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Cloud business software giant NetSuite eyes Hong Kong for regional data centre operation

PUBLISHED : Sunday, 29 May, 2016, 3:45pm
UPDATED : Monday, 30 May, 2016, 4:12pm

Hong Kong looks set to burnish its credentials as a regional data centre hub on plans by NetSuite, the world’s leading provider of cloud-based business management software, to step up its infrastructure expansion across the Asia-Pacific.

NetSuite chief executive Zach Nelson said the company plans to establish its first data centres in the region next year, with Hong Kong and Singapore as the likely locations for those facilities.

“When we do data centres, it will have to be in multiple sites,” Nelson said in a media briefing ahead of his visit to Hong Kong this week.

He said having data centres at multiple sites help ensure automated failover for disaster recovery, so there is zero downtime for NetSuite’s users in case of service interruption at one location.

It is a similar strategy NetSuite adopted in Europe last year, when it opened two data centres in Dublin, Ireland, and Amsterdam, the Netherlands.

Data centres are secure, temperature-controlled facilities built to house large-capacity servers and data-storage systems, and feature multiple power sources and high-bandwidth internet connections.

Companies in the internet, digital entertainment, logistics and financial services fields are among the major users of data centres, which host so-called cloud computing operations. Cloud services enable companies to buy, lease, sell or distribute software and other digital resources online, just like electricity from a power grid.

NetSuite, which forecast more than US$1 billion in sales this year, is recognised as the world’s top provider of cloud-based financial management, enterprise resource planning and e-commerce systems.

The San Mateo, California-based company was founded in 1998 by Evan Goldberg, who serves as its chief technology officer, and software billionaire Larry Ellison, the executive chairman at Oracle Corp.

Nelson said building data centres in Hong Kong and Singapore would help drive its plans to enter mainland China and India, where local partners help serve its users. NetSuite, which set up offices in Hong Kong in 2008, has more than 30,000 corporate customers around the world.

Jabez Tan, the research director at Canadian consulting firm Structure Research, said cloud infrastructure deployments are “a significant driver of data centre growth in Hong Kong”.

“The city has traditionally been viewed as an ideal location to enter the Chinese market due to its proximity and political ties,” Tan said.

Nelson expected a cost-effective set up of data centres, estimating initial expenses to range from US$2 million and US$3 million each in the two locations targeted by NetSuite.

That low estimate means that NetSuite plans to enter into co-location deals with data centre services providers in Hong Kong and Singapore.

Co-location is an outsourced data centre service in which the operator provides the facility, while the customers or tenants supply their own servers and networking equipment.

“There has been a surge in the construction of co-location or third-party data centres in Hong Kong,” Tan said.

Data from Structure Research showed that Hong Kong’s co-location market is projected to increase 17 per cent to US$828.7 million next year, up from an estimated US$709.3 million this year.

“With data centre space utilisation in Hong Kong greater than 50 per cent and power utilisation at less than 50 per cent, we see there is still plenty of runway for the Hong Kong data centre market,” Tan said.