INDUSTRY FOCUS: Data Centers – Growing by Gigabytes

By Ed Felton
From the May/June 2012 issue

The growth of cloud computing is spurring increased demand for data center space in North America, according to a survey commissioned by Digital Realty and reported by Data Center Knowledge. The growing interest in cloud adoption, along with the resumption of planned expansions that were deferred due to the economy, points to robust growth ahead for the U.S. data center industry.

Ninety two percent of IT decision makers at large companies said they will “definitely or probably” expand their data center footprint in 2012, the highest number in the six-year history of the survey by Digital Realty, which is the largest operator of data center facilities. By comparison, 70 percent of respondents said they had expanded their data center operations over the past two years.

Ironically, the industry expansion comes at the same time the U.S. government is continuing its aggressive effort to consolidate its data centers, and has again increased its target for the number of facilities it expects to close, according to Federal Chief Information Officer Steven VanRoekel.

The government now expects to shutter at least 1,200 data centers, or about 40 percent of the 3,133 IT facilities identified in the latest update on the consolidation. The government is on track to close 525 data centers by the end of 2012, including 215 that were shuttered in 2011. That marks an acceleration of the project, as the administration originally expected to close 137 data centers in 2011. A listing of facilities that have been closed or are targeted for closure is available at However, a new $500-million data center for the Social Security Administration is expected to be built near Frederick, MD in the coming months.

Wyoming Opens Window to Data Hub

The Microsoft Corporation’s announcement to construct a $112 million data center in Cheyenne, WY marks a notable milestone in Wyoming’s economic diversification efforts, and it’s a clear sign that our state’s emerging presence on the digital industry landscape is gaining ground.

Behind the lead of Governor Matt Mead who first stated his goal to recruit data centers during his campaign, Wyoming has aggressively pursued technology as a target industry that someday may be mentioned in the same breath as agriculture, energy and tourism when talking about our state’s signature industries.

This is only possible because of the close working partnerships developed during the past six years with the Wyoming State Legislature, the governor and local economic development organizations throughout the state, as well as our relationship building efforts with technology companies and site selectors.

The Wyoming Business Council has collaborated with local economic development leaders to showcase our state’s enviable assets such as a cool climate, robust fiber, low-cost and redundant electricity and access to available shovel-ready sites that lower the total cost of operation for digital business. In addition, this local and state economic development team has worked together with the governor and the legislature to create unique incentives that set us apart in this highly competitive market.

In the case of the Microsoft decision, the result of this group effort produced an incentive package comprising up to $5 million from Governor Mead’s Data Center Recruitment funds, used at the sole discretion of the governor to entice data centers, and $5 million from a Wyoming Business Council Business Ready Communities (BRC) Managed Data Center Cost Reduction grant through applicant Laramie County.

Through Cheyenne’s local economic development agency Cheyenne LEADS, Laramie County will use the $5 million from the governor’s fund to build infrastructure to include roads, water lines, sewer work and fiber installation to lower the upfront costs for Microsoft’s selected location; Laramie County will use the $5 million BRC grant to assist with utility and connectivity costs.

In addition to the above state incentives, Wyoming offers a data center sales tax exemption. Combined with our other benefits such as no corporate or personal state income tax, and workforce development training funds, Wyoming has a compelling cost reduction incentive package that is appealing to this industry by careful design. Without these incentives and our infrastructure investments, the Microsoft project – and future projects of this caliber – would not be possible, and we must give credit to the legislature and the governor’s office for having the foresight to work with the Business Council and the local economic development community on ensuring we’re ready to compete in the digital industries.

Although Cheyenne was the final location decision, Microsoft identified Evanston, Laramie and Rawlins as very real possibilities until just months before the final decision was made. Economic development officials and local leadership in those communities worked through the same process with Microsoft as did Cheyenne LEADS, and Microsoft officials made note of the pride displayed from each community during the 10-month site selection process. The professionalism, understanding and sincerity by all communities involved made the entire state look very good to the company and made it easier for Microsoft to select Wyoming over competing states. From a local economic development standpoint, this announcement illustrates how important it is to have shovel-ready property available for economic development.

With the successful recruitment of the NCAR-Wyoming Supercomputing Center to Cheyenne in 2007 and the presence of other data centers such as EchoStar, Ptolemy Data Systems, T3Media (formerly Thought Equity Motion) and Green House Data calling Wyoming home, the recent Microsoft decision punctuates this work; but now, it’s time to go to work on the next one.

TVA Identifies 20 Sites Ready for Data Center Development

The Tennessee Valley Authority (TVA) is undertaking a Data Center Ready-for-Development Sites Initiative as part of its Megasites program.

Twenty sites in the TVA region have been identified by Deloitte Consulting as being ready for development as data centers (see map below, with full information on the sites available at

The strategy behind this program is similar to the Megasites program in that it identifies what target companies are looking for and then finds sites where much of the due diligence on those attributes has already been done. The Megasites program is a multi-year economic development effort designed to make it easier for large industries to find an optimal location that is ready for use. A third-party consultant (McCallum Sweeney Consulting) has identified locations that offer large developable acreage, have access to utilities, are close to interstate highways and railways, and can supply a plentiful labor force. Megasites help companies save time and money and reduce their risks in locating in the region.

The TVA’s web pages for the potential data center sites feature a GIS presentation of the available property as well as demographic information about the labor force available to the location and a snapshot of consumer spending and businesses in the area.

For example, TVA and Deloitte identified a 92-acre site in an industrial park in Huntsville, AL as a prime location for a future data center. The web page for the site indicates that a Phase I Environmental Report already has been completed for the site, which is a vacant parcel that can be purchased.

To assess the available labor force for the Huntsville site, visitors to can enter in a specific geographic radius or an estimated drive time (in minutes) and be served up a workforce report according to the specs. The same coordinates/requirements can be entered to generate customized reports on consumer spending and related businesses in the target location.