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Interview: CyrusOne’s new Europe president on aggressive expansion

20 Feb 2019

US-based real estate investment trust (REIT) CyrusOne initiated a zealous expansion into Europe late last year and hasn’t looked back.

After its acquisition of Zenium in August 2018 to break into the Europe market with established data centres in the UK and Germany, the company revealed plans for a massive hyperscale campus in the Netherlands in addition to further plans within the continent, with the goal for its European portfolio to provide nearly 250 MW by this year’s end.

In November last year, former CyrusOne executive vice president and chief commercial officer Tesh Durvasula was promoted to president for Europe and tasked with moving to the UK to oversee the company’s ambitious expansion. In light of this, we sat down with him to garner his thoughts and the company’s future plans for the region.

When asked whether there are any significant contrasts between the US and Europe data centre markets, Durvasula says every region they operate in faces the same basic set of challenges - how to harness the potential of rapid advances in technology to deliver a competitive advantage.

“Whether you’re in Frankfurt. London, or Texas, that means rapid and sustained investment in digital infrastructure. The direction of travel is the same, but there are obviously differences in the route you have to take. The regulatory environment in Europe is slightly different to the US. Access to power is also a factor in some regions,” says Durvasula.

“We didn’t enter Europe blindly. When we acquired Zenium we didn’t just buy a portfolio of data centres, we were also able to bring great people into our organisation, with years of local market knowledge. That’s going to be hugely important as we look to expand our footprint in Europe at the pace the industry demands.”

While CyrusOne certainly made its entry known to the Europe market with audacious investments, Durvasula says they won’t be slowing down.

“The sheer amount of data being produced globally is increasing at an insatiable rate, which naturally means the need for more data centres. Our customers are telling us we need to be global to compete, so naturally we are looking at the top GDP countries outside of the US, and the most prosperous, with a whole host of these locations based in Europe,” says Durvasula.

“We currently have development sites in process across London, Dublin, Frankfurt and Amsterdam, and exploring options in several of the other Tier 1 European markets. It’s certainly in our thinking that we would look to expand our footprint further, both within Europe and more globally. We’ve grown the CyrusOne business fivefold since we went public in 2013 and it’s been an unbelievable ride. If we complete everything in the works, we’ll have one of the largest portfolios in the European theatre.”

Sustainability is a hot topic at the moment as the issue of power-hungry data centres continues to swell, but Durvasula says CyrusOne is looking to do its bit for the industry.

“If you look back ten years ago, sustainability was a tick-box exercise for the annual CSR report. It’s far more compelling when sustainability is tied directly to the bottom-line on a balance sheet. As large energy users in the UK, the data centre industry is in a strong position to effect change in terms of how green energy is priced and made available,” says Durvasula.

“We recently moved our London I and London II data centres onto a green energy tariff. We were able to negotiate a deal which will deliver reduced unit costs to our customers alongside a reduction in carbon emissions. We continue to explore ways to maximise the efficiency and resource usage in our data centres so that we can pass those benefits along to our customers.”

Durvasula comes to the Europe market at an interesting time, as Brexit is causing no shortage of business anxiety. However, he is confident that it won’t impact the company’s interests in the region.

“The Brexit process has been fascinating to watch, both from New York and since landing in London. We’re still learning a lot each day, and as a company we definitely see the exit of Britain from the European Union as both an opportunity and a challenge, whatever the eventual outcome may look like,” says Durvasula.

“I’ve always had a sense of the “optimism bias” but I believe that regardless of the Brexit outcome, CyrusOne will be able to grow and continue our plans for European expansion. Brexit is a once in a generation moment for the UK, but frankly the explosion of technologies including AI, IoT and machine learning is a bigger issue in the long-term. The biggest issue right now is uncertainty, which is preventing businesses from taking the decisions they need to in order to preserve their long-term growth.”

In terms of the trends emerging in the global data centre industry, there is one that transcends continents and something Durvasula says has existed since he started working in the industry more than 20 years ago - uncertainty.

“Whilst its common to be able to predict the growth trajectory of data centre demand in the next 5, 10, 15 years, and we carefully select sites, partnerships and developments that reflect this, it’s much more difficult to say what will happen in the next month or two months, where the demand will come from next and what this demand will look like. Companies don’t always know where they need to be from month to the next, so it’s hard for us to always know our next direct move,” says Durvasula.

“Also interesting is the hyperscale vs enterprise customer, and the importance of being able to scale up and scale down, depending on individual needs. We sell to so many different types of companies, from huge global mega-corporations to smaller enterprise customers who don’t want to be in the cloud. The cloud isn’t for everybody, and it’s becoming increasingly important to give these customers somewhere to go, too.”

Durvasula says being in the data centre industry gives him a front-row seat of what’s going on in technology and how it’s impacting global growth and business.

“Watching this massive innovation cycle between what we’re seeing in the cloud, AI, machine learning is so fascinating, as our appetite for consumption continues to shape society and ultimately the demand for data centres. This generation of kids is the first to grow up with the whole world’s information in their pockets. The thought of them using technology in more efficient ways than we ever thought possible is so exciting,” says Durvasula.

“Our appetite for consumption will just continue to add to the already exponential growth of data, both via cloud companies and those out of the cloud. Data centres are at the core of this, as with this insatiable rise in data use comes the demand for more places needed to hold the data, more connectivity options, more providers and collaborators, more security and efficiency - you name it, data centres will be heavily involved as technology advances, and I can’t wait to see it unfold.”