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Marketing your AEP Qualified Data Center Site
September 25, 2013
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Presenter Panel
Amy Koscielak AEP
akoscielak@aep.com (614) 716-1008
Tim Comerford Sugarloaf Associates
tcomerford@BLSstrategies.com (973) 908-8232
Will Steffens Sugarloaf Associates
wsteffens@sugarloafassociates.com (973) 908-8232
Pat Lawrence AEP
rplawrence@aep.com (614) 716-3441
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AEP At-A-Glance
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Partners in Marketing
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Marketing Strategy
INDUSTRY KNOWLEDGE
• Industry Basics • Industry Trends • Economic Benefits
LEAD GENERATION
• The Right Contacts • Multiple Channels • Multiple Touch Points
PROSPECT DEVELOPMENT
• Handling Inquiries • Incentives • Closing the Deal
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Industry Basics
Knowledge KNOWLEDGE
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Types of Data Centers
• Colocation • Retail (small requirements)
• Rack level • Service Based • Examples
• Cervalus • Savvis • NY Internet • Data Pipe
• Wholesale (used for larger requirements) • White space • Primarily selling infrastructure
or conditioned space • Examples
• Digital Realty Trust • Dupont Fabros
• Enterprise (large corporate or service providers)
• Examples: • Apple • Facebook • Goldman Sachs
• Cloud (IT services provided via telecommunications with the end user unaware of where data is hosted)
• Examples • Amazon • Google • Apple
• Modular (small units to allow for greater flexibility and efficiency
• Examples: • Compass Data Centers • IO
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Tier Ratings
The major difference (other than reliability) is the construction cost for the facility. Costs will range from $1,000 to $ 4,000 per square foot (exclusive of IT and site costs).
TIER 1 Less than 28.8 hours downtime/year
TIER 2 Less than 22 hours downtime/year
TIER 3 Less than 1.6 hours downtime/year
TIER 4 Less than .4 hours downtime/year
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Site Location Factors
1. Power Availability and Reliability 2. Telecommunications / Connectivity 3. Site Variables
• Water • Sewer • Zoning • Access
4. Site Risks • Natural • Manmade
5. Utility Costs 6. Labor Availability 7. Vendor Access and Proximity 8. Security 9. Transportation 10.Site / Development Costs 11. Incentives 12.Renewable Alternatives
Some Rules of Thumb: • 50% of a building is normally white space • Designed power densities of 150 – 300 watts/sq.
ft. are common • Water demand example: 132k sq. ft. data center
= 5,729,000 gallons / month
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Fiber
Source: Allied Fiber
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• Web • Data Center Knowledge http://www.datacenterknowledge.com/ • Telcom Ramblings http://www.telecomramblings.com/ • Data Center Dynamics
http://www.datacenterdynamics.com/news
• Research Organizations • 451 Research https://451research.com/ • Gartner Group http://www.gartner.com/technology/home.jsp • Lawrence Berkeley National Laboratories http://www.lbl.gov/
Research and Resources
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Industry Trends
Knowledge KNOWLEDGE
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Current Market
Source: Data Center Sites
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What’s Causing the Demand?
In the past 5 years, the number of internet users has increased from 1.043 billion (16% of the world population) to 2.11 billion (30% of the world population).
Estimated total colocation space in use in the U.S. in 2011 was 67.7 million sq. feet. This is projected to expand to 144 million square feet by 2015, based on growth projections by providers. Data Center Knowledge
TechNavio's analysts forecast the data center construction market in the US to grow at a compound annual growth rate of 7.61% over the period 2012-2016.
Roughly 8.75% of total enterprise data center space is currently in colocation. That total will increase to 14.11% by 2015. Data Center Knowledge
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Market Forecast
14.66 17.00
20.54
24.81
14.07
20.76
23.73
30.81
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
2012 2013 2014 2015
Colocation Supply vs. Demand New Space Available New Space Required
Source: Nemertes Research / Data Center Knowledge
The bottom line? Enterprise colocation demand will outstrip colocation service provider supply starting this year, unless colocation providers expand at a faster rate than current growth rates would indicate. In other words: Watch out for the coming colo crunch!
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• Modular • Growth of colocation • Cloud • Smaller sites • Second tier markets • Increased densities • Energy efficiency • Wholesale / Retail convergence • Recognition of incentives • Increased demand for data
• Banks seeing 50-100% growth in data requirements • Cisco –internet traffic growing 61% from 2007 - 2012
• Selling bytes not power • Green
• Solar • Cogeneration • Renewable resources
The most important trend? Data center expansion into the second tier markets and the opportunity it provides. Think of data and the access to telecommunications as an ED tool.
Trends
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Economic Benefits
KNOWLEDGE
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Building Specifications
Building Size: 230,000 SF
Interior Portion of Building to Be Renovated in Phase I: 58,800 SF
Rack Space (raised floor computing area available to
tenants):
30,980 SF
Network Operations Center (NOC): 3,700 SF
Mechanicals and Supporting Infrastructure: 6,300 SF
Office: 6,800 SF
Miscellaneous (restrooms, etc.) 11,020 SF
Total Estimated Construction Expenditures $54,319,795
Project Example
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Estimated Economic Impacts (Direct, Induced and Indirect) Over Ten Years
Impacts to COOK COUNTY, IL
Job Creation Earnings Added to Local Economy* Direct
Indirect and Induced Total
Construction Phase NA 642 642 $30,103,111
Ongoing Operations 22 143 165 $72,022,310
Potential Implications Over Ten-Years
22
785 (temp +
permanent)
807 (temp +
permanent) $102,125,451
* “Earnings” refers to total earnings added to the local economy, not the specific revenues of the data center itself.
Estimated Net Tax Revenues
Taxing District Net New Tax
Revenues Over 10 Years
Board of Education $2,810,080 City $850,020 County $451,700 Forest Preserve District $56,700 Metropolitan Water Rec. Dist. $312,850 City Library Fund $108,500 City School Building & Improvement Fund $116,350 Community College District $161,300 Park District $338,830 Total $5,206,700
Construction & Taxes
Three Types of Job Creation Data centers contribute to local employment in three forms: • Direct jobs – employees of
the data center • Indirect jobs – jobs created
within the data center’s supplier network to service the new facility; and
• Induced jobs – increased
employment in the consumer4 sector as a result of the spending of wages in the local economy to pay for groceries, clothes,
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Employment Projections
Job Title Employees Average Wage*
Security 8 $25,220
Salesperson 2 $77,740
Engineers (Hardware and Software) 2 $90,080
Building Cleaning Worker 1 $28,460
Data Center Manager 1 $115,240
Data Center Technicians & Network Admin. 8 $77,150
TOTAL Jobs/Weighted Average Wage 22 $59,014
* Based on U.S. Bureau of Labor and Statistics. May 2011 Metropolitan and Nonmetropolitan Area Occupational Employment and Wage Estimates. Chicago-Joliet-Naperville, IL Metropolitan Division.
Employment
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The Right Contacts
LEAD GENERATION
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• American Electric Power (AEP) • Engineering Firms • Architects • Technology Community • Vendors
• Generators • Hvac
• IT Companies • Telecommunication Companies (Large and Small) • Developers • Real Estate Brokers • Trade Associations • Colocation developers • Site selectors • Consultants • Construction firms (including project management) • Internet and media
The Data Center Network
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Multiple Channels, Multiple Touch Points
Lead Generation LEAD GENERATION
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• Networking • Web and Social Media
• Develop your LinkedIn to target the industry • E-blast
• Direct • Trade Shows/ Events
• AFCOM – annual event “Data Center World” • 7x24 National– bi annual conference (east and west coast) • 7x24 Regional – local chapter events • Data Center Dynamics – private group that sponsors regional events • IMN • Cap rate events – private group that runs events (National Data Center Series) • Events associated with data center operations • IT related trade groups
• Trade Associations • AFCOM – (http://www.afcom.com/ ) national and local • 7x24 (http://www.7x24exchange.org/ ) national and local • Green Grid (http://www.thegreengrid.org/ ) • Uptime Institute (http://uptimeinstitute.com/ )
Channels that Work
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Web
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Direct Marketing
Personal Contact Email Mail
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Direct Marketing
Personal Contact Email Mail
End Users Consultants
1. Minimize Risk
2. Reliable Power
3. Speed to Market
Three Campaigns
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Strategic Events
AEP 2013 Calendar
Data Center World Spring Conference
IMN Data Center Spring Forum
7x24 Data Center Spring Conference
7x24 Data Center Fall Conference
EUCI Data Center Forum
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Advertising
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Social Media
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Responding to Inquiries
PROSPECT DEVELOPMENT
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Information & Local Knowledge
• Key data • Power infrastructure • Sewer • Zoning • People
• Answer inquires quickly or get back to them ASAP • Position yourself as the “go to” person
• Know the sites and have an inventory • Know the key people • Know the answers and if not, know how to get them quickly • Sell others on the “need for speed” • Remember the client will follow-up with in depth due diligence, but you need to
provide quality answers to the critical questions • Build a network • Sell the incentives
Usually a user has a deadline to satisfy a client or corporate need and will default to the “path of least resistance”. As an economic developer, you provide a unique resource to a site selector-- local knowledge.
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Incentives
PROSPECT DEVELOPMENT
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• Data center targeted incentives are relatively new due to the perceived lack of job creation.
• Currently over 15 states offer data center specific programs and incentives.
• Most programs center on tax exemptions or credits • Business personal property tax • Sales taxes • Real property taxes • Investment tax credits
State Incentives
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States with Incentives
• Alabama: Real & personal property tax abatement • Arizona: Exemption from sales tax on building, equipment & power • Iowa: Sales & Property tax exemptions • Louisiana: Up To 10 year property tax exemption • Minnesota: Full exemption on Personal Property, 20 year sales tax exemption, 20 year sales tax exemption
on energy • Nebraska: Sales tax exemptions, person property exemption, job tax credit, investment tax credits • North Carolina: Sales tax exemption to 1% • New York: 20 year PILOT, sales tax exemption • Ohio: Sales & Property tax exemption • Oklahoma: Sales & property tax exemption • South Carolina: Sale tax exemption on power, equipment & software • Tennessee: Sales tax exemption, Tax Credits, Reduce sales tax on energy • Texas: Sales tax exemption on power, and equipment up to 15 years (effective 9/1/13) • Virginia: Sales tax exemption • Washington: Sales tax exemption • West Virginia: Sales tax exemption on construction, equipment & software; salvage value of personal
property. • Wyoming: $2 million in grants for energy efficiency
Other states have incentive programs that a data center project may be able to take advantage, however they do not specifically target data centers.
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Partners in Marketing
• Prospecting lists • Web • Advertising & collateral • Email marketing
– Constant Contact – Discounts for 501(c)(3)
– www.constantcontact.com
AEPED.com Property Quick Links
Roanoke County Center for Technology www.aeped.com/rccrt
Industria Centre Site #17 www.aeped.com/ics
Progress Park www.aeped.com/progresspark
Cherokee Expressway #10 www.aeped.com/ceip
Wolpert Greenfield Site www.aeped.com/wgs
National Cyber Research Park www.aeped.com/ncrp
Findlay Commerce Park www.aeped.com/fcp
Bradley Square www.aeped.com/bradleysquare
The 59 Industrial Park www.aeped.com/59ip
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Contact Us
Amy Koscielak AEP
akoscielak@aep.com (614) 716-1008
Tim Comerford Sugarloaf Associates
tcomerford@BLSstrategies.com (973) 908-8232
Will Steffens Sugarloaf Associates
wsteffens@sugarloafassociates.com (973) 908-8232
Pat Lawrence AEP
rplawrence@aep.com (614) 716-3441
Thank you.
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Tier 1 Provider - is one that can reach every other network on the Internet without purchasing IP transit or paying settlements. They can be regional, national and international.
Tier 2 Provider - A network that peers with some networks, but still purchases IP transit or pays settlements to reach at least some portion of the Internet. Resellers of services from tier 1 networks.
Tier 3 Provider - a network that solely purchases transit from other networks to reach the Internet. Long Haul – long distance fiber primarily provided supporting the Tier 1 networks Metro / Short Haul – Tier 2 and 3 networks. PoP –point of presence is an access point to the Internet. It may be either part of the facilities of a
telecommunications provider that the Internet service provider (ISP) rents or a location separate from the telecommunications provider. ISPs typically have multiple PoPs, sometimes numbering in the thousands. PoPs are also located at Internet exchange points and colocation centers.
ISP – Internet Service Provider - business or organization that offers users access to the Internet and related services. Many but not all ISPs are telephone companies or other telecommunication providers.
IXP – Internet Exchange Point - a point through which Internet service providers (ISPs) exchange Internet traffic between their networks.
Meet me Room - is a place within a colocation center where telecommunications companies can physically connect to one another and exchange data.
Cross Connection – connections from one network to another.
Fiber Definitions
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