Financial sector firms should ditch London-centric data centre view, claims operator

Financial sector companies should prepare to move their data centres outside of the boundaries of London as advances in communications technology alleviate concerns over latency.

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Financial sector companies should prepare to move their data centres outside of the boundaries of London as advances in communications technology alleviate concerns over latency, according to one operator.

Speaking to Computerworld UK at DataCentres Europe 2013 in Nice, Alex Rabbetts, managing director at data centre operator and consulting firm MigSolv said that the case for data centre customers moving to regional facilities is becoming increasingly clear.

He claims that there are number of reasons for exiting the capital, including the threat of terrorist attack, access to stable power supply and risk of flooding, not to mention property prices.

“Customers are beginning to realise they don't need to be in London," he said. "When you go outside of London it is cheaper, there are more stable power supplies, there are hundreds of reasons why you wouldn't want to be in London, so businesses are moving away from being very capital city-centric.”

He added that situating a large amount of data centres in one area presents a risk not just to the direct users, but the wider economy, a factor that is not mitigated by the concentration of data centres of nearby Slough. 

“If everyone was in London and there was an incident it could be catastrophic, not just for the companies that are in those facilities but actually for whole of the UK. You could take the financial services industry out in one hit.”

Rabbetts said that advances in communications technology such as fibre optics, as well as hardware in the data centre, have been crucial in enabling data centre infrastructure to be placed outside of London, a move which was not possible five years ago.

However, he acknowledged that, while many business applications can be delivered from other parts of the UK, there are still some business for which it remains preferable for the premises to be situated close to their data centre, such as the financial industry with its base in the heart of the City.

Data centres have traditionally been kept close to the London's financial district for reasons such as ensuring low latency for trading purposes. Part of the requirement for trading systems in the financial sector is a reliance on the synchronous replication of transactional data across different sites, which has a limited distance of approximately 200 kilometres.

Rabbetts said that synchronous replication is one of the remaining barriers to enabling financial sector firms to start moving their data centres further afield into regional parts of the UK.

“There is a very small part of a financial services organisation that needs to have synchronous replication, where you are writing to two places at exactly the same time,” he said. “Primarily that relates to trading floors, so if you are on a trading floor you have got to have synchronous replication, which means that a data centre has to be pretty close.”

He believes that ongoing advances in communications technology mean that there is the imminent prospect that traders will no longer require data centres to be so closely situated.

To illustrate this, Rabbetts pointed to the recent advances made by American researchers by combining and mirroring two beams of light in an optical fibre to enable a signal of 400Gb/s across 12,800 kilometres.

“Even trading will be able to move to wherever it wants to be eventually, because the technology is changing. Once that technology hits the mainstream, which won't be long, then this synchronous replication – you will be able to put it anywhere virtually, so the need for it to be close to you will go away.”

While he anticipates that this technology could only be a couple of years away from use, Rabbetts said that financial sector companies, which are traditionally conservative, should start to move other functions of their business to regional data centres, such as backup, disaster recovery, back office functions or any other non-critical applications.

“Financial services firms should really be looking at regional requirements now, and moving whatever they can which doesn’t require synchronous replication," he said.

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