Courtney Grill: Thanks for sitting down with me today. You joined Faithful+Gould a few months ago to help lead our newly implemented Mission Critical / Data Center Sector. Now that you’ve settled in, how are you feeling regarding this sector?
I’m very excited and enthused about where we are headed. At the core of this initiative, is Faithful+Gould’s recognition of the demand within the market for these types of facilities. This is an area where we can deliver for our clients by helping them reduce and avoid risk, manage and mitigate cost and drive efficiency in their projects. Given our history of serving large global enterprise clients such as Google, Barclays, Equinix, BP and ExxonMobil, it just makes sense to prioritize this as an area of focus.
CG: How did you first delve into the world of data centers?
I was working in business development for Skanska Building USA in the early 2000s and, along with my colleagues, noted the growing need for construction of these types of facilities. I ended up co-founding the Skanska global Mission Critical Center of Excellence. As the representative for the United States and Canada, I helped manage any mission critical opportunities within that territory with a team that I created with some partners in our New York office. In that time, I had the opportunity to work with key data center clients within the financial and tech industries. That was the height of the financial industry’s data center expansion or the “mission critical boom”, back in 2006.
CG: What led to this “mission critical boom”, as you refer to it?
In the early 2000s, banks began to get heavily involved in robotic trading, computer trading and automated trading. Prior to the implementation of automated and online trading, in the New York Stock Exchange for instance, you had a bunch of folks standing around yelling out “buy” and “sell”. Then, the financial institutions discovered that they could use computer algorithms to track any news directly affecting the market. For example, if a report on a hurricane in Houston is announced, which would lead to the oil refineries in the area being subsequently pushed offline, a blip in oil futures is immediately generated by the computers reading that data. Through automated trading, sell trades in oil are immediately executed and the whole system becomes more efficient. In doing this, the banks stand to generate millions of dollars in milliseconds.
There was a massive move to make this the new way of life for financial trading, which initiated a big data center build for every large financial institution.
CG: It’s amazing, looking back and considering how much that development would change the financial trading system altogether.
It certainly is. Once this became possible, there was a massive move to make this the new way of life for financial trading, which initiated a big data center build for every large financial institution. All of those organizations were in a big rush to build data centers and to develop all types of applications to run and host these computer trades.
However, that wasn’t quite the end of the story. In the initial boom, these clients built portfolios of multiple large data centers within a very short period of time – about five to six years. Keep in mind, the cost to fit out a 100 thousand-square-foot data center is around $100 million, with operational costs ranging up to $1 million a month. After the 2008 financial crash, the banks looked at their portfolios and noted those exorbitant costs weren’t linked to the core business of banking, and began looking for an outsourced model. Banks began to lease their data center spaces, where possible, in a massive consolidation that allowed the banks to downsize their footprint.
CG: Are the bulk of data centers being built today co-locations?
At this point in time, there are two options if you’re a financial institution and you want look to a place to store your data. First, there is co-location, where you utilize a data center that was built by a developer with the specific intention to be broken up and leased out in pieces to different companies that are co-located at the same site. With this option, you can get power, space and cooling, you just have to bring in your own racks and servers, and you get a flat rate that you pay every month.
Option number two is the cloud. The cloud is the newest generation of data center services. While it is similar to co-location, with the cloud you can get everything for one price, including racks and servers, and you don’t need to have a team managing it. You essentially just pay for your compute requirements within the space.
CG: And that’s what we’re working to help our clients to do?
Exactly. The cloud is behind the ever-expanding demand to build data centers, not only all over the United States, but all over the world. We’ve chosen to focus our attention on our Mission Critical / Data Center Sector in recognition of this demand, and of our particular expertise in this area.
Considering the size and scale of the companies that are building these facilities throughout the world, the value we bring is our extensive global footprint, which mirrors the widespread locations that these companies are expanding into.
CG: Why choose Faithful+Gould for these sorts of projects?
Well for one, given the extent that these companies need to be expanding, they are looking for support in every aspect. From finding the right sites and managing the folks coming and going, to facility assessments of the existing portfolio, and studies on how these aging facilities can be made more efficient. They need extensive project management, project controls, cost consulting, commissioning, you-name-it services. Faithful+Gould provides a full suite of services and our mission critical specialists are professionals from within our project management, cost management, building surveying, sustainability, health and safety and strategic asset management teams. This makes us ideal for these projects.
Also, despite the demand, mission critical remains a niche market, and there are not a lot of companies that focus on mission critical to the scale that we do. There’s almost no competition out there that has the depth and breadth that we have to service these accounts. Considering the size and scale of the companies that are building these facilities throughout the world, the value we bring is our extensive global footprint, which mirrors the widespread locations that these companies are expanding into. We have 25 offices here in the Americas and are very active in Asia, the Middle East, the UK and Europe through our partnerships with other Faithful+Gould entities. When you take into consideration our parent company, SNC-Lavalin and the global footprint it has, we can basically cover any country that any of our clients with data center needs would be located.
CG: The interesting thing about your role here is that you’re commuting coast to coast, between our New York and San Francisco offices, as one of the leads of this sector. How does the market differ on the east and west coast?
On the east coast, you have most of the financial organizations headquartered in New York. All the big, top 30 financial institutions usually have a headquarters, or at least hub location, in New York City. As discussed previously, they are major the users of data centers, particularly for financial trading. These types of customers have been in the market since day one and are typically very risk averse and conservative in the data center market. They are looking for a traditional data center footprint, with traditional operations, equipment and technology.
Meanwhile, on the west coast, you have the birthplace of technology companies. These companies are technology-centric and thrive on innovation. They are constantly pushing the manufacturers of all their equipment and infrastructure to drive innovation and to become more efficient. These data centers use a tremendous amount of power, space, cooling and water. Considering they are building massive data centers all over the world, they want to be conscious and avoid over-indulgent, power-hungry facilities so they are also pushing the manufacturers to innovate and try and reduce and eliminate waste inside the data center and drive energy efficiency.
CG: How do you tailor your approach on each coast?
I think obviously our experience working in these differing markets, and our understanding of what they need, is the key. That’s why I am splitting my time, understanding that these projects will not be suited with a one-size-fits-all approach given the differences in their markets that I detailed above.
CG: What do you hope for the future for us? Where would you like to see our sector go in the next five years?
My hope is that we can stay on the cutting edge, and continue to attract the best in class consultants. We have an excellent mission critical team spread throughout the United States and a very strong team in Asia, the Middle East, the UK and Europe which will allow Faithful+Gould to truly deliver innovative, value added services to our respective clients throughout the world.