and data industries choose the Netherlands as the ideal digital hub to operate from. With this annual report, the second time it is published, the Dutch Datacenter Association would like to emphasize the importance of this crucial industry and provide insights into how this sector works, grows and what its challenges are, as it is destined to play a crucial role in the future growth of our economy. Stijn Grove Managing Director Dutch Datacenter Association 2016 Dutch Datacenter Association 7
ABOUT THE REPORT The Dutch Data Center Report is annual study initiated by the Dutch Datacenter Association. The main focus is to provide a quantitative overview of the Dutch multitenant data center market, the Netherlands as Digital Gateway and the direct and indirect way the data center industry impacts the Dutch (digital) economy. The report is a combination of research exclusively done by PB7 Research, CBRE Data Centre Solutions and the Dutch Datacenter Association itself. It focuses on data centers that rent out data center space in the form of housing or colocation. Many of these data centers will also offer hosting services. Not included are single tenant data centers that house server racks for internal use. Major hyperscale data centers from digital giants such as Microsoft and Google are also not part of the scope. 8 2016 Dutch Datacenter Association
EXECUTIVE SUMMARY Data centers are the foundation of our digital economy Digital services play an increasingly important role in our lives and the economy. Data centers are essential for these services to operate properly. Online services such as cloud, mobile apps and other digital applications are provided from within data centers. Data centers thus form the foundation of our (digital) economy. Having a strong data center infrastructure has become crucial to any economy The Netherlands has one of the strongest data center infrastructures in Europe. Over 90% of organizations in the Netherlands have high quality data center facilities at less than 30 minutes drive. We have identified 271.000 square meters of multitenant datafloor, an increase of 5% compared to the Dutch Datacenter Report 2015. Most of the growth can be contributed to the metropolitan area of Amsterdam, while most regional data centers have actively improved their utilization rates. The Digital Gateway to Europe As the fastest growing data center market in Europe, the Digital Gateway to Europe is the place in Europe to distribute your data. Centered around the Amsterdam Metro region data centers have grown with an average of 15% per year for the last 5 years. Due to the steady high take up all data centers are constantly expanding their supply to keep up. The Amsterdam metro is responsible for 64% of all multitenant datafloor in The Netherlands. As a location, it brings multiple benefits, including one of the biggest internet exchanges in the world, excellent connectivity, low energy costs, a stable energy grid and an world class infrastructure for international business. The Digital Gateway to Europe is considered as the 3rd international hub ( mainport ) of the Netherlands next to the Port of Rotterdam and Schiphol Airport. Future (challenges) In both the internationally oriented Amsterdam Metro and the regional datacenter markets, we predict long term continued growth. The data explosion and continued rise of online services drive a steady data center demand. Two thirds of all data centers expect to rent out more meters over the next 12 months, and only 18% expects a decrease. On the other side, Dutch businesses expect a strong shift away from using compute and store out of their internal datacenters towards colocation, hosting, and the cloud. For our economy, the direct and indirect effects are huge. It is of the utmost importance to safeguard the growth of this sector. Focus, support and a balanced approach by our government is needed for this fast growing industry. Let s continue and build on our lead. DATA CENTERS ARE THE NEW FOUNDATION 2016 Dutch Datacenter Association 9
THE NEW FOUNDATION >>>>>>>THE NEW FOUNDATION >>>>>>>>>>>>>> 10 2016 Dutch Datacenter Association
DATA CENTERS What is a data center? Data centers are relatively new in our urban landscape. In fact, many people are unaware that they even exist. A data center is a facility, often an anonymous-looking industrial building, used to house computer systems and associated components, such as connectivity and storage systems. It generally includes redundant or backup power supplies, redundant data communications connections, environmental controls (air conditioning, fire suppression) and various security devices. Large data centers are industrial scale operations. The importance of data centers Data centers are the main enablers of the digital economy. Data centers underpin a wide range of activities across government, business and society. They form an important part of our national critical infrastructure and bring energy efficiency. The Netherlands is benefitting greatly as Dutch data centers grow with double digits every year and are a magnet for bringing foreign investment and indirect growth. DATA CENTERS ARE THE MAIN ENABLERS OF THE DIGITAL ECONOMY Everything that happens online originates in a data center. Data centers form the heart of the digital infrastructure and are its foundation. This infrastructure includes Internet Exchanges, Cloud Exchanges, Cloud providers, Webhosters, Internet Backbone Carriers, Content Delivery Networks, Internet Acces Providers and Fiber Operators. All centered in data centers to make the internet and online services possible. In simple terms: Our current lives would grind to a halt without data centers. Key functions of data centers 1. Reliability A professionally managed data center has backup systems that are too expensive for most businesses to purchase and maintain. Redundancies in cooling, power and communication systems ensure the constant connection that is essential to any business. Constant up-time means uninterrupted access to your organizations data and servers by staff and customers. 2. Energy efficiency Data centers bring huge efficiency benefits. By concentrating IT equipment in one place and by operating data center facilities more professionally huge amounts of energy are being saved compared to on-premise situations. Without data centers our society would use more than double the amount of energy to what is used now. 3. Cost A data center is a low-cost solution to getting high-end equipment and service. If your IT department had to fund everything that you get from colocation a clean room, redundant systems, around-the-clock monitoring you would devote much of your company s total budget to keep the servers operational. When you colocate, you get exceptional data center equipment at a fraction of its total cost. And what are the costs when your IT, hence your complete company is unable to work? 4. Scalability When you devote part of your office space to server cabinets and other IT equipment, expanding that area becomes a challenge as your business grows. With data center space or colocation, you have flexibility to expand your requirements, paying only for the space and power you need and only when you need it. 5. Risk Management Emergencies happen, but when your mission-critical equipment operates off-site, it doesn't have to adversely impact your business. Colocation is a good strategy whether you use your data center as a primary home for your servers or as a mirror site to ensure constant connectivity during an emergency. Think of a data center as another basket, located away from your office, for your most important eggs. 2016 Dutch Datacenter Association 11
DATA CENTER TYPES A. Regional and national data centers Throughout the country regional data centers provide a platform for organizations to compute, run and store their services and data. Nowadays, organizations rely heavily on online services, which is why a regional data center can be found in every province in the Netherlands. From the north of Groningen to the deep south of the province of Limburg. Most Dutch data center operators have two or more locations providing geographical redundancy in-house. Only two Dutch data center operators have a truly national network of data centers. B. International data centers The Netherlands is the place to distribute online services in Europe: the Digital Gateway to Europe. Its central location, open economy and most of all its unrivalled connectivity and internet exchanges make the Netherlands one of the most advanced international data center markets in the world. It s currently Europe s fastest growing data center market. The data center space offered mainly consists of retail colocation, i.e. customers leasing space within a data center, usually one or more racks or caged-off areas. What is also offered is wholesale colocation: A tenant leases a fully-built data center space. Most of the data centers are located in the Amsterdam Metropolitan Area (MRA), with almost 100 data center locations, multiple internet and cloud exchange points. Unique are the three data center campuses within this area: Science Park, South- East and Schiphol campus. C. Hyperscale data centers Hyperscales are huge, single tenant data centers. Build for the world wide operating internet companies that are large enough to build their own data center. Hyperscales are built in places where costs are low, with the supply of enough green power and were heat exchange is possible. Apart from being a Digital Gateway for commercial data centers, the Netherlands is unique being a hyperscale country. Massive hyperscale campuses are located in the province of North-Holland, just above Amsterdam, and in the Groningen area, the most northern part of the Netherlands. The world's major Cloud providers choose the Netherlands for their online services. THE NETHERLANDS HAS ONE OF THE MOST ADVANCED DATA CENTER AND HYPERSCALE MARKETS IN THE WORLD Wholesale and retail data centers In a wholesale data center, a company leases out a fully provisioned facility for its own dedicated use. In a retail data center, a company rents a part of the data center, where it can place its own IT equipment within racks and rows. generators, fire suppression and environmental operations. The wholesale data center is aimed at the bigger players; the general guide is that it works cost effectively at an IT equipment power requirement of 1MW or greater. Not exactly your average business data center. Compared to an owned data center, wholesale colocation allows a company to avoid managing the issues of building and running a facility: maintenance, power provisioning, connectivity, uninterruptible power supplies and auxiliary Retail colocation offers great flexibility in how the IT platform grows or shrinks over time, as facility costs and capacity are shared across many lessees. Retail data centers are generally better for companies with minor to medium IT requirements. 12 2016 Dutch Datacenter Association
HOW A DATA CENTER WORKS A data center is a purpose-built complex technical facility. All to provide a secure, highly efficient place to house computer systems, connectivity and storage systems that should function without interruptions. Below are the main components that allows the data center to makes it customers happy. Security Mission-critical facilities face unique challenges to ensure the security of both digital and physical assets. Whether a data center supports a single client or provides hosted services for thousands, they are responsible for the sensitive information their customers rely on to conduct their business. A data center has fencing and a secured gate to keep unwanted visitors out. In addition, multiple video cameras, CCTV cameras. monitor the exterior premises and the building. The cameras are arranged in such a manner that one camera also monitors another one. This means that, should a neighboring camera fail, continuous monitoring is still assured. Data halls Data halls, or server rooms, house standard servers and storage units. The racks are often kept in an enclosed area to enable optimal cooling. Additional fencing, caging, is used to raise the level of physical security. Data halls are only entered into sporadically and for short periods of time. Fire extinguishing All data halls are equipped with smoke detection systems that monitor the room 24/7. In the event of a fire, water, extinguishing foam, or powder fire suppression systems can cause more damage in a data center than a charred cable. This is why, special extinguishing gases are preferred. An extinguishing gas, reduces the oxygen content in the air, which smothers the fire s source. It is harmless to people and the equipment. Diesel generators When a power outage occurs, the diesel generators start up automatically within seconds. While the generators go through a short start-up phase, batteries deliver power allowing operations to continue uninterrupted. The diesel generators then take over and provide the complete power supply for the data center. Batteries Batteries can provide power during short outages. When electricity fails completely, power is delivered via this uninterruptible power supply (UPS) until the emergency standby system is active. The UPS apparatus also compensates for voltage fluctuations and distortions. However, batteries cannot on their own bridge the gap for power outages that last longer than a few hours or days. Cooling units High-efficiency cooling units remove the heat emitted by the air-conditioning system and release it into the outside air via heat exchangers on the roof. Heat exchangers Located on the data center s roof, heat exchangers release excess heat from the turbo-cooling units into the air. When outside temperatures are high, the exchangers are sprinkled with water to increase the efficiency of heat dissipation. Monitoring Control stations for the building security and data center facilities serve as central commands in the data center. All important information is gathered via a DCIM (Data Center Infrastructure Management) system and displayed on large screens. Any variation from standard operation is promptly reported. Meet-Me-Rooms Connectivity is key for a data center. Without it a data center is without use. All connectivity comes together in Meet-Me- Rooms, there will be a minimum of two per data center for redundancy reasons, and from there it is distributed to the server rooms. 2016 Dutch Datacenter Association 13
2016 DUTCH DATA CENTER REPORT STATE OF THE DUTCH DATA CENTERS Dutch data centers: 206 DATA CENTERS Of which: 156 > 100m2 IT floor... and 117 > 400m2 Total 271.000 m2 net surface of the EU key data center 20% market METRO AMSTERDAM 5 year average data centergrowth 1Fastest growing Datcenter a market in Europe 82% Occupancy rate 64% 64% of all data centers are located in the Metro Amsterdam Amsterdam Campuses Science Park, South-East, West, Schiphol Other hotspots Rotterdam, Eindhoven, Groningen DUE TO DATA CENTERS until 2020 a 10-20% decrease in ICT-related energy consumption is forecast relative to 2013. ENERGY PRICING Most competitive pricing of all key markets in Europe 14 2016 Dutch Datacenter Association
DRIVERS CONNECTIVITY (HYBRID) CLOUD OUTSOURCING SAAS GAMING IOT BIG DATA Netherlands is home of 2 Hyperscale campuses 42% Projected from 21% to increase 42% 70% in data centre outsourcing Server-racks still located on-site In 5 y ears time this will drop t o 50% 127 4X 2015 RECORD YEAR AMS-IX: 127 New members 27% growth of internet traffic In Western Europe the number of IoT devices will quadruple between 2015 and 2021 AMS-IX 792 members NL-IX 564 members 2nd year the Dutch Data Center Report is published DATA CENTERS: FOUNDATION FOR THE (DIGITAL) ECONOMY 2016 Dutch Datacenter Association 15
DATA CENTER EXPERTISE A data center is a complex crossroad of many different fields of expertises. Although data center staff is normally limited in numbers, the knowledge areas in which they need be skilled are not. Below are the important areas of expertise. IT sector Data centers excist through customer demand. ISV s, Cloud providers and direct customers all have different needs in a disruptive market. Data center personnel need to have extensive IT knowledge to serve the customer. Also in the data center sector, the customer always comes first and is always right. Technical facilities A data center is a highly technical building. The technical facilities need to be in perfect condition, operated efficiently and get updated regularly in accordance with the latest standards and regulations. Power Power is the main fuel and main cost for data centers. The less power data centers use, the lower their costs and the better it is for the environment. To always maintain focus on this up-to-date knowledge of the energy pricing, laws and regulations, energy efficiency and green energy are key. Security To earn the trust of its customers a data center must be highly secure. Perimeter fencing, security gates, CCTV, 24/7 guards but also strict security processes are needed to maintain this trust. Connectivity Without connectivity data centers can t operate. Extensive knowledge of Fiber carriers, Backbone providers, CDNs and Internet exchanges is needed. This alongside other connectivity as Cloud, Ad, Mobile data, Media exchanges and knowledge of (in-house) patching. Real estate A data center is also known as digital real estate. A data center leases wholesale, retail space or racks to its customers. Finance Data centers are expensive to build. A large data center can cost in excess of 150 million euros. Hyperscale data centers can exceed one billion euros. These huge investments require excellent knowledge of financial markets and possibilities of, for instance, financial lease constructions. Certifications In the data sector it is common to be certified in different areas. As a data center house critical IT systems, it needs to provide its customers with assurance that it meets certain claims. The most important certifications are: IS0 27001 ISO 9001 ISO 14001 PCI-DSS SOC1 LEED/BREAM Information security management Quality management Enviromental management Credit card payments Financial and internal controls covered by ISAE3402/SSAE16 (prev. SAS70) Green building certification 16 2016 Dutch Datacenter Association
THE DIGITAL DISRUPTION IS ALL COMING FROM A DATA CENTER NEAR YOU BLOCKCHAINS AGRITECH SCALE UPS BIG DATA ANALYTICS GOVTECH OFFICE TOOLS SMART CITIES HYBRID CLOUD EHEALTH EDUTECH BUZZ ANALYTICS DIGITAL GLOBALIZATION INTERNET OF THINGS FINTECH SAAS VIRTUAL REALITY ARTIFICIAL INTELLIGENCE E-COMMERCE SMART HOMES HOSTED VOIP SELF-DRIVING CARS GAMING SECURITY ROBOTICS PERSUASIVE COMPUTING OPEN ENTERPRISE ENERGY EFFICIENCY TRUST PUBLIC CLOUD START UPS 2016 Dutch Datacenter Association 17
DATA CENTER CUSTOMERS THE GROWING IMPORTANCE OF DIGITAL DEMANDS INCREASED FOCUS ON THE CONTINUITY OF IT SERVICES Commercial data centers have three major customer groups: 1. Hosting/Cloud providers 2. ISVs/SAAS providers 3. Direct customers 1. Hosting and Cloud providers Hosting and Cloud Providers provide IT infrastructure and platform services to third parties. The customers can be end customers of SaaS providers. Popular services are Infrastructure as a Service (IaaS), offering computers physical or (more often) virtual machines or Platform as a Service (PaaS), allowing customers to develop, run, and manage applications without the complexity of building and maintaining the infrastructure typically associated with it. 2. SaaS providers SaaS stands for Software as a Service. SaaS is sometimes referred to as on-demand software and is usually priced on a pay-per-use basis or using a subscription fee. In the SaaS model, application software is installed and operated in the data center and users access the software from their premises. SaaS users do not manage the IT infrastructure and platform where the application runs. This eliminates the need to install and run the application on the user s own computers, which simplifies maintenance and support. The ISVs, Independent Software Vendors, have now almost all switched to a SaaS model. 3. Direct customers These are companies or organizations that outsource (part of) their IT to a data center. These can be governmental, businesses and non-profit organizations. The customer outsources their compute, storage, security and networking equipment to the data center. 18 2016 Dutch Datacenter Association
REGIONAL DATACENTERS With the growing importance of digital and the continuity of IT services more and more organizations are increasingly opting for external housing of their IT infrastructure at a data center provider. Preferably organizations around the corner, as organizations don t want to lose control over their IT systems. A data center in the region is able to service regionally-based companies and local governments to meet that need. Recent research of the Dutch research company PB7 shows that the demand for regional colocation services is increasing. Innovation hotspots Every province in the Netherlands has multiple data centers. Regional data centers profit from being located in the proximity of a digital innovation hotspots, where all kinds of digital players and startups can interconnect. What is so unique to the Netherlands, is that if you want to find a high quality, tier-lll level data center within a 30 minute drive, there are hardly any blind spots. Apart from the Amsterdam notable data center campuses, there are those in the Rotterdam, Eindhoven and Groningen region. Regional data centers obviously look for local opportunities. They often expect to find business with local businesses, healthcare or education, but have grown as a result of the business from local IT service providers, hosters and (cloud) software vendors. As a result, regional data centers do well when they are located at digital innovation hotspots, where all kinds of digital players and startups can interconnect. Well connected Need for connectivity is no longer an argument for specifically choosing colocation data centers in Amsterdam. All regional DDA data centers are carrier-neutral and many offer IX services. With the current fiber technology, a regional data center is also only a few milliseconds away from the major Internet exchanges in the Amsterdam area. For SMEs and Enterprise organizations this is a negligible number. Regional data centers bring huge efficiency, scalability and flexibility benefits and provide a primary home for your servers at all times. DDA Datacenters 2016 2016 Dutch Datacenter Association 19
THE WORLD S TOP TECH COMPANIES CHOOSE THE NETHERLANDS AS THE PLACE TO CONQUER EUROPE. THEY HAVE VERY GOOD REASONS. 20 2016 Dutch Datacenter Association
DIGITAL HUB In Europe, having high speed internet access is now very common. Almost everywhere in Europe people and organizations go online via fixed and/or mobile broadband. The underlying infrastructure that makes it all possible to surf the web is called the digital infrastructure. The infrastructure that makes the internet work. Digital infrastructure The digital infrastructure is the combined fixed and mobile access networks, data centers, cloud & hosting providers, domain name registrars, internet exchanges, content delivery networks, etc. Part of the digital infrastructure are international digital hubs, these are only present in a few countries around the world. These digital hubs are international intersections of connectivity and are the key commercial multi-tenant data center markets. Digital Hub Digital hubs consist of international backbone-, fiber- and IP-carriers, data centers, internet exchanges and major cloud providers. They have developed into an unique ecosystem of infrastructure, customers and suppliers. The Netherlands is one of the most important Digital Hubs in the World. The Digital Gateway to Europe is centered around the Metro Region of Amsterdam. In the Netherlands it is seen as the 3th international hub, Mainport, next to the Port of Rotterdam and Schiphol Airport. Near the Digital Gateway For companies less dependent on latency or the need of being next to the special digital hub ecosystem, just being outside the Amsterdam region is good enough and in almost all the cases still better than anywhere else in Europe. As the Netherlands is a small country, this immediately means basically all of the Netherlands. Notable data center hot spots are: Rotterdam, Groningen and Eindhoven for commercial data centers. Apart from multi-tenant data centers, the Netherlands is also home to hyperscale data centers. Main campuses are Agriport, north of Amsterdam and Eemshaven, Groningen in the north of the Netherlands. "AS THE NETHERLANDS IS A SMALL COUNTRY, PEOPLE VISITING THE NETHERLANDS SOMETIMES REFER TO THE WHOLE OF THE NETHERLANDS AS AMSTERDAM." 2016 Dutch Datacenter Association 21
CAMPUSES Commercial data centers/colocation Locations: Amsterdam, Rotterdam, Groningen, Eindhoven Links: www.dutchdatacenters.nl www.digitalgateway.eu Amsterdam Metro Region Locations: Science Park, South-East, Schiphol, West Links: www.dutchdatacenters.nl www.digitalgateway.eu WEST SCIENCE PARK SCHIPHOL SOUTH EAST Hyperscales Locations: Wieringermeer (Middenmeer) Eemshaven Links: www.agriporta7.nl www.dataports.eu www.nxtvn.com All data centers can be found online. Visit the Dutch Data Center Map: www.dutchdatacenters.nl/map 22 2016 Dutch Datacenter Association
WHY NOT JUST NAME IT AMSTERDAM? AMSTERDAM-NORTH AMSTERDAM 300 km/ 186 m AMSTERDAM-SOUTH GIVEN ITS AGE, THE INTERNET ECONOMY HAS ALREADY A LARGE IMPACT ON THE DUCH ECONOMY AND IS GROWING AT A RAPID PACE RELATIVE TO OTHER GROWTH ENABLERS #FTE (K) Annual Growth 07-13 Port of Rotterdam - The Port of Rotterdam is contributing to 3,8% 184 1 of the Dutch GDP - The Port is contributing to 2,3% of the ~1250 2014 1% country employment Amsterdam Schiphol Airport 1916 166 1 2014 - Schiphol is contributing to 3,4% of the Dutch GDP - The airport is contributing to 2,1% of the country employment 2% Internet Economy 1995 >100 2 2014 - The internet economy is currently adding to 5,3% GDP - Employment in e-commerce cloud and Digital Infrastructure is estimated to be 1,5% of total employment 7-9% Source: Slides from the 2014 Deloitte report on the Dutch Digital Infrastructure: www.digitale-infrastructuur.nl 2016 Dutch Datacenter Association 23
DIGITAL GATEWAY TO EUROPE Digital Gateway to Europe is home to several large internet exchanges and has the fastest growing data center industry in Europe. The digital hub consists of connectivity, data centers and cloud providers. Connectivity Internet Exchanges Digital Gateway to Europe is home of three(!) of the largest exchanges in the world: AMS-IX is the second largest internet exchange in the world in terms of traffic and has almost 800 members. The second largest Dutch internet exchange, the NL-IX, is number 7 in the world. The world number 6 exchange, Equinix IBX, is also present at several locations. Connectivity Backbone Fiber & IP carriers The metro Amsterdam area is known of its perfect fiber connectivity. With a large national network and many sea cables landing in the Netherlands we are directly connected to, for instance, the USA. Many customers only use fiber and operate and maintain the optical equipment themselves. The major leading fiber providers leading are Eurofiber, EU Networks and Relined. The top IP backbone carriers present are NTT, Cogent, Level3, GTT, Hibernia and Telia Sonera. Companies who choose the Netherlands as their digital hub enjoy the lowest average latency throughout Europe. Connectivity In-house connectivity Organizations choose to rent space in certain data centers because of other relevant parties, verticals, CDN s, cloud connects, etc. that rent space in that data center. In-house cabling connects them together. Data centers Colocation Unique about the Amsterdam region are the multiple data center campuses near to each other. The Science Park campus (where it all began), the South-East-West Campus, and the Schiphol Campus. Cloud providers International large cloud players The Netherlands are the only European country in which three out of the four top public cloud players are present with their own large data centers. Providing superior Cloud connections for Enterprise, Media and ISVs. The third mainport At the end of 2015 the Dutch parliament recognized the Digital Gateway as the third mainport of the Netherlands. Mainport is a Dutch word meaning an intersection of major transport routes. The closest English word is hub. The motion submitted by member of parliament Kees Verhoeven (D66) stated that the Dutch government should develop an economic vision with the relevant stakeholders and implement this vision to strengthen the position of the digital hub. The adoption of the motion was an important milestone and great support for the Digital Gateway to Europe. TO STRENGTHEN THE THIRD MAINPORT IS A NATIONAL PRIORITY 24 2016 Dutch Datacenter Association
Diamond encrusted unicorns The Netherlands is known for its ideal position as a launch pad to the rest of Europe. With its central location and perfect connectivity it has the best average latency times to any location in Europe to distribute data. The well-developed digital ecosystem has attracted many foreign companies entering the European market. These include Google, Softlayer, GoDaddy, Huawei, Microsoft, Netflix, Uber and NetApp to name a few. Apple, to give one more example, has chosen to distribute all of the company s software updates in Europe through the Netherlands. Strategically located at the center of Europe s largest markets, the Netherlands has also established itself as a magnet for international companies and a leading site for European or regional headquarters. A stable country with a supportive corporate tax structure, a highly educated, multilingual workforce and a superior logistics and technology infrastructure, the Netherlands offers companies a perfect climate to compete successfully in Europe. And with attractive quality of life. For scale-ups, Fortune 500 leaders, diamond encrusted unicorns, small to mid-sized business, the Netherlands is a smart choice to locate international headquarters. Just ask major players like Cisco Systems, Palo Alto Networks, Netflix and Tesla or smaller operations like Optimizely, DoubleDutch, Advantech, Sun Pharma and Lux Research. Regardless of size, there s nothing small about the results businesses see here. Digital Gateway to Europe organization The Digital Gateway to Europe organization is an industry & government backed initiative to promote the Netherlands as the Digital Gateway to Europe and orchestrate all activities around the digital hub. It helps foreign companies that want to come to the Netherlands and helps Dutch digital companies that want to go abroad, it organizes trade missions and trade shows and provides training about this new sector. Main activities: Portal Digital Gateway to Europe Trade missions Trade shows Industry events Reports & documentation Education Support & consultancy services www.digitalgateway.eu "THE NETHERLANDS HAS THE LOWEST AVERAGE LATENCY FOR DATA DISTRIBUTION THROUGHOUT EUROPE." More general information about investments in the Netherlands: www.investinholland.com 2016 Dutch Datacenter Association 25
REPRESENTATION In only 20 years the data center sector has grown to become an industry of major importance worldwide and especially in the Netherlands. For many years this sector was almost unknown to the general public and government. You can say that the data center industry grew to its current size completely under the radar. In general internet related companies were for a long time not represented on trade association level. As the internet grows very fast and tends to be disruptive this sector did not connect to the existing traditional ICT and telecom sector and still feels different from it. Only around five years ago representation changed in the Netherlands, as Cloud and Webhosting providers started organizing themselves. In 2014 the other data centers followed and the Dutch Datacenter Association, the national trade association for commercial data centers, was formed. It currently represents almost all Dutch data centers and is the primary voice of the sector. In the Netherlands we have a tendency to organize things. We have vertical or horizontal representations of every sector in our economy. All these groups and associations work together via the famous Dutch polder model. The polder model looks for solutions by cooperation despite differences for a greater purpose. To make a more effective representation and to form one voice towards government, all parties in the digital infrastructure: data centers, internet exchanges, domain name registrars, internet backbone and access providers, cloud and hosting providers, formed an umbrella organization called DINL (Digital Infrastructure Netherlands). THE DUTCH DATACENTER ASSOCIATION IS THE NATIONAL TRADE ASSOCIATION FOR COMMERCIAL DATA CENTERS 26 2016 Dutch Datacenter Association
Dutch Datacenter Association The Dutch Datacenter Association (DDA) is the national trade association for commercial data centers. It s the representative of the successful Dutch data center sector, the foundation of our online digital economy and Europe s Digital Mainport: Digital Gateway to Europe. With almost 90% of all commercial data centers in the Netherlands being a member, the DDA is the voice of the industry. Activities of the Dutch Datacenter Association: - Driving awareness of the industry towards stakeholders such as government, the media and society at large. Expressing the views of the industry with regard to regulations and policy issues. - Promoting the image and the economic importance of the data center industry. In the short as well as in the long run. The DDA publishes many publications including the annual Dutch Data Center Report. - Leading by facilitating members to boost operational improvements in the form of best practices, promotion of education and contributing to technical standards with which the data center industry in the Netherlands and beyond can make the difference. For the Dutch Datacenter Association cooperation is key. Therefore we are active participants of: - Digital Infrastructure Netherlands (DINL) - Digital Gateway to Europe (DGWEU) Board of Directors: Michiel Eielts - Chairman (Equinix) Eric Boonstra - Secretary (EvoSwitch) Michael van den Assem - Treasurer (Interxion) Gerben van der Veen - Member of Board (Dataplace) Executive Board: Stijn Grove, Managing Director For more information visit our website: www.dutchdatacenters.nl From left to right: Rob Stevens (Interconnect), Jeroen Stevens (Interconnect), Wim van de Donk (King s Commissioner of North Brabant), Michiel Eielts (DDA), Stijn Grove (DDA). 2016 Dutch Datacenter Association 27
RELATED ASSOCIATIONS NL - Digital Infrastructure Netherlands (DINL) DINL the federation/umbrella organization that represents the parties that provide the facilities necessary for the digital economy: data centers (DDA), cloud and hosting providers, internet access providers, internet exchanges, registrars, NLnet and SURFnet. Digital Gateway to Europe Digital Gateway to Europe NL - Digital Gateway Digital to Europe (DGWEU) Gateway to Europe Digital Gateway to Europe is the industry and government backed organization promoting the Netherlands as the Digital Gateway to Europe. DGWEU promotes and orchestrates Mainport DINL backed, from the industry for the industry. It is the central source of information about the hub with reports, factsheets, contacts, maps and news. The Digital Infrastructure Association (DINL) is committed to the strong, ongoing development of the Netherlands as the hub within the international digital infrastructure. With our digital economy the Netherlands is at the forefront of the sector and there is still much more potential to be realized. The organization puts the Netherlands on the map as international digital hub, guides government, companies and citizens in the digital economy and highlights the opportunities and challenges. It is the first point of contact for anything happening in the digital infrastructure. DINL is neutral and non-discriminatory: an open digital market where all participants are treated equally, this is the philosophy behind everything we do. www.dinl.nl The Dutch are also famous for trade, logistics, reliable and comprehensive infrastructure and open and business friendly orientation. Ideally located in the heart of Europe and connected directly via many sea cables to, the United States. With multi-campuses and home of the largest internet exchanges in the world. These are the reasons why the Netherlands appeals to such diverse industry giants in the cloud, internet, hardware, and data industries as the ideal data hub ( Digital Mainport ): the Digital Gateway to Europe. At the end of 2015 a majority of the Dutch parliament recognized the Digital Gateway as the third major international hub of the Netherlands after Schiphol airport and the seaport of Rotterdam. www.digitalgateway.eu "DIGITAL GATEWAY TO EUROPE REPRESENTS AND PROMOTES THE DIGITAL MAINPORT / DIGITAL HUB IN THE NETHERLANDS" 28 2016 Dutch Datacenter Association
DIGITAL CLUSTERS NL - Security The Hague Security Delta (HSD) is the largest security cluster in Europe. In this Dutch cluster with important regional hubs in The Hague, Twente, and Brabant businesses, governments, and knowledge institutions work together on innovations and knowledge in the field of cyber security, national and urban security, protection of critical infrastructure, and forensics. They share a common goal: more business activity, more jobs and a secure world. In The Hague region alone 400 security businesses realize more than 25% of the national turnover in security and employ 13,400 people. Nationwide there is a turnover of six billion euros and 61,500 people are employed in the security domain. HSD has three important regional hubs with their own areas of expertise. Twente Safety & Security (TS&S) is particularly strong in nano technology, safety, radar & sensor technology and the Dutch Institute for Technology Safety & Security (DITSS), located in Brabant, in high-tech solutions and camera and sensor technology. The main focus areas of the The Hague region are: cyber security, forensics, national security, and critical infrastructure. www.thehaguesecuritydelta.com NL - E-commerce Thuiswinkel.org is the inspiring digital commerce network that helps companies, entrepreneurs and their employees to becoming more successful. They offer relevant and practical solutions through lobbying, the Thuiswinkel Waarborg Keurmerk quality mark, knowledge, research and education, primarily through digital channels, and buys goods and services wherever and whenever they want. Their objective is to improve trust in distance selling and to make cross-border trading easier. www.thuiswinkel.org NL - Startups The overall goal of StartupDelta is to establish a thriving and competitive ecosystem in the Netherlands, listing a top 3 position in Europe on the Global Startup Ecosystem Ranking. Coming from nowhere, the Netherlands is now listing a 4th place in the EU and 19th globally (January 2016). So, we re on speed and aiming high! The StartupDelta initiative consists of a dedicated team with excellent connections in enterprise, government, research and all aspects of the startup community. They are assigned to tackle challenges that hinder growth for startups. StartupDelta closely collaborates with the 10+ tech hubs to make the Netherlands the largest startup ecosystem in Europe. www.startupdelta.org The Dutch Polder Model : The Netherlands is a small country with largely consists of polders, land reclaimed from the sea, which requires constant pumping and maintenance of the dykes. Ever since the Middle Ages, when the process of land reclamation began, different societies living in the same polder have been forced to cooperate because without unanimous agreement on shared responsibility for maintenance of the dykes and pumping stations, the polders would have flooded and everyone would have suffered. Crucially, even when different cities in the same polder were at war, they still had to cooperate in this respect. This is thought to have taught the Dutch to set aside differences for a greater purpose. 2016 Dutch Datacenter Association 29
MARKET RESEARCH >>>>>>>THE NEW FOUNDATION >>>>>>>>>>>>>> 30 2016 Dutch Datacenter Association
STATE OF THE DUTCH MARKET - PB7 The Dutch Data Center Landscape With London, Paris and Frankfurt, the Amsterdam region is one of the top-four data center locations in Europe. All of these areas show growth, but Amsterdam has been outpacing the others for a while now. he strong position of the Amsterdam area can be attributed to two key factors. First, Amsterdam is home to one of the biggest and fastest Internet Exchanges in Western Europe, even the world. And secondly, out of the four metropolitan areas, Amsterdam is the more affordable in terms of property prices, doing business and cost of living. With the presence of Schiphol as a major international airport, it is also very accessible for international customers. Table 1: Sizing the Dutch multitenant data center market, May 2016 2015 2016 Gross surface (incl. office space, etc.) 460,000 m2 496,000 Net surface (data floor) 259,000 m2 271,000 Data centers (#) 205 206 Source: Pb7 Research, June 2016 FIGURE 1: MULTITENANT DATA CENTER FLOOR SPACE (net m2 * 1000, % of total), per province except MRA, May 2016 10% 9% 7% 7% 5% 5% 3% 2% 2% 1% 1% 1% 0% 0% 0% ZH NB GR OV UT LI NH GE FL DR ZE FR Source: Pb7 Research, June 2016 2016 Dutch Datacenter Association 31
In the Netherlands, we found 156 multi-tenant data centers, one more compared to 2015, and estimate we may have missed up to 50 small locations with up to 100 square meters of data floor (less than 2% of the total floor space). If we add up the surface of all data floors, we find a total of 271,000 square meters (2.9 million square feet). If we add office space and areas from data center building, we find a total of 496,000 square meters. The importance of the Amsterdam region becomes visible when we map the amount of square meters of data floor from multitenant data centers. In the Metro Amsterdam (Amsterdam, Almere, Aalsmeer, Haarlem, Hoofddorp/Schiphol), Pb7 identified more than 171,000 m2 of net floor space, or 64% of the total data floors in the Netherlands. If we take into account some historical restatements, the supply in the Amsterdam region grew by 12,000 square meters, with Keppel T&T opening up a new 7000 square meter facility in Almere as the biggest contributor the growth. FIGURE 2: MULTITENANT DATA CENTERS GROWTH EXPECTATIONS FOR THE NEXT 12 MONTHS, MAY 2016 [N=100] 80% 70% 67% 68% 60% 58% 50% 40% 36% 30% 20% 18% 15% 13% 19% 10% 0% Datafloor in use (m2) Power (MW) Investments (EUR) 6% Decrease Stable Growth Source: Pb7 Research, 2016 32 2016 Dutch Datacenter Association
64% OF THE DUTCH DATA CENTER FLOOR SPACE IS LOCATED IN THE AMSTERDAM REGION Regional datacenters When we take away the Amsterdam region, we find less growth in the provinces. As a result of a few bankruptcies, supply even shrank in Zuid-Holland and Zeeland. As we saw that many local datacenters have a lot of unfilled data floors, we can see this as a healthy development. Local demand is growing, but it will take a few years before the overcapacity will have disappeared. Looking at these facts, it seems like there is limited activity in the regional datacenter segment. But looks can be deceiving. First of all, most multitenant datacenters, including the regional ones, find that demand is growing and that they are able to fill more square meters. In a recent survey, Pb7 Research found that only 18% of the multitenant datacenters expect a decrease in square meter usage over the next 12 months, while 67% expects an increase. The percentages for power usage are similar and even slightly more optimistic and point to continued increase of the density in equipment. Regional datacenters obviously look for local opportunities. They often expect to find trade with local businesses, healthcare or education, but have grown as a result of the business from local IT service providers, hosters and (cloud) software vendors. As a result, regional datacenters do well when they are located at digital innovation hotspots, where all kinds of digital players and startups can interconnect. What is so unique to the Netherlands, is that if you want to find a high quality, tier-iii datacenter within a 30-minute drive, there are hardly any blind spots. Pb7 Research believes that the continued investments in digital will continue to drive growth for regional service providers. However, with the growing importance of digital for enterprises, SMBs and public organizations, they are also starting to turn to professional datacenters to deliver secure and robust housing. Datacenter and server room decision makers are also experiencing a strong growth in demand for the housing of computer equipment, but many are looking to build new server rooms themselves. About one in four expects a decrease in square meters and power usage, while at the same time, most believe they need to increase investments into the datacenter. Created by IABR, found via IABR 2016 Dutch Datacenter Association 33