Interview of TAdviser with the cofounder and CEO of IXcellerate company Guy Willner

Guy Willner: Business in Russia has a pronounced personal shade: here the personal trust to those with whom you deal is very important. It is important to Russian clients to know that it is possible to rely on you that you can be trusted. For example, it is characteristic of the USA to a lesser extent. The formalities connected directly with the transaction are more important there. The parties sign the agreement, for example, on 150 pages and if one of the parties does not satisfy the conditions stipulated in it, then another will take legal action.

One of difficulties which we face, – perception of Russia in the West. Many abroad had an opinion that in Russia there are a lot of inadequate people, and nobody wants to invest in the enterprises in this market. Difficulties with attraction of financing under large infrastructure projects result. Construction of large data center requires multimillion investments. For this purpose it will be required to address also the international financing sources, but to receive it from these sources incredibly difficult.

However, we managed it: we got strong support from Sumitomo Corporation which is provided in Russia about 50 years and more than once observed the periods of rise and recession in this market.

Because of that image of Russia which developed in the West our business develops much more slowly here, than could. Many western companies avoid the Russian market. When I conduct negotiations on perspective of joint projects in Russia with some western company, in reply I hear "Well, I do not know, maybe, somehow then, in a year, we are not sure".

However there is also plus that Russia is torn off from the West. There are a lot of actively developing creative Internet businesses. They create own web environment since they are not suppressed with large international players in the country. In the field of the Internet in Russia there is more creativity, than, for example, in Germany.

Guy Willner: The IXcellerate company goes on the planned way, however it was more difficult because of unexpectedly arisen political crisis, the followed drop in oil prices, sanctions. We coped with the arisen difficulties, as well as some other providers of services of data centers. It shows how steady the industry is.

Affairs at IXcellerate go well. Last year attracted new large customers, all them already more than 70, practically filled the second queue of data center of IXcellerate Moscow One. Also our data center was recognized by the best in the "integrated solution in the field of power supply and cooling" nomination within a professional award in the area creation of DPCs of "Russian Data Center Awards 2015" and also won in 2016 the "Innovations on Decrease in TSO of Data Center" nomination.

We completed team building, today we have in the state about 40 people. It is possible to tell that the first several years we created a skeleton, and now began to build muscles. If to consider third-party specialists whom we involve then about 200 people, including technical development specialists, to telecommunications, design, etc. are in total involved in the project. Our present command very mature and sure, with strong management.

We approached a point of stable development, having reached profitability, and now IXcellerate is in a situation when we need to extend. For this purpose we look for possibilities of attraction of additional financing and we consider prospects of merge to other companies in the Russian market in the next five years.

Guy Willner: With adoption of law we saw significant increase in demand for the services and inflow of clients. Now we have about 15 very large international companies using IXcellerate services only due to the need to meet the requirements of law FZ-242. They are provided by the different industries, including Internet trade, finance, cosmetics, distribution and others. Considering that the Internet market grows, it is possible to predict that also scales of installations of these clients will grow. Requirements for a personal data storage in Russia pushed to expansion of infrastructure of cloud providers who are also placed with us on the platform.

Guy Willner: I for a long time in this industry, and some foreign clients with whom I cooperated, working in the previous company, addressed us and in Moscow. They have to me a trust, and it is very important for business management in Russia as I spoke earlier.

When we for the first time bring the new large foreign customer to Moscow, he is always nervous, expecting some negative, but, having carried out by day three in Moscow, the opinion of the client changes. He says that this amazing place – dynamic, modern, with good engineers, technical specialists, communications. It is interesting to observe it.

Now we have several "evangelists" in Western Europe, the USA and other places which we bring to Moscow. Here it is pleasant to them, and then they share positive impressions with clients in the countries. It helps to correct image of this market.

Guy Willner: If to compare the markets of services of data centers in the different countries on a 10-mark scale of a maturity, then the USA, for example, is somewhere in the eighth place, Europe – in 6-7 place, and Russia in the 2nd position. Mature market is characterized by high extent of consolidation, and the Russian market moves in this direction. I think that over time three-four leading players will appear here. So far it is difficult to tell who exactly it will be. If to look at the market of the USA, then at the beginning of market development services of data centers rendered the companies of different profiles, including telecommunication companies and integrators. Now there the leading players – those who specialize only in services of DPC. Similar situation and in Western Europe. And it is easy to explain it: the client will address rather to the company for which this type of service is key business.

It is difficult to tell when the Russian market approaches a maturity. According to my forecasts, within five years in Moscow, at least, the capacity and resource base of DPC providers (capacity) will grow by 10 times.

Guy Willner: In addition to certified quality among our main differences – the politician of neutrality of communication. The client always has a choice and an opportunity to pick up the supplier individually for the requirements. At our data center there are nodes and connections with 37 telecom operators are guaranteed. If the network on which data are transferred refuses, data transmission will be automatically transferred to network of other operator. Take place in neutral data center, it how to land at the airport with a set of runs which you can depart to a destination point: if to cancel one of them, you can select another.

Besides, we can set network connections (cross-connections) between the companies directly if it is necessary. Our specialists do it very quickly. Thus, we can create an ecosystem of the companies connected among themselves. I can cite as an example one of our clients – La Redoute company. It is the French company specializing in remote sale of clothes and home decoration which works also in Russia. Every day she needs to approve a set of bank card transactions via the website, to contact directly the delivery service when the order is placed, to trace a warehouse status, etc. They use 2-3 networks from the different operators connecting the company with a banking system and other parties of sales process.

One more important feature of IXcellerate – we are focused only on service of placement of the equipment and services accompanying it. It is called pure play colocation. If the company defines priority specific service, then it does this service top-level. For example, we register and we respond to the requests of clients, on average, within 6 minutes that several times quicker than an average market indicator. Thanks to policy of pure play colocation among our clients there are a lot of integrators, providers of cloud services and telecom operators as IXcellerate for them the strategic partner and in any way not the competitor.

It is possible to note also our deep understanding of the market. One of the reasons of it is existence of partnership with IDCG, the international group of data centers, partner alliance of commercial DPCs around the world. If we have any questions, we can address partners from IDCG which are ready to share experience and examination.

Guy Willner: Clients pay more and more attention to service quality. It means that the prices began to vary. A few years ago very few people paid attention to quality characteristics of DPCs, certification of Tier 3 , etc. DPCs had no strong distinction on quality. At the same time cost was rather identical as on services of very good DPCs, and data centers with quality "so-so". Now, when clients got experience with idle times, problems of technical support, failures of the equipment, many look for and are ready to pay for reliability and guaranteed quality.

In addition service prices of DPC can grow at the providers buying the computing equipment since because of growth of currency rates also the prices of the import equipment which they use increase. However it is not our case - we do not buy the computing equipment, clients place with us own.

It should be noted that the prices are influenced by costs for the hi-tech, difficult import equipment for cooling and power supply. Import substitution and use of solutions of local suppliers helps to solve this problem. There are companies which also manufacture very quality products in Russia. The share of such equipment in our data center grows. The local products purchased for rubles cost cheaper.

For example, we found one producer of "smart" PDU (distribution frames of power supply) near Moscow, and especially for IXcellerate he released blocks under our brand and with those characteristics which were necessary to us. Also we found local producer of the "cages" separating the equipment of one client from another. Earlier we used a product of the Swedish company, and now we use Russian, qualitative and at the same time more profitable at the price. There are also good local solutions for creation of hot/cold corridors.

At the same time, we always leave a possibility of the choice for our clients: if someone wishes to have infrastructure using only import solutions, we can provide it.

Guy Willner: Customer requirements at the level of projects become harder and harder. More and more, for example, they request crosstalk coupling with other clients, are interested in existence in data center of the clients working in the same sphere, as they are. It is especially important to know it, for example, to financial institutions.

It is also possible to tell that scales of projects increase. It is required to clients more than the areas. Even if the client comes initially with a small amount of racks, most often he wants to have a backlog for further expansion. Now it is required to have data center not less than 10,000 square meters successfully to render services and to develop. In the past, for comparison, it was possible to construct DPC on 400 square meters and it is easy to find under it clients.

Guy Willner: It is impossible to tell that cloud services eat off a share from a segment on placement of the equipment (colocation). High-quality platforms for deployment of the services are required for providers of cloud services too. It is cheaper, than to build own DPC. As a result we can have in one data center and the client who needs the platform for placement of the own equipment, and cloud provider who provides it cloud services. This concept of a hybrid cloud becomes very popular.

Guy Willner: We observe stable growth in the market. At the same time about 60% of our revenue come from new clients. The largest customer from all appeared at us just last year.

More mature market now in Moscow, the colocation market is in regions of Russia at very early stage of development, corresponding to availability and level of a maturity of communication networks in the specific city / area. I think, in the long term 10 years will be large commercial data centers in all Russian cities with the population from 1 million people. They will service local state structures, banks, retail, etc.

Guy Willner: There are industries where business is especially sensitive to the prices. One of them – the hosting companies. Sometimes with these clients we jointly study projects with dynamic pricing. In other industries the cost of services of data center for the companies is very small share of expenses in their general IT budget - if for them services become a little cheaper, it will not play a special role. Economy which they receive is important for them, placing the equipment in third-party data center instead of construction of own DPC.