DEAC interview to magazine Digital Times: The attack on the East
The Latvian banking system is well known in Russia as a "safe harbour" for capital. Harbour that is close to Russia both geographically and psychologically and at the same time located on the territory of the European Union. Could our country become also the harbour for crucial information of large companies, not only their money? DEAC is doing everything possible in order that we could answer to this question affirmatively.
For whom and for what is built a second data center in Riga, how is changed the focus and about the recent efforts of the company to the eastern direction, we are talking with Oleg Naskidaev, Head of marketing and development department, DEAC.
Digital Times: We know that DEAC recently has done something in Moscow and St. Petersburg. The first question is simple: what are you doing in Moscow and St. Petersburg?
Oleg Naskidaev: If you look at the history of our company since 2000, when we began to work actively with our customers, then we originally geographically mainly worked in the Baltics, and sometimes had also the customers abroad. From the standpoint of strategic development in 2006 our company decided to build a second data center. In 2009 we launched it and during the last ten months worked actively in Russia, mainly in Moscow and St. Petersburg or Moscow Region and Northwest Region. There is concentrated a large part of Russian business in general. DEAC activity is focused primarily to give Russian companies the opportunity to use our infrastructure as a backup.
The second category of customers – companies, that wish to take out the entire infrastructure outside the country. In this case, one of our data center (DC) we use as a primary and the other one – as a backup. We give Russian companies an opportunity to diversify risks, reduce all sorts of administrative pressure, to protect themselves from raiders. In addition, many Russian customers who work for export are interested in being closer to Europe.
Digital Times: Is there any interest in Russia for your services?
Oleg Naskidaev: There is an interest, and a considerable one. At the moment we have about 20 projects with large Russian companies operating at the federal level. They can not be named - such is the desire, which is associated with many causes, ranging from security policy and ending with the fact that in Russia it is not used to show their data location point.
Digital Times: It turns out now that Latvia is providing Russians not only with banking services but also data protection?
Oleg Naskidaev: In principle, yes. If we take two main advantages of our company to Russian data center operators, the first one is the protection of business in any form and the second - a reduction of costs as the costs of our services is still lower than it is to Russian data centers. These are two factors that Russians are greatly interested in over the past ten months.
Digital Times: The cost of your services is lower due to what?
Oleg Naskidaev: Over the past few years due to the large deficit of areas in the Russian data centers, data center operators in Russia began to artificially increase the prices. Now the difference in price regarding to our observations is about 20-30%. Plus, if we evaluate customer needs in total, there are many details that make the final cost.
Digital Times: Why is it you? Within the EU there are many companies of your profile. No one prevents Russians to work with Lithuania, Estonia, Poland, Finland and others from Western direction.
Oleg Naskidaev: At the moment there is no similar infrastructure in Lithuania or Estonia. If we take our new data center and evaluate it, for example, the scheme of power supply, which is very important from the standpoint of data safety, was built under the scheme Tier IV. In Latvia, Lithuania and Estonia there are only a few companies that provide Tier II. Most, about 80 percent of all areas that are in the Baltic States, works under the scheme Tier I. This means that there is one generator, one centralized air-conditioning system and so on. If something of this fails, the efficiency of the data center is in risk. And it works most of the local operators.
But on the other side needs of customers in our market are not so well developed, that is why there is no need for such areas. So when we launched our second data center, it was not oriented to Baltic market. That's why it has a high Tier level what distinguishes us against other data centers and makes more attractive for large Russian companies.
If we take, say, European data centers, from the standpoint of technical equipment they are pretty good, everything is in order with Tier level. But they have other questions, mainly related to the telecommunications costs - they are in fact just geographically farther away from Russia.
Again, similar mentality and language of communication with the customer has great meaning: there are two big differences whether customer support communicate in Russian or in English. And do not discount the geographical proximity - it is easier to travel to Riga than to fly to Sweden, Switzerland or Brussels. At the very least, during our talking with the Russians we have made conclusion for ourselves, that if there is good area for a good price in Latvia, then it is meaningless to go somewhere and look for the best of the best.
Digital Times: What can you say about the other CIS countries? Are their markets perspectiv for you?
Oleg Naskidaev: I have just recently returned from a visit to Minsk. In Belarus the situation is somewhat different, but basically trends are similar. Belarusian companies that more work for export are interested to place their data processing infrastructure closer to Europe.
If we take the Ukraine, the trend out there are little bit more similar to Russian realities, rather than Belarusian. There's more money, more opportunities and also the potential even in the sense that if in Russia a business is concentrated in Moscow and St. Petersburg, then in Ukraine the same is in five cities - Kiev, Donetsk, Dnepropetrovsk, Odessa and Lvov.
Digital Times: DEAC are increasingly leaving the Baltic states and moving farther and farther to the east?
Oleg Naskidaev: Such tendency is, but we must not forget the European market, there is own reality and their consumers. If for Russian customers is important business defense and reducing costs, for European companies it is important that they can place their equipment exactly here, and the pricing issue they also did not ignore. If these two things match, the company is not even our potential customer, its simple - our customer. One example - somewhere six months ago company Telefonica located its equipment in our data center. It has a lot of such backup points around the world. So they increase their influence in the region.
Digital Times: How loaded is your new data center?
Oleg Naskidaev: On the fifth. Capacity is great; we plan to full it somewhere within 1.5-2 years. It is focused only to customers from the West and the East; entrepreneurs from Baltics can use it as a backup. Although, frankly, we do not have such a rigid division, that we place here only non-residents, and in the underground data center, only residents. For example, there are several projects for the same Russian companies when we give an entire server room for the needs of one company and even we then have access only under the video cameras.
Digital Times: I understand that Baltic companies do not come to the new data center because it is very expensive?
Oleg Naskidaev: They just do not need to pay for additional security, which ensures compliance with the requirements of Tier IV. If you take the risks that may attack any Baltic company, we simply do not have at all customers for the infrastructure Tier IV. Even if we explore Moscow region, then they also have no customers for Tier IV, if we ignore the public sector. And the service level Tier III uses not more than 15% of the market.
Digital Times: Give an example of a system that may require a Tier IV. Why such a level of protection?
Oleg Naskidaev: It is required if the customer wants a complete disaster recovery, when no matter what happens, the system must work, work and work again; or when a simple five-minute downtime can cost several million dollars to the customer. In these cases, the infrastructure that provides the uptime of 99.998% per annum will be adequate safety policy. Services at that level can afford only very large companies, and objectively it is necessary only for very large companies.
Even the way to the Tier III is very long, plus along the way big companies can come to believe that it is better to build their own data center. But we really do not know anything about them, its proprietary information. Therefore, if the company has decided to rent a data center infrastructure Tier III or Tier IV, it means that they calculated and concluded that to build a data center on their own is not profitable.
Digital Times: You launched your new data center last year, and somewhere at the same time Lattelecom signed an agreement with "Synterra" about direct connection of the magistral networks. Is it a coincidence? Because you are working both with Lattelecom, and "Synterra".
Oleg Naskidaev: This is probably a coincidence. Companies in this business very quickly respond to market needs and therefore such coincidences can occur. Yes, we use the services of Lattelecom, together with services for all major Latvian providers, as in terms of risk diversification it is extremely unwise to be a customer of only one company. Yes, now in Russia we use the services of "Synterra", but at the same time we test a second channel, which will bypass this operator - for all of the same risk diversification.
Digital Times: Lattelecom - your biggest partner, but given that he also owns a data center - and just as big a competitor...
Oleg Naskidaev: It's inevitable with such size and status of the company. Withn some divisions of the company we are competing, with some - cooperating.
Digital Times: I mean that in Latvia, perhaps, only Lattelecom can repeat your step and build own data center with the same Tier level and capacity. Are not you afraid?
Oleg Naskidaev: In my opinion, it would be extremely principled move - they say, so can we. In terms of market demands there is no need to build another data center and invest in it. Because the maximum capacity of our second data center is 500 racks. It is very much even by Russian standards. For example, now are in first top ten of Russian data center operator, comparing with other companies.
Therefore repeat our maneuver is possible, but is it necessary? For company, which plans to do it would be simpler to rent half of our data center and use for their needs.
Digital Times: And you would rent half of your data center for competitors?
Oleg Naskidaev: Why do not? We built it for smaller customers who need one two racks, and for very large, ready to use dozens of racks. If Lattelecom would come - welcome, we will provide them with the entire floor.
Digital Times: Traditionally perhaps, the final question - what are the features of doing business in Russia in your field?
Oleg Naskidaev: There is much more professionals, so we get already developed requests. For example, if communicating with customers in the Baltic countries, we help them often to form a correct model of IT infrastructure. The Russians, as a rule, just give us a technical task and it is easier and faster to work, because Russian customers know what they want.
And from a market perspective the Baltics, Russia, Belarus is approximately at the same weight categories. In the same Western Europe and the U.S. have is built already a lot of, here only now the business is picking up the speed. In the West issues of outsourcing are discussed for decades, we have this tendency only the last ten years.
So, the prospect of growth is very large. That's why we built another data center, aimed at the western and eastern markets. The very fact that we launched in the Baltics this data center, adds impulse to market development, including strategic - on a national scale.
Posted in Digital times # 5, 2010
Author: Vitaliy Hlapkovsky
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