Agencies face new foe in data storage fray

Contractors make a play for piece of booming market

Federal agencies are increasingly
turning to contractors to run
their ever-expanding data centers,
but they face growing competition
from commercial companies for
storage space and management
expertise.

Agencies and private companies
are competing for the same
shrinking pool of available data
center managers. By 2015, the
number of qualified senior-level
professionals is predicted to
decrease nearly 50 percent,
according to the Afcom Data
Center Institute, a data center
think tank. That expected decline
is particularly critical in the federal
sector, which is also bracing for
an exodus of employees retiring in
the next decade.

Finding and recruiting experienced
data center managers
is difficult, especially in the
Washington area, where qualified
professionals are in great
demand, said George Newstrom,
president and chief operating
officer at Lee Technologies Inc., and former
secretary of technology for Virginia.

"We're just having a difficult time finding,
hiring and training [workers with] the skill
sets that we need today, much less what we
need for the future," he said.

Nevertheless, Lee Technologies has
increased its number of data center employees
for the past two years, an expansion that
Newstrom insists will continue ? despite a
tight labor market ? as agencies and private
companies outsource more of their data center
functions.

Afcom also predicts that by 2010, more
than half of all data centers ? government
and commercial alike ? will have to relocate
to larger, more secure facilities, creating
greater competition for facilities and land.

A survey of some 300 corporate information
technology executives found that 90
percent intend to increase or maintain their
data center square footage, said George
Hamilton, research director at the Yankee
Group, a Boston analysis firm. Sixty-nine
percent said they were going to increase their
space, with nearly half of those respondents
saying they planned to add between 25,000
and 100,000 square feet in the next one to
two years.

"Some of the larger [telecommunications
companies] are running into the same issue
of trying to find more data center space," he
added.

Upgrade needed

But it is government data centers that are
more than five years old that face a dire
future. They were not designed to meet the
new, more-stringent security standards
mandated in the Federal Information
Security Management Act, the Defense
Department Information Technology
Security Certification and Accreditation
Process and the Health Insurance
Portability and Accountability Act.

Those standards are "adding new skills to
the mix that these federal data centers need
to meet and qualify for in order to turn on
a new system," said John Curran, chief
technology officer at ServerVault Inc., of
Dulles, Va. "It's not enough to say, 'We've got
a couple of people who are aware of how
these servers work.' You need to have people
who are experts in security, experts in networking."

Moreover, Curran said that within
five years, the government-mandated
changeover to IPv6, the increasing adaptation
of virtualization ? in effect, replacing
many of the routers and switches needed to and other new technologies will put new
burdens on federal data center managers.

"There's a lot going on to put virtualization-
type capabilities into the network," said
Brad Boston, senior vice president of global
government solutions at Cisco Systems Inc.
He said Cisco is seeing increased demand
for such services as data centers become
more consolidated.

"Instead of putting the data close to where
it's needed, it's being consolidated into a
central spot for management efficiencies,"
Boston said. But customers ? especially
military units in the field ? must be able to
quickly retrieve the information they need
wherever they are, he added.

Outsourcing solution

To meet those changes and new requirements
? coupled with the need for more
space ? federal IT managers are going to
outsource whatever they feel they can't handle
adequately, Curran said. "Servers, networks,
databases all exist in today's data center,
and you need all those skills to keep
them running."

ServerVault has reported a steady increase
in the number of agencies that want secure,
hosted facilities. The challenge there is to
keep applications and systems running with
"a high level of knowledge about how the
applications work, how the network works
[and] how the security is set up," Curran
said.

ServerVault runs applications for more
than half a dozen federal agencies, which he
declined to name for security reasons.

"Many of them have multiple applications
here, the ones they don't feel comfortable
running in their own data center," Curran
said.

Vendors take notice

Vendors have noticed the developing market
and are aiming to take part in it. An
increasing number of IT product companies
are making a concerted push into the federal
data center space, seeking to sell storage,
products or both.

Liquid Computing Inc., a Canadian company,
recently structured its federal unit as a
wholly owned U.S. subsidiary and hired federal
market veteran Tom Kreidler as president
to make government agencies aware of
LCI's product offerings.

LCI's strategy focuses on its fabric-based
computing technology, which aids in server
virtualization by eliminating the need for
many of the cables and switches that operate
multiple servers in a data center, Kreidler
said.

The Army High Performance Computing
Research Center is LCI's first government
customer, and the company is also seeking
to demonstrate its technology to NASA.

Kreidler said he knows LCI must gain
market share quickly because it faces large
competitors, such as Cisco Systems,
IBM Corp., Hewlett-Packard Co., Sun
Microsystems Inc. and Lee Technologies.

"Government is starting to discover that
the data center is not just a room but is a
vital part of their very critical mission infrastructure,"
Newstrom said.

On the comeback trail

Ten years ago, Newstrom thought data
centers were passé. "Then, all of a sudden,
the Googles, the Yahoos, the eBays of the
world began building these huge data centers
to house the servers ? not the mainframes
any longer," he said.

Then came the 2001 terrorist attacks, a
somber wake-up call for federal agencies ?
especially those whose
data was critical to national
defense ? to set up,
expand or outsource their
own data centers.

"There are a lot of data
centers in the Washington
metropolitan area. And
the larger mission-critical
agencies ? DOD, [Homeland
Security Department]
? cannot afford those data
centers to be inside what
they call the blast zone,"
Newstrom said. "So there
are huge [request for proposals] out on the
street for moving data centers and critical
infrastructure outside of the Washington
geographic area."

In addition, the Base Realignment and
Closure program includes money to relocate
critical infrastructure. "So there is
funding for the major agencies, the
ones that have the most dire need," he
added.

Newstrom said he believes Lee
Technologies can triple or quadruple in size
in the next five years because of the need
and the allocated agency budgets.

That expansion will include services, to
eventually account for about 80 percent of
revenue. Newstrom declined to release Lee
Technologies' annual revenue.

His plan also calls for expanding business
opportunities outside the Washington
area while aggressively increasing Lee
Technologies' federal sector component,
"which was a small fraction of our business
to date, into a significant component of our
business."

Newstrom's bullishness about the data
center market is perhaps best exemplified
by his insistence that Lee Technologies will
not resort to acquisitions to meet its growth
targets. "We feel the markets are robust
enough to carry us to this growth rate," he
said.

Associate Editor David Hubler can be reached at
dhubler@1105govinfo.com
.

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