6.6 EDSR 05-15-2017E lls
River`
Request for Action
To
Item Number
Economic Development Author*
6.6
Agenda Section
Meeting Date
Prepared by
General Business
May 15, 2017
Amanda Othoudt, EDD
Item Description
Reviewed by
Director's Report
Cal Portner, City Administrator
Reviewed by
Action Requested
Information presented for discussion only in effort to keep the EDA updated development activity.
Background /Discussion
BUSINESS VISITS
7 BR &E visits have been completed this year. More retention visits are in the scheduling process, watch
for the emails, and please RSVP and let us know if you are able to attend.
NEW PROJECTS
Housing TIF Project - Patrick Briggs
Patrick Briggs withdrew both the Jackson Hills and the Saxon /Elk River Lodge TIF applications. Staff
rescored the applications based on new information and the Jackson Hills project scored 24/50, making
the project ineligible for TIF. The Elk River Lodge TIF application was dependent upon receiving tax
increment from the Jackson Hills Project.
MISCELLANEOUS
Revolving Loan Fund Balance Reports
At the request of members, a copy of the Revolving Loan Fund report is attached.
TIF Policy Review
Over the past year, staff has been working to review and update all of the city's financial policies, the TIF
policy is the final policy left to review. Workshops were scheduled with the EDA and the HRA. Staff in
conjunction with our Attorneys and Financial consultant, are working to create a policy that incorporates
the cities priorities for the use of TIF funding into the actual policy instead of using scoresheets to
evaluate projects. The policy revision will be presented to the EDA at their June 19`'' meeting.
Die Concepts
Fred Trapp has moved all of his equipment into his new Line Avenue facility. The project utilized the
HRA Blighted Properties Commercial /Industrial Forgivable Loan Program and an EDA Microloan of
$260,200. Jake Pace is working on compiling the completed project video and will present it at a future
EDA /HRA and City Council meeting. Some before and after photos are attached.
MN Economic Redevelopment of Brownfields Workshop
I will be presenting at the MN Economic Redevelopment of Brownfields Workshop next week to
iawERfu sr
4A UO'E
highlight the Die Concepts project and the creative financing that went into redeveloping the project.
Financial Impact
None
Attachments
Revolving Loan Fund Balance Report, April 13, 2017
MPLS /St. Paul Business Journal — Data Center Article
Photos of Die Concepts — Before /After
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24 TABLE of EXPERTS
ADVERTISING SUPPLEMENT TO THE MINNEAPOLIS /ST. PAUL BUSINESS JOURNAL
DATA CENTERS
SPONSORED BY
COMMSCUE® mclrc
COIOg iR "iHNGE.
MODERATOR
PANELISTS
Amanda Othoudt
City of Elk River
Amanda Othoudt is economic development director for the
city of Elk River, focusing on business retention, attraction and
expansion. Prior to Elk River was community development
coordinator for the city of Becker, where she was responsible
for planning, zoning, community development and economic
development activities. She also was a land development
assistant at Lyon Contracting Inc. and Trident Development. She
graduated magna cum laude from St. Cloud State University
with a Bachelor of Arts degree in planning and community
development and a double minor in economics and heritage
preservation. She is certified as an economic development
finance professional through the National Development Council.
Stave Knutson
Marco
Steve Knutson is chief technology officer at St. Cloud -based
Marco, where he has led the charge in its strategic growth and
technology implementation. He graduated from the University
of New Mexico in 1991 with a bachelor's degree in computer
science. He developed and helped lead the deployment of
large -scale IT networks for the United States Department
of Defense and served as a computer analyst for BDM Inc.
before joining Marco in 1999. Knutson put the pieces in place
to launch Marco's hosted voice and UCaaS solutions, built its
cloud infrastructure, consolidated the data center from six to
three, and migrated customers while building the architecture
of Marco's data center.
Kam Patel
Commscope
Kam Patel is director of global data center solutions at
CommScope. He has been with the company for 25 years
in a variety of strategy, business development, product line
management, marketing, engineering and operations roles,
and has authored numerous articles, white papers and
presentations on the design of telecommunications and
data networks. Patel holds and Bachelor of Science degree
in electrical engineering from the University of Vermont, and
holds more than 20 patents for network equipment.
Graham Williams
Co10gix
Graham Williams is chief operating officer for Cologix,
responsible for operations, construction, commercial
management, marketing and strategy. In his time at Cologix, he
also has led the development and sales organizations. He has
over iS years of experience in the data center, communication,
i nternet, content delivery and video industries. Prior to Cologix,
Williams held product management and strategy positions at
Charter Communications and Level 3 Communications. He has
an MBA and a bachelor's degree in political science.
Ernest Sampera
vXchnge
Ernest Sampera is responsible for sales, product management,
marketing communications, corporate communications and
business development at vXchnge. He brings over 25 years of
marketing, sales, distribution channels, program management,
strategic alliances /business development and financial
management experience to the company. Prior to joining
vXchnge, he was senior vice president and chief marketing
officer at Switch & Data. Prior to that, he served as vice
president of channel marketing for AT &T Business Services. He
also has held executive marketing and development positions
with IBM, UNISYS and the American Medical Association.
ADVERTISING SUPPLEMENT TO THE MINNEAPOLIS /ST. PAUL BUSINESS JOURNAL
By Holly Dolezalek
Contributing writer
he Minneapolis -St. Paul
TBusiness Journal held
a panel discussion on
the topic of data cen-
ters recently. Panelists
included Graham Wil-
liams, chief operating
officer of Cologix; Steve Knutson,
chief technology officer and chief
information officer for Marco; Kam
Patel, director of global data center
solutions at CommScope; and Ernest
Sampera, chief marketing officer for
vXchnge. The moderator was Aman-
da Othoudt, economic development
director for the city of Elk River, which
is home to two fortune 50 data cen-
ters and has a 33 -acre, shovel -ready
data center site available.
Othoudt: Why are enterprises turn-
ing to data center services and what
are the key considerations in their
selection?
Williams: We see three big demand -
driving trends. One of those is that
enterprises are increasingly outsourc-
ing their data center needs to third -
party providers. They originally built
their own data centers five to 10 years
ago, and those data centers are now
coming to the end of their useful life.
Enterprises are now having to decide
whether to rebuild or look at alterna-
tives where they can effectively pay
for what they use on a service basis
for a monthly fee and let someone
else manage that infrastructure. There
are four key considerations. The first is
that a lot of enterprises are realizing
that managing and maintaining gen-
erators is not their core competency,
and that their focus is on goods and
services, so they rely on experts to
help them keep their focus on what
they do best. The second is that they
like the idea of a monthly fee for a
service more than writing a big check;
CFOs are having a harder time justi-
fying big capital checks for internal
data center equipment and servic-
es. The third is that having access to
a lot of different networks provides
flexibility and drives costs down, due
to providers competing against each
other to offer the best price. Finally,
enterprises are not sure how they're
going to use the cloud. They want to
future -proof their model so they can
use some of their own infrastructure
and then access service providers and
not have to physically move servers to
access providers in the future.
Sampera: The pace of innovation is
what we see driving the need for data
center services. It has become far less
about physical space and more about
getting enough power and cooling to
the footprint they need. There used
to be a case for an enterprise owning
and maintaining its own facility. How-
ever now, as technology and meth-
odologies have introduced concepts
like hyperscale and hypercloud, it no
longer makes sense for the business
to spend the CapEx and IT resourc-
es on the less flexible, less scalable
private data center. What enterprises
are really seeking is reliable, secure
space, power and cooling for their
ever - shrinking footprint.
Interconnectivity is the other piece
that makes data centers so attractive
to enterprises. With a private data
center, you're likely to have one or per-
haps two carriers servicing the facil-
ity. However, that connectivity para-
digm leaves you open to the whims
of those carriers in terms of pricing,
service, maintenance, etc., and leaves
you open to myriad security threats.
By choosing space and power at a
purpose -built facility that has a carri-
er- neutral environment, you're open-
ing up considerable new options and
leveraging a more secure, compliant
environment.
Knutson: We work with the end
user, with a lot of SMBs who don't
know what it means to move to the
cloud or move to a data center, and
how they connect to the data cen-
ter. They think it's a universal solu-
tion for optimum performance and
cost savings, when that's not always
the case. So we help the customer
decide if data center services make
sense based on this criteria.
Patel: We focus a lot on the For-
tune 500, and we've seen a variety
of customers migrate to the cloud.
APRIL 28, 2017 25
We'll also see outsourcing to the pub-
lic cloud; a lot of customers are send-
ing workloads, but it depends on the
size of the enterprise. SMBs are more
likely to go to the public cloud, as
opposed to the larger players. They
don't want to be the experts on build-
ing their own data centers, because
they've had this experience where
they built a building that was sup-
posed to last 20 years, and at that
time they might have needed 5 kilo-
watts per rack but now they need 40
kilowatts per rack. I've been to plenty
of data centers where there's plenty
of square footage, but they can't add
any more equipment because they're
out of power. Another big consider-
ations is fiber diversity in the region.
People want to move to where Inter-
net exchanges are. Building a data
center in a smaller metro may have
fewer carrier choices than in larger
metros. Some metros may even have
direct access to other regions such as
Asia, Africa, South America or Austra-
lia. With applications like 5G and self -
driving cars, that's driving a need for
lower latency, which means more data
centers in smaller locations.
Othoudt: What are you seeing in the
migration process from on- premise
to the cloud?
Knutson: If a customer has decid-
ed to move to the cloud, that usual-
ly entails moving part or all of their
2s TABLE of EXPERTS
ADVERTISING SUPPLEMENT TO THE MINNEAPOLIS /ST. PAUL BUSINESS JOURNAL
0i®i ®1
servers and applications off - premise.
Business analysts have to go through
each different workgroup that's using
those applications, thinking about the
co- dependencies of each application
on each other. You can't necessarily
just take one application off-prem-
ise and move it to the cloud, because
something else might break. For us,
it's all about the end user experience.
The person at the PC who's running
your business should have the same
or better experience with the cloud,
as it was on- premise. Otherwise, why
do it?
Patel: We think of cloud as soft -
ly to going cloud -based as your ERP.
ware as a service and infrastructure as
So we see software as a service tak-
a service. With SaaS, as Steve pointed
off. Eighty percent of our clients
out, some services are easy. At Sales-
participate in some form of that, and
pa
force.com, everything resides on their
about 30 to 40 percent of them are
server, you make the transition to
in infrastructure as a service. That last
Microsoft 365 and that takes care of
20 to 30 percent are getting ready,
your email and those things are easy
t
and they're building applications for
to do. Then there's infrastructure as
the cloud, but they're probably ve
a service, where you move the bulk
going to move what they have to
of workloads. What customers often
'the
the cloud because it's too difficult and
waver on is, you kind of pick who you
aver
'costly.
pick, and once you've picked them,
Williams: Certainly the notion of
it's a commitment, because it takes a
'
the Cloud with a capital C as a mono -
lot of work to make applications work
entity is confusing to enterprises
in the cloud. You get to a point with
and small businesses. Our customers
a
nd
insecurity or latency where some ser-
are learning important lessons that
vices just become difficult. If you're
'we're
passing on to other custom -
moving SAP to the cloud, there's
moving
ers. For example, there are probably
lot of customization to suit your
going to applications you're going
business, and it may not be as friend-
to want to o run yourself on your own
mclr
taking technology further
Marco's technolo- geniuses can
keep your important business
applications and data safe and
secure by migrating them to
the cloud.
Moving to the cloud with Marco protects
your data and applications, provides limitless
storage, and saves you money on expensive
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41
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business IT // managed services // cloud services // copiers & printers
infrastructure, whether that be for
security or latency. There will be oth-
er applications where you'll be able
to gain efficiency by moving them
to the cloud. Once you've done that,
you don't want to do it again, and
you certainly don't want to have to
pick up your servers and move them
from one data center to another if
your overall IT strategy changes. So
customers ask us: How can you help
us make a good decision today that
won't hurt us in three years? We pro-
vide access to lots of cloud providers
and service providers, so that custom-
ers know that if they have to change
providers, they can just slot the cross -
connect to another provider. So the
low switching costs for a highly con-
nected interconnect point are really
important and compelling to our busi-
ness customers.
Sampera: It's probably best
described as cautious optimism in
that we're largely past the rush of ear-
ly adopters going full bore on cloud.
Now we're seeing enterprises take a
more strategic approach to deter-
mining what goes into the cloud as
opposed to staying on -prem. Compli-
ance and security are such important
priorities, those tend to be the first
exceptions or considerations in any
migration plan. This is where we're
seeing a lot more hybrid, where cus-
tomers say that this information can-
not be in the cloud because of how
many instances of that record there
are, where it's propagated, and how
they enforce record destruction from
a compliance standpoint.
We're also finding that connectivity
is an important aspect of any migra-
tion. With a solid interconnection
strategy, you have multiple approach-
es to network design, different DDOS
providers, and private architectures,
versus having to engage a carrier and
have them build out to your facility.
With cyberattacks being a leading
cause of outages, prevention and mit-
igation have to be key considerations
in any migration strategy.
Othoudt: How are you handling the
influx of demand for connectivity to
the hyperscale cloud providers?
Williams: The businesses that we
Most Carrier choice (95 +)
Most Cloud choice (25 +)
Low switching costs
Scalable and reliable infrastructure
20 minutes from anywhere
ADVERTISING SUPPLEMENT TO THE MINNEAPOLIS /ST. PAUL BUSINESS JOURNAL
work with are increasingly looking for
access to the hyperscale cloud pro-
viders with more security than they
can get by connecting via the public
Internet. These customers are looking
to use services like Amazon's Direct
Connect, Microsoft's Express Route or
IBM Softlayer's DirectLink. These on-
ramp services create private, secure
connections from the customers'
equipment to cloud infrastructure.
Today in Minneapolis, customers lever-
age these services by choosing from
a range of network service providers
who are pre- approved by the cloud
providers. Cologix's meet -me -rooms
have the most approved network ser-
vice partners in our markets which our
customers value to ensure cost effec-
tive services for ever - increasing traf-
fic volumes. Based on Minneapolis's
strong economy and our experience
in other markets, we believe that the
cloud providers will extend their net-
works to Minneapolis which will cre-
ate a lower latency access point for
local customers that does not require
a backhaul service to a different mar-
ket. Cologix is regularly championing
markets like Minneapolis to the hyper -
scale cloud providers as a logical next
step for expansion.
Patel: Our products address this
challenge a little differently. If direct
connectivity is needed within the
building, from these larger customers,
it requires a lot of fiber. The amount
of fibers required tend to clog path-
ways and meet -me rooms. Our meth
od to address these challenges is with
smaller products that are more dense.
This allows Graham and Earnest to
meet the fiber glut and still provide
the diversity and cross - connections.
Knutson: Our customers' number
one problem is connectivity to cloud
services. When they're in their own
building, with their data center on-
premise, they can have direct connec-
tivity right into the services they're
consuming. But if we're going to pick
that up and drop it into a smaller pipe
or pipes, what happens if that one
pipe goes down? We're talking about
multiple paths, carriers or routes to
get to those services. They ask, "Why
doesn't this act the same? Why is it
not as good ?" It's because we made
the pipe smaller. We don't just need
good connectivity, but also diverse
connectivity.
Sampera: Flexibility and accessibil-
ity are the keys to connectivity. Enter-
prises need choices as well as the agil-
ity to shift when their business needs
change. In an environment like ours,
companies can determine best -fit car-
rier options. The connectivity is just a
cross connect, and you get the best of
both worlds. You can deploy one and
interconnect many, as opposed to try-
ing to engineer networks to wrangle
many to one.
Knutson: If you're in a large metro-
politan area like Minneapolis -St. Paul,
you just do a cross - connect. But in the
secondary and tertiary markets, they
don't have that luxury. So it's not the
11 .... a .... 0
connectivity into the data center, it's
the connectivity out of the customer;
we have to map both ends. For us, it's
not always the data center that's the
bottleneck; sometimes it's the cus-
tomer themselves.
Othoudt: How do companies choose
where they locate their data center?
Patel: As it relates to the data cen-
ter, the availability of low -cost pow-
er is a big issue. And people forget
that when you build these big data
centers, it takes talent and people to
work in them. It might be beneficial
for latency and cross - connects in one
location, but the talent to run these
things may not exist there.
Williams: First and foremost is
location. In Minnesota, what can be
a 20- minute drive in summer can be
an hour and a half in winter. If you
are concerned about connectivity,
you want to sit at the physical inter-
section between the metro fiber and
the long -haul fiber, at the 511 building
near the Vikings stadium. Looking at
service providers, the first thing cus-
tomers do and should look at is: Will
my services always be on? Data cen-
ters area physical infrastructure busi-
ness. The people who are really good
at this have big generators that are
well maintained and managed. They
have redundancy so that any given
piece of equipment can fail and the
entire system stays up. For anyone
who hasn't gone through the pro-
curement process with a provider, go
see the data center. You can look and
see and touch the equipment, and
the difference will become very clear
very quickly. All of the things we've
been talking about really don't mat-
ter if you lose power or air condition-
ing. Start there, and the next choice is
connectivity, making sure that service
providers come to you as opposed
to you having to chase them. When
you have to unbolt servers from the
floor, and drive them across town and
rebolt them somewhere else, that is a
painful, expensive, risky process.
Sampera: While some enterpris-
es still prefer to be in close proximity
to their data center, there are other
important considerations to the loca-
tion choice. As we've talked about,
interconnectivity gives you the abil-
ity to reach your various user popu-
lations with high reliability and mini-
mal latency. It may also be important
for IT teams to choose a data center
that offers other sites relative to dif-
ferent geographical areas they need
to reach. The other important value
proposition is reliability. If you have
a business continuity need, which is
becoming more prevalent, there's an
issue relative to the consistency of
service, the infrastructure, and the
methodology for maintaining equip-
ment. Beyond location, look at a data
center's standard operating process-
es, and ask maintenance questions.
That's going to tell you that you have
a service provider who lives and
breathes the IT issues you're facing
every day.
Williams: Internet exchanges are a
really important driver and attractor
of demand. Minneapolis has a great
story overall in terms of overall Inter-
net traffic that's coming to the mar-
ket, and that's best seen through
the Midwest Internet Cooperative
Exchange (www.micemn.net). It's a
huge economic development driv-
er because it allows companies to
exchange internet traffic without
paying for it. So it drives cost down
and performance up. We've seen big
names like Google and Netflix and
Akamai come into the market here,
where that traffic exchange used to
happen in places like Chicago. Traffic
on the MICE exchange is growing fast-
er than internet exchange overall. The
state is becoming more important in
the global internet than our peers in
other states.
Othoudt: What are companies look-
ing for in terms of disaster recovery
when considering data center sites?
Williams: Security has to be multi -
layered and incorporate physical and
logical security. Our customers come
to us to ensure 24 -7 guards at the
site and the front of the building, and
that there is dual- factor authentica-
tion only for authorized users, with all
users tracked throughout and records
kept. If you go into a data center that
doesn't have video cameras with stor-
age of the videotapes, you should go
find another one.
Sampera: Disaster recovery is tak-
ing on new meanings today. Beyond
the traditional definitions, there is
quite a bit more focus on prevention
and proactivity. For example, we're
starting to see customers imple-
menting RFID technology. Custom-
ers want physical asset tracking as
part of their security. As you can
imagine, in a lot of these data cen-
ters, moves /adds /changes occur dai-
ly. We've implemented asset tracking
using RFID technology, and custom-
ers can access it through their portal.
Knutson: We've found that one
thing is often getting left out: You
should know where your data is. We
had a customer whose contract said
that the cloud provider could move
their data out of the United States,
depending on loads. For this custom-
er, that wasn't okay; they needed their
data to stay in the U.S.
Othoudt: Where do you see the
industry going in the next five years?
Sampera: We think it's going to
continue to grow. Cloud computing
is becoming cheaper, and given the
fact that more and more devices are
going to be using the internet, that
more and more analytics are going
to be calculated, latency will be more
important. There's going to have to
be more data centers in more mar-
kets, and the question is, how do you
anticipate the next market? That's the
$64 question for all of us.
Williams: People forget that the
growth of the internet and mobile
APRIL 28, 2017 27
traffic and IoT has a physical mani-
festation, that as you do more on your
phone, there need to be more rout-
ers and switches in the data center.
We also expect to see enterprises
outsource more and more. For over-
all footprint, I think there's going to
be a consolidation, as enterprises let
go of their own DIY data centers and
consolidate into more efficient foot-
prints in a co -lo provider.
Othoudt: Final thoughts?
Patel: What does everyone think
about retail versus wholesale?
Sampera: In terms of the value cus-
tomers are looking for, we see more
and more enterprises doing multi -
deployments. Retail data centers
deliver a more hands -on experience,
which in our case means people who
are on staff 24/7 to the reboot lay-
er, the physical rack and stack. With
virtualization and hyperscale, we see
more footprints consolidating, and in
many cases, customers are having to
deploy smaller edge -based comput-
er nodes to maintain and optimize
performance. It's a pretty interesting
ecosystem that leverages the cycle
of growth to benefit all data center
customers.
Williams: Our view is that we're
going to continue to see growth in
retail and wholesale. They're natu-
ral environments in the data center
and there will be customers for both.
Across retail and wholesale, connec-
tivity becomes more important for
each, and we're seeing larger enter-
prises that five years ago needed two
megawatts in 10,000 square feet, but
now can fit more in a higher density.
So they'd like a smaller footprint — but
they have to be close to connectivity.
There may be a blurring of retail and
wholesale, largely in a space where
traffic and outsourcing are going to
rise both retail and wholesale boats.
Patel: You know, our end users
often have similar pain points. What
in your business helps reassure them
that they're making the right decision,
whether it's to stay in their own data
center, or go to the cloud, or a co-
location facility?
Williams: For us, it's robust infra-
structure and redundancy. They come
to our site and they see our genera-
tors and our cooling and our UPSs and
say: These guys know what they're
doing and this is better than what I
can do. Also, connectivity. Customers
walk out thinking: We have maximum
choice, and that gives us a lot of con-
fidence beyond knowing that our ser-
vices will never go down.
Knutson: In the small to medium
enterprise sector, they might have
limited IT staff. Their IT people are
doing things like running a help desk
when they really should be focused on
strategy, becoming more efficient and
making more money. It's about how
to maximize the talent they have and
offload the tasks to IT staff so they
can help drive business value instead.
Former M N FAB Building February 2016
75- 135 -2379
Rearview
Former M N FAB Building April 2017