TelecityGroup: Data centres and the digital economy – John Hughes
TelecityGroup is one of the leading providers of carrier-neutral data centres for financial institutions, operating facilities in city locations across Europe. Future Banking sits down with the company's executive chairman, John Hughes, to discuss his long-time work in the tech industry and why banks can rely on his company to provide data centre services for the financial services industry of today.
When people were first trying to break into the data centre industry in the late '90s, John Hughes, now executive chairman of TelecityGroup, jokes that it was with something of a Field of Dreams-inspired model.
"The strategy was pretty much 'build it and they will come'," he says, as we sit down at the company's headquarters in London. "Well we did, and they didn't."
The result was predictable - when the tech bubble burst in the early 2000s, TelecityGroup and many of its competitors were delisted and taken private. But it wasn't the model that was wrong, Hughes argues, but the timing, and a lot has changed since then. Namely, demand has shifted and the customer base has transformed substantially.
"When I joined in 2007, it felt like a business for which the time very much had come," he says. "It was doing interesting stuff, with a good group of people and it had a strong future."
He was right. Since Hughes took over, the company's revenues have increased from £98 million to around £350 million in 2014.
"That's several times the scale and profitability, and it's a company doing incredibly relevant stuff," he says. "It's a great opportunity to be chairman of something like this.
"Our customers range from start-ups to Fortune 100 companies. We have over 2,500 clients with most of our growth coming year on year from the existing base."
When the company was rebooted into its current form, it was a business that centred around big telecommunications companies - which all sought to be located in the same physical location. In more recent years, there has been a shift towards customers from a wider horizon of markets, including the financial services sector, requiring, resilient, secure and connected data centre locations in which they can run increasingly demanding applications, such as the delivery of real-time data and information to, for example, a trader's screen.
Now, TelecityGroup has become a company with international reach. It's no exaggeration to say that the company sits - almost literally - at the centre of the digital economy, running major data centres across Europe, in Amsterdam, Dublin, Frankfurt, Helsinki, Istanbul, Manchester, Milan, Paris, Sofia, Stockholm, Warsaw, and London, of course. Hughes points one out just across the street from the office where we are sitting in the Isle of Dogs.
"We became the logical place for the telecommunications companies to terminate networks, and the content-delivery networks came with them," says Hughes. "Over the past few years, the business has continued to serve those two communities; they make up a big part of our revenue streams.
"This transition fits with what we've built, which is a network of high-quality data centres near each of the major financial districts in the continent. So we have data centres located in the major internet hubs, many of which host the important internet exchanges."
TelecityGroup is constantly enthused by the exciting work that their partners are up to, says Hughes. He's frank, admitting that some of the work it does is not as colourful and exciting as that of its customers, conceding that the business is to provide what he describes as "internet plumbing for the online infrastructure".
"The stuff that's really interesting and glamorous is what our customers are up to - we make it possible for them to do this," he says. "Whether it's providing real-time data to people doing online trading or distributing video, applications and content in real time, we've got 2,500 customers around Europe, doing a range of work, from household names to speciality businesses."
TelecityGroup has an increasingly diverse range of financial services companies choosing to locate their network-intensive IT infrastructure in its data centres - 13% of colocation revenues in FY2014 came from financial services, Hughes says.
"These customer deployments support a wide range of banking and insurance services, trading platforms and also companies' in-house IT systems," he adds.
Lock and key
With the complex implications of the Edward Snowden NSA revelations still ringing in everyone's ears, it makes sense that TelecityGroup's customers are increasingly talking about digital privacy and concerned about data sovereignty - the idea that data in a cloud system must stay in the jurisdiction of the territory where it is created.
"What typically matters to these customers more is the question, 'Is my data secure?'. Because they are proprietary, they are sensitive," says Hughes. "It's staggering to me, the effect that Snowden has had on the whole industry's outlook in this area
"We have continued to strengthen our integrated quality management systems, enabling ISO and related certi?cations across the business for security, quality and environmental management, together with occupational health and safety."
The delivery of these systems is coordinated by an operational standards team that comprises a group of experts in each specialist area. They then provide support to TelecityGroup's country managers to ensure they are fully conversant in what needs to be done to maintain performance improvements for customers across all sectors, says Hughes.
Product for the environment
TelecityGroup is also stepping up efforts to mitigate its environmental impact. Data centres can require the power supply of a small town to run on a daily basis, and they come under significant pressure from clients to manage energy efficiently. TelecityGroup has responded with an ambitious corporate social responsibility programme, taking a leadership role, and also paying attention to its consumption of water usage and carbon emissions. It was also the first data centre provider to publicise long-term and clear carbon-efficiency management targets.
For example, TelecityGroup wanted to develop a way to achieve more effective air-flow management in its facilities, with an aim to maintaining segregation between the cooling air and the waste heat generated by IT equipment. The solution has seen significant improvement of the operating environment temperatures, helping maintain equipment longevity and improving the resilience of the data-cooling systems.
"This isn't about some marketing spin; this is about driving up the efficiency of our data centres using free air cooling, so the impact on the environment is lower," says Hughes. "We spend a lot of time worrying about these kinds of things, and it's borne out: last year, we were recertified to the Carbon Trust Standard in the UK, achieving a best-in-sector score of 92.5% for carbon management.
"We also ensure our clients are fully engaged and advised on the most energy-efficient set-up for their equipment - our ongoing aim is to develop solutions that actually set the standard for innovative data centre design now and in the future."
Hughes makes no secret about having been around for a while, but he still marvels about finding himself working at the forefront of the tech business. For one thing, he's also a non-executive chairman at Just Eat, the pioneering website that streamlined the online takeaway delivery service, showing that the art of good business really is all about being a good middleman.
"I essentially find myself sitting on both sides of the fence," he says. "But it gives a useful understanding of what's driving the typical customer that TelecityGroup has, which I think is a useful place to be.
"Just Eat was a very different proposition, it was a much smaller business, but it was a fascinating one. The notion of these 'marketplace' businesses intrigues me a lot."
After more than 30 years working at the forefront of the tech and telecommunications industries, Hughes says he remains passionate about the transformative power that technology can have, and is constantly thrilled by how much has changed.
"The thing about tech is that you never get bored," he says. "30 years since I started, it's changed beyond all recognition, and I find all that fascinating, and coming to the intersection between technology and what it gets used for, and understanding what the business drivers are, it's still an interesting place to be."