Terremark Taking Over Management Of Verizon Data Centers

Ten months after it was acquired by Verizon for $1.4 billion, cloud services provider Terremark is performing an assessment of Verizon data centers globally that will now be managed by the Terremark business unit while also increasing its own data center capacity.

Terremark executives last week took reporters on a tour of a newly remodeled Terremark data center in Santa Clara, Calif., a suburb of San Jose. The 40,000-square-foot facility, gleaming white and vacant except for power supply units, will be half-full with servers and related equipment within a month, and nearly all the space is already spoken for, says David Layton, a senior VP for the West region for Terremark. With the acquisition, Terremark will take over management of two Verizon data centers in San Jose, and Layton has been visiting other Verizon data centers in Texas, Georgia, Hong Kong and Tokyo, making an assessment of each facility. "We’re looking at the data center and saying, 'OK, it's got X amount [of equipment], and if we wanted to take it to the next level, it would cost X amount of money.' Or do we just go ahead and ... build another data center?"

The new data center is next door to an existing Terremark data center and, being in the heart of Silicon Valley, is in an ideal location because of its proximity to high-capacity fiber optic trunks serving major carriers such as MCI, AT&T and Qwest, he says.

The facility is highly secured, with visitors buzzed in by a uniformed security guard behind a bullet-resistant glass barrier. At another Terremark data center outside Washington, D.C., bomb-sniffing dogs are used, and guards check under vehicles with mirrors to inspect them.

The data centers typically serve three categories of customers, Layton explains: colocation customers who install and maintain their own equipment in the data center while Terremark provides the power, cooling and connectivity; managed customers for whom Terremark maintains the equipment; and cloud customers for whom Terremark delivers infrastructure as a service (IaaS).

It is that third class of customers that Verizon, with Terremark, expects to see the most growth, says Kerry Bailey, president of Terremark. "Enterprises are moving their workloads to the cloud," Bailey told reporters. "It’s the new IT delivery model, and it will transform how businesses enable their business model."

Initially, startups and Web 2.0-like companies moved to cloud service providers like Terremark because they’d rather invest in innovation instead of IT, while enterprises were reluctant turn over control of mission-critical business applications to such a third party, says Mark Gaydos, VP of marketing for Engine Yard, a platform as a service (PaaS) provider. Its customers purchase as a service a software stack of an operating system, middleware, database and applications from Engine Yard, and could then sign up with a company like Terremark for IaaS.

But enterprises are warming up to IaaS because they want to be innovative, too, says Gaydos. Enterprise software development had been a process of "develop, deploy and decay," he says, meaning that large deployments like ERP and CRM didn’t change much once installed. To be competitive today, though, the process needs to be "develop, deploy, iterate," he says, constantly updating software with new features. That’s where the cloud comes in handy for enterprises.

"Enterprises are starting to try to be more innovative. They want their applications, especially for their customers, to get better and better, and so innovating on the application is where you provide your customer value," Gaydos says. "All that back-end stuff, why do you want to be in that business?"

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