Hass And Associates Hong kong News SoftLayer and the Intricacies of Asia-Pac Expansion
A look at some of the densely-populated rackswithin the new SoftLayer data center in Singapore.
Asia has become the hot expansion market for data center serviceproviders. The region’s infrastructure growth trails its surging Internetpopulation, which is why companies including Google, Amazon, Rackspace,Digital Realty and Equinix have all been expanding in the region.But expansion decisions aren’t simple in the Asia-Pacific region, asproviders must weigh multiple variables in audience and operatingenvironment before investing millions of dollars in a new location. Aninteresting case study is provided by SoftLayer Technologies, one of theworld’s largest hosting providers.Global expansion has been a priority for SoftLayer in recent years. Thecompany is based in Dallas, but 40 percent of its customer base is basedoutside of the U.S. While the customer base has been international, thecompany’s infrastructure has just recently started to extend beyond theU.S. Its quest to expand reveals the challenges and rewards many serviceproviders face when choosing where to expand in AsiaPac.
The company has a data center in Singapore, and added network locationsin Tokyo and Hong Kong in 2011. ”Opening a data center in Singapore gaveus an opportunity to do a few things in the region,” said Mark Quigley, SoftLayers Director of International Operations. ”It’s a place for Americancompanies to house their infrastructure.”While the company has made significant advancements in its Asia-Pacbusiness, Quigley discussed the unique challenges in setting up shop inJapan in particular. Quigley spent a lot of time in Asia during 2012 in orderto help learn the culture and shape Soft Layers operations in the region.He finds that in Japan, the culture breeds two contrasting business realitiesthat create challenges and opportunities for companies like Soft Layer:Japan is insular and Japan is global.More Infrastructure in Asia-Pacific
Japan is insular because IT purchases there are made through either Japanese firms or foreignfirms that have spent decades building trust and reputation. It’s hard for an outsider toestablish a business quickly, and the process of getting established can be time-consumingand expensive. “A difficult part would be trying to figure out the telephony support,” saidQuigley. “Asian business culture tends to value face time.”However, as Quigley points out, Japanese businesses also have a huge need for global reach.“The capital investment required to go global is negligible compared to theirforebears, because they don’t need to build factories or put elaborate logistics operations inplace anymore,” said Quigley. “Today, a Japanese company with a SaaS solution, a game or asocial media experience can successfully share it with the world in a matter minutes or hoursat minimal cost, and that’s where SoftLayer is able to immediately serve the Japanesemarket.”That’s why SoftLayer isn’t yet planning to open an office in Japan. It has a network location inTokyo, an existing customer base, and a number of relationships with existing partners likeParallels and Citrix who have solid footing there already. It will continue to seek the rightpartnerships to enable growing its business in the region.Rapid Global App Deployment
Right now, the company is doing its due diligence and seeking to understand themarket in Japan. This reflects SoftLayer’s methodical approach to expansiondecisions.“It doesn’t make sense to make a push. It takes time,” said Quigley. “There’sJapanese business culture to contend with. We’d attracted some Japanesecustomers, but we haven’t marketed to the Japanese audience yet. If we were goingto make a full on push, there’d have to be significant changes.”One promising development is that Japanese companies are becoming morecomfortable shifting their IT infrastructure from on-premises facilities to third-partyproviders.“From a technology adoption perspective, we have in-country companies likeKDDI, NTT, that are actively providing colocation services, dedicated hostingservices, and have started cloud infrastructure (i.e. Nifty cloud by Fujitsu),” saidQuigley. “All are seeing that Japanese companies are starting to outsource theirinfrastructure.”SoftLayer wants its network within 40ms of everyone on the planet, and the JapanPoP is part of this, allowing it to “cross both ponds” to connect U.S. data centers andinternational facilities. The Japanese market is a great opportunity, but as Quigleydiscovered, it’s a tough nut to crack. It takes time and commitment to penetrate themarket, and it’s one that remains almost paradoxically insular and global. Doing Your Homework