dc2013_day2-01-drhans-christoph-gcc-dc-market-v02 by saad alshammari

Kuwait Data Center Market Insights in Data Center Business 2 June 2013

Content Ernst & Young cultivates an ongoing exchange with both leading providers of DC services and their customers globally. Let us share some of our latest insights in this context. 1

Pressure on IT Budgets – Uncertainties in the financial sector lead to a search for cost cuttings

GCC Data Center Market – Analysts predict steady growth

Green IT as a driver for government spending – Governments of Gulf Countries develop sustainability programs

Success Story – A fast growing German DC Service Provider

Section 1

Pressure on IT Budgets

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IT Cost is under pressure ► Management is continuously asking its IT function for

increased service at a reduced cost ► The IT departments can achieve this by introducing

new technology like virtualization ► This leads in turn to increased complexity and an

ongoing need for skilled people and training ► Outsourcing is an alternative, but companies are

looking to do it the smart way

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IT Cost is under pressure Our report shows that industries that tend to outsource are ► Oil & Gas, Power & Utilities, Media & Entertainment

Industries handling sensitive data refrain from outsourcing ► Asset Management, Banking, Insurance

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IT Cost is under pressure The big variance of cost ratios indicate that there is a number of companies with potential to reduce IT costs ► E.g. the ratio of IT costs to revenue for Diversified Industrial Products varies between 0,14% and 11,61%

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IT Cost is under pressure There is also a big variation on the portion of data center costs from total IT costs ► E.g. the ratio for Diversified Industrial Products varies between 0,39% and 100%

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IT Cost is under pressure Finally the variance in the number of used data centers per company also indicates potential for cost reduction ► E.g. the number of data centers per company in the Diversified Industrial Products sector varies between 0 and 10

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Section 2

GCC Data Center Market

An initial view of the market Market size and growth for datacenters in GCC ► The size of the datacenter industry in GCC was estimated by Ovum at

120

USD million

100 78

2010E

F2011

F2012

F2014

F2015

101

60 40 20 0 F2013

Market share for data centers (%)

2% 23%

circa USD 80 million in 2010 and was expected to grow at a CAGR of 4.4% until 2016. ► Saudi Arabia is the largest market in GCC accounting for 53% of the total market value in 2010. Kuwait is however, expected to grow at a CAGR of 5.3%, highest in the GCC countries until 2016. ► Data centers are primarily demanded by the telecommunication sector, financial services sector, manufacturing and public sectors. Demand from telecommunication sector is expected to grow at a CAGR of 14.5% and to drive the market growth.

F2016

Demand of data centers by sector

15% 5% 2%

Bahrain

53% Kuwait

Oman

Qatar

Saudi Arabia

United Arab Emirates

Section 3

Green IT

Sustainability is on the agenda Reducing carbon dioxide emission is part of the agenda of governments within GCC E.g. the current five-years-plan for Kuwait states under the policies of the natural environment: ► “7. Adopt methods of manipulating environmental

situations in Kuwait territory, provide necessary budgets and laws for reserving the environment from pollution …” Governments of GCC countries plan ► to consolidate data centers for ministries and public

agencies and ► to deploy green technology in this context

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Sustainability is on the agenda Ernst & Young ► Is partnering with vendors and engineers to inform you

about latest technology ► Can support you in establishing an effective reporting

on current resource consumption ► Has numerous benchmark data to assess the energy

efficiency of your environment And Green IT pays off… Servers

Networks

Storage

Data Center Space

Capital Cost Savings 50% Power & Cooling

80%

60% Provisioning Cost

50% Disaster Recovery Cost

70%

30% 13

Section 4

The CANCOM Success Story

A journey to success The company CANCOM ► Funded in 1999 ► Transformed from a HW and SW distributor to an IT

Solution and Service Provider ► Built its success by focusing on mid-size companies

and an innovative solution ► Operates 2 data centers and about 30 subsidiaries

across Germany – Switzerland – Austria ► Participated in the EY Entrepreneur of the Year

award 2011

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A journey to success CANCOM can show constant growth over the last five years by ► Employing 4 times

as many people ► Doubling revenues

The CANCOM management team gained first experiences when funding EINSTEINet ► An ASP and fixed-line Telecom provider ► Investing in a 15,000 sqm data center near Hamburg ► And getting insolvent in 2000

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A journey to success CANCOMs success is based on a combination of server and client virtualization called Application Hosting Platform (AHP)

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A journey to success A real case cost calculation showed some 30% cost reductions for the cloud solution compared with traditional computing

Area Physical data center infrastructure Server and storage hardware Software licenses (office, etc.) ERP software licenses ERP software development Clients Total implementation cost Annual asset value depreciation (20% of infrastructure cost) Maintenance (HW, SW) Energy Leased lines IT operation staff Total annual operation cost Cost per client

Traditional 1.000 (4 DCs)

Server Virtualization 500 (1 DC, 1 Backup site)

Using AHP 500 (1 DC, 1 Backup site)

1.200 (350 servers) 1.200 800 700 1.000 5.900 800

400 (90 servers) 1.200 800 700 1.000 4.600 540

450 (100 servers) 1.200 800 700 810 4.460 512

250 300 360 1.750 3.460 160

250 90 360 1.250 2.490 115

250 90 360 750 1.962 91

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Thank You

Dr. Christoph Capellaro Director Ernst & Young Al Aban, Al Osaimi & Partners 13001 Safat, Kuwait Baitak Tower christoph.capellaro@kw.ey.com

Phone Fax Mobil

+965 2295 5117 +965 2245 6419 +965 9721 6390

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