Data hosting company follows the cloud

Rackspace is on a mission to expand its data hosting services in Asia. Lew Moorman and Mark Randall explain their company strategy

PUBLISHED : Saturday, 15 December, 2012, 12:00am
UPDATED : Saturday, 15 December, 2012, 3:12am

Rackspace Hosting has a fairly simple modus operandi: it leases space in data centres to host and help manage company websites and applications, such as e-mail.

Founded in 1998, the American company based in San Antonio, Texas, is now one of the leading international providers of data centre services. It has more than 190,000 customers worldwide, many of which are small and medium-size businesses.

A data centre is a secure, temperature-controlled facility housing large-capacity server computers and data-storage systems, and equipped with multiple power sources and high-bandwidth links to the internet.

Technology analyst firm Gartner estimated total revenue from data centre services in Asia reached US$10 billion last year.

In 2008, Rackspace invested more than US$20 million in Hong Kong to establish its Asia-Pacific headquarters and set up a new facility in Sha Tin to serve more than 5,000 clients across the region. These include firms in the financial services, retail and manufacturing industries.

A second data centre for the region is planned in Sydney, Australia. Rackspace already has seven data centres located in the United States and Britain.

Lew Moorman, Rackspace's president, said the company was generating significant business in Hong Kong from both global and local customers. Rackspace offers its clients dedicated hosting and so-called private cloud services in Hong Kong.

"What we aim to do next year is to bring our public cloud service, powered by OpenStack technology, to Asia," Moorman said. "We're very bullish on it. We've talked about what investments we should make in the region to make this happen."

Cloud computing enables companies and consumers to buy, lease, sell or distribute a range of software, business systems, data and other digital resources, including storage, as an on-demand service like electricity from a power grid. These resources are hosted in data centres.

"Cloud" refers to the internet, which is depicted in that form in computer network diagrams.

OpenStack is a free cloud-computing operating system that was co-developed in 2010 by Rackspace and the US space agency Nasa. It was designed to enable organisations to create and offer cloud computing on any standard computer hardware.

This open-source technology, which allows for researchers worldwide to contribute improvements to its software code, is supported by about 200 information technology companies, including Dell, Intel, International Business Machines, Yahoo, Cisco Systems and Hewlett-Packard.

New York-listed Rackspace, which posted third-quarter revenue of US$336 million, started offering its OpenStack-based public cloud service in the US in August. The aim is to give companies the option to save money and boost their operating efficiency, while not being locked into proprietary cloud-computing technology suppliers.

In an interview with the South China Morning Post, Moorman and Mark Randall, the interim Rackspace managing director for Asia-Pacific, discussed how the company is managing its expansion in the region and recruiting the right employees - called "Rackers" - to help foster business growth.


What is driving your expansion in the region?

Moorman: We've had really incredible growth. There is big demand for our hosting and private cloud service using VMware (a computer hardware virtualisation technology that, basically, creates room in a single server to run several programs in parallel) from enterprise customers. But we think business will be bigger when we bring our public cloud services here. The first step will be to bring our full suite of public cloud services to Hong Kong and Australia.

We think OpenStack creates a strategic advantage for us because it is emerging as the de facto standard globally in terms of cloud software. We already run the largest OpenStack operation in the world. So this knowledge and the tools that we're building around OpenStack are going to create an undeniably large opportunity for us, especially in [mainland] China.

This technology is being downloaded in [mainland] China more than anywhere else in the world, by private enterprises, the academic sector and, we assume, the government.

There's an incredible community building up in China that is actively contributing to further develop OpenStack. High growth is also what creates incredible opportunity here. Europe and the US are not doing quite so well, while the Asia-Pacific region continues to have good GDP (gross domestic product) growth in general.


How has Hong Kong helped to put the company in a position to grow?

Randall: We needed to be in Asia because our global customers wanted our services here. Like most of our global customers, it came down to a choice between Hong Kong and Singapore as the location for our first office and data centre in the region.

In the end, we selected Hong Kong because it has better [telecommunications network] connectivity back to the US and Europe for our multinational corporate customers. The city also gave us the capability to build up our skills and expertise in a manner that would help us enter [mainland] China in the future. In this office, we've built a strong bench of talent ready to help customers - whether multinational or Asian - work through issues 24/7.

Data centre expansion in Hong Kong is also on our agenda next year. We're looking at different options.


In recruiting local staff, what makes a good Racker?

Randall: Fundamentally, Rackspace is based on a number of core values. These are largely based on doing the right thing by our customers and being transparent and honest with them. These are the foremost requirements we look for in anybody we hire. We've refused to hire a large number of very qualified people, either in technical or commercial roles, because they don't share those values.

We also want people who are experienced, with the ability to move up one or two layers within the organisation, and understand the local markets we operate in.

Moorman: We'll probably double the number of staff in Hong Kong next year from around 55 that we currently have. I think we're now at a critical mass here; we're looking to bring on local Rackers who can also help us expand into adjacent markets in the region. We expect every employee to help set the direction for the company. We don't have a top-down culture. If we're going to succeed in Asia, we want Rackers here to step up, teach us and show the way.


Which other areas will you invest in?

Moorman: We want to make our operations in the region on a par with other markets in terms of products and investments. But we also recognise that we need more local market knowledge to determine the right place for us to spend our time and energy and where there is a great appetite for our services. We've got good traction in India and we're looking at Southeast Asia. We're still studying and learning more about [mainland] China.

What is certain is that we will be more active in marketing and aggressive in talking about OpenStack across the region. We believe this technology will become a fundamental platform for economic development around the world. The web relies on an open protocol so that anyone can join in. We think the cloud is in a very similar situation.