Could Iceland become a data centre hub for Canadian business?

When you think of data centres; Iceland probably isn’t top of mind.

But that might change. A new independent study from BroadGroup Consulting found that Iceland is positioning itself to become an international data centre hub. What Iceland is offering businesses that already outsource data centres is this: clean energy reserves, solid infrastructure and dramatically lower prices.

That last fact may motivate solution providers to consider relocating to Iceland. And, the person who I spoke to about this Iceland opportunity told me there are many businesses in North America already exploring the prospect. I’m sure these are tire kickers, but you never know because at the end of the day money talks.

The study also found that power in Iceland is 100 per cent renewable. Iceland produces electricity using exclusively hydro-power, geothermal energy and onshore wind. These are sustainable and green resources with next to zero carbon trade-offs. So if your company has a green mandate Iceland could be ideal. But we all know that cost will be the biggest factor.

Steve Wallage, managing director of BroadGroup Consulting, who conducted the study, said data centre costs are closely linked to power prices in Iceland. Typically power accounts for 20 to 40 per cent of data centre operating costs.

Iceland is trying to entice solution providers to consider their data centre facilities with fixed-rate, long term contracts. They will even go a step further and cap prices for a ten year period or even longer if it’s a greenfield project.

One public quote I got offered a fixed rate of $43/MWh for a 12 year contract. The European average was $65/MWh in 2011. You would have to think prices will increase each year so a lock in rate will bring some predictability to solution providers.

Certainly this is something of an oddball situation. Saying you are moving your moving your data centre to Iceland is like moving it to the moon, but I’m sure people had the same reaction to outsourcing call centres to non-English speaking countries in the 80s. What solution providers have to take into account is Iceland’s location. Iceland is more than far away. This isn’t a data centre in the rocky mountains of Colorado, which a lot of Canadian solution providers currently use.

Iceland is located between the North Atlantic and Arctic Oceans and the country is just south of the Arctic Circle. This means it will not be cost effective if you have to make a visit for any reason as Iceland is closer to Europe than Canada or the U.S. It also means you will have to completely trust in your Icelandic partners. So the next question is one of what’s the expertise level in Iceland. Will the Icelanders have the data centre expertise you need for your customers?

Another potential problem is Iceland’s population. There are only 320,000 people in the entire island. Another odd factoid is that of these 320,000 people; a large portion of the population are young about one out of five people are 14 years-old or younger. I am stating the obvious here, but you simply don’t want teenagers running or operating your data centre.

Still an interesting new opportunity for Canadian solution providers hearty enough to outsource their data centre to a part of the world they never would have dreamed of visiting let alone working with.

One quick hit before I go. The former head of strategy BCE and Bell Andrew Smith has resurfaced. Smith is about to launch Strum. He claims it’s the world’s first customer-to-business social network. Smith spent the last six months recruiting people for design and development for Strum. He says that Strum will solve a huge problem: providing an easy way for customers to connect with businesses in a manner designed for customers. When Strum gets officially launched look for Smith to announce a strategic partnership with a major Canadian retailer. Don’t be surprised if it’s SportsChek. Strum has developed a direct line of communication between customers and local businesses.

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Jim Love, Chief Content Officer, IT World Canada

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Former editor of Computer Dealer News, covering Canada's IT channel community.

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