Singapore rumbles. The thunder from the clouds overhead seems to be a constant in this electric city. It sounds like a giant lying in wait.

Singapore is home to one of the most important DatacenterDynamics Converged events to be held in Asia Pacific this year, and from the time you touch down on the island, you get a sense of why. It seems to be preparing for some big changes, and this is not just about wiping away the façade of colonialism to form its own national identity. It is more about the cosmopolitan nature of the country – where you can walk down the same street and visit a Buddhist temple, Mosque and church all within a few minutes. 

Once standing alone as the most important ASEAN (Association of Southeast Asian Nations) player, Singapore is now finding itself surrounded by emerging markets, especially in the data center space. Malaysia, Indonesia, the Philippines and Thailand – they have all seen the use of mobile technologies grow. And in recent years, they have also witnessed more and more global companies targeting the region. As a result, they are trying to attract the lucrative data center industry to their shores. But that is easier said than done.

Regulation, risk from natural disasters and the infancy of these markets means they are relying heavily on their proximity to Singapore – not only because of its strong reputation as a business-friendly location, with regulation based around British law, but as a disaster recovery link. After all, Singapore is where much of the region’s connectivity began.

Ka Vin Wong, the managing director for CSF Asia, an ASEAN data center provider based in Malaysia, says connectivity made Singapore the natural leader for ASEAN.

“Singapore has an incredibly rich network. The Singapore government made this decision about 15 years ago to deregulate the entire telecommunications industry, and it was the best thing since sliced bread. It was a time when lots of fiber was going all over the region, and when Singapore deregulated it became the connecting home for the South Asia sector,” Wong says. “Because of that, Singapore is highly connected. Singapore Island itself is a data center.”

One advancement that is now allowing more restrictive countries around Singapore to approach the international market is cloud computing. Its heavy reliance on connectivity, and the elimination of boundaries dictating where services must be delivered from, means that Wong’s company can now set its sights on building data center operations outside of Singapore, but use its relationship with the country to divest risk.

Hub of activity
CSF is based in Malaysia and listed on the London Stock Exchange. It focuses on the development of colocation data centers throughout ASEAN. It already has three data centers in Malaysia and is currently building out in Indonesia, where it has partnered with prominent property group PT Karya Graha Nasantara, which owns land in Jakarta.

In October, it issued a profit warning saying an expansion at its Malaysia CX6 data center will now be held off until 2013, delaying revenue. The data center was going to be expanded by 50,000 sq ft due to a customer request, but the company is still working on the plans.

This is not CSF’s only build project. It is also in talks to build a data center in Singapore. Its plan is to link all of its data centers together but Singapore – which will admittedly be more expensive to build – will play a starring part in CSF’s future.

Wong says that building in, or partnering with, Singapore is important if CSF wants to attract hesitant customers to data centers in nearby nations. He says other companies are following suit, and the overall affect could be that a new data center hub – the whole of ASEAN as opposed to Singapore standing alone – could be created.

“ASEAN is becoming more and more the economic hub of Asia,” Wong says. Similar to Singapore’s love of reclaimed land, its influence in the data center space is spreading closer to the countries that surround it.

The data center players that attended DatacenterDynamics Converged Singapore at the Marina Bay Sands on October 18 almost told Wong’s story for him. Local operators and suppliers discussed the nation’s challenges with players from neighbouring nations.

Spread the risk
Kosit Suksingha, managing director of Thailand managed hosting and data center services company TCC Technology Co, in a roundtable on outsourcing, said that by using Singapore as an anchor for connectivity the ASEAN region has been able to open up its colocation offerings and wider data center outsourcing services.

By linking into Singapore, these nations are starting to develop new markets, and similar to Wong’s CSF, they are all around internet service provision and cloud computing.

“From a regulatory point of view, as a data center operator [in an ASEAN country outside of Singapore] you cannot control a lot of things. But if you look at the region as a single market, because our facilities are interconnecting, companies can move their business around [to different geographical locations],” Suksingha says.

“We think now about spreading the infrastructure with good connectivity and multiple locations, so we effectively spread the risk.”

Singapore will, however, remain a unique location for data centers, despite ASEAN taking some of its glory, according to Chris Dow, Hitec Power Protection’s sales director for APAC, who is based in Malaysia. Hitec timed the release of a new modular UPS system to coincide with DatacenterDynamics Converged Singapore.

“The success of the broader region really depends on the client base,” Dow says. “It is possible for ASEAN to grow as a whole, but even in Singapore, foreign-owned data center companies struggle to get business with local Singaporean companies. And the Singapore Government won’t put its servers in a foreign-owned data center.”

“So, while I think Jakarta and Kuala Lumpur and Bangkok and other capitals can grow, it will really depend on the custom they get. The banks, for example, won’t be interested at all.”

Hitec is based in The Netherlands, and much of its turnkey power solutions are manufactured in Europe. “During the last four-and-a-half years I have predominantly been working in Asia Pacific, and during this period we have grown the business here quite substantially. In APAC we announced about 45-50% of the company’s turnover,” Dow says

“So we know if we develop new products we have to develop something that is very appropriate for this market.”

Singapore has a high demand for UPS supply, according to Dow. This is regardless of the fact that it has one of the best electricity grids in Southeast Asia. “The country spends proportionately more on UPS systems than any other country in the region. But there is the provision of power, and then there is the availability of secure power – they are two different things,” Dow says.

“The provision of power comes from burning oil or whatever to generate power at the power station – that is something Singapore is trying to increase at the moment because their business environment is growing so much.” The nation, Dow says, may be one of the biggest petrochemical producers in the world, but it does not generate much of its own electricity.

It’s not just about demand
With all this growth in Singapore – be it from international or ASEAN demand – another major player, Digital Realty, highlights one of the nation’s major challenges: how do you build out your footprint on an island that resorts to the reclamation of land to make space?

It announced a major attack on the Asia Pacific market in 2010. Since then it has built out its presence in Hong Kong, Australia and Singapore, where the company has fast capitalized on its investment. We caught up with Kris Kumar, the company’s head for Asia Pacific, at the event. He said: “We are now 18 months in and already have 65% of capacity sold for its first Singapore data center, so I expect to fill up the Singapore building by the middle of next year. In the last few months, we have been in the process of working on our next big investment in Singapore.”

Digital Realty’s first data center in Singapore came about through acquisition. It purchased 375,500 sq ft of data center space in Jurong East that has up to 30MW of redundant UPS capacity for SGD170m in 2010. The company is known for its acquisitions in markets such as the US and Europe, where it has famously built out its data center footprint fast. But in Asia Pacific, despite the Singapore purchase, Kumar says the company has to rely on more new build activity. “The Asia Pacific region doesn’t offer that much acquisition opportunities because there hasn’t really been the level of construction activity as seen in North America or Europe. So there is not that much stock to go and acquire,” Kumar says. “A development program will overshadow any acquisition program in APAC just because there isn’t that quality of facility, and now customers expect a much higher degree of quality in the data center space.”

Kumar says Digital Realty plans to make a number of big data center announcements for the Asia Pacific region in the coming year, and does not rule out Singapore as being a bigger destination for the company. It is also heavily interested in Japan – Kumar says it is most interested in this market to date. And the company is in talks with India but right now, it is not investigating Malaysia, Indonesia or other ASEAN nations. While it is open to new challenges, and customers have expressed interest in being in these locations, Kumar says it does not make good business sense yet. Much of this, once again, comes down the local business environment.

People count too
Like other companies building in Singapore, according to Robert Timmermans, Jones Lang LaSalle’s Engineering and Operations Solutions group head for APAC, Digital Realty could come up with the challenge of finding the right people to man its data centers, especially on the facilities side. Timmermans oversees the department that supports properties and facilities management groups from an operations perspective.

“It is always difficult getting really good people within the data center industry, especially in Singapore and Hong Kong, where there are a lot more data centers coming in and a lot more complexity in the data center,” Timmermans says. “They are very small markets, and it is difficult to find the right people with the necessary experience of managing a facility.”

While training is widely available, and companies such as Jones Lang LaSalle are working with local educational institutions to bring more courses online, finding staff with experience seems to be the problem. So Timmermans will often turn to expat professionals, which can be more expensive “but worth it”. “Seventy percent of failures are caused by human error, and it is not because people are incompetent or lazy, it is because they are complex systems,” Timmermans says.

This is one area where Indonesia and Malaysia might be able to offer Singapore some help in return. Jones Lang LaSalle has brought staff in from these areas, developing their skills further for the wider market (CSF’s Wong says his Indonesian data center is 100% locally manned).

So, Singapore could get something back from associating more with the ASEAN label, and growing out its own image to include the entire region. But Singapore is also very interested in wealth: the Singapore Flyer, the giant ferris wheel that juts into the skyline, had to be redirected when it was first installed to ensure good Feng Shui for prosperity, and Singapore Merlion is yet another symbol of its attitude to wealth. Played right, however, capitalizing on ASEAN as a wider region could just bring more data centers to Singapore, and in turn more money for its healthy economy.