Giant IBM has opened a $7.5-million e-business hosting centre in Calgary, putting “Big Blue” in direct competition with TELUS Corp. for the fastest-growing segment of the information technologies industry.
IBM Canada Ltd.’s new 7,000-sq.-ft. centre in downtown Calgary is the global corporation’s first foray into Western Canada to capture a share of the applications services provider (ASP) market. IBM operates similar centres in Toronto and Montreal.
“Calgary is a robust business environment,” Paul Lovell, general manager of IBM’s e-business hosting services division, said in an interview at last week’s official opening of the state-of-the-art, high-security facility.
“We’re coming here because there’s a marketplace here for it,” Lovell said.
osting centres provide a secure, reliable environment with scalable (expandable) high-speed Internet bandwidth. The facilities enable companies to run their Net-based e-business applications and get technical support and, if desired, management services.
Despite the dot-com collapse and crash in high-tech share prices, the market for providing e-business services to small and medium-sized firms and large enterprises continues to grow. Analysts predict the ASP market in Canada will be about $1.2 billion by 2004.
“Worldwide, the ASP revenue for 2000 surpassed our expectations,” says Lise Dellazizzo, Canadian ASP program manager for IDC Canada Inc. “In Canada in the past year, the number of companies playing in this space has probably tripled.”
IDC Canada is forecasting steady annual growth in the ASP business, with the Canadian market filling up with service providers and maturing by 2005, she said. “So if companies want to get in and really want to try to grab market share, the next two to three years are very important.”
Telus invested more than $22 million in its 7,432-sq.-ft. web-hosting centre in Calgary, which opened in July. At the same time, the Western Canada-based corporation challenged for turf in central Canada, launching a $25-million hosting centre in Toronto.
Telus proclaims in its news releases that its goal is “becoming the ultimate web-hosting service provider in Canada.”
IBM’s decision to partner in its new Calgary centre with two of TELUS’s telco rivals — Bell Canada and AT&T — makes the competition for the West’s ASP market a race between “thoroughbreds.”
“It looks like that competition is really head-on,” Dellazizzo said, adding that the customer will be the big winner.
“Customers that are looking for an ASP solution will really have a great deal of choice. Those are two strong players, and they both have something different to offer because they have a different core heritage.”
Lovell says IBM brings some unique features to its centre.
The facility is linked directly into the two separate, high-speed Internet backbones of telco network providers Bell and AT&T. This double link gives customers matchless bandwidth capacity and reliability, Lovell said. “If one telco’s network goes down . . . we switch over to the other network and the user never notices a problem. That’s unique in the marketplace.”
IBM also has formed 20 partnerships with private Internet carriers to carry customer traffic in and out of the centre, rather than competing with public traffic channeled through busy hubs in Toronto and Vancouver.
The centre offers a continuum of services starting with basic facilities hosting — providing a secure space for a customer’s hardware and software and reliable, always-on bandwidth. Customers wanting more can choose from an “a la carte” menu of management services. They range from data backup and recovery, to a fully managed site where the customer simply has to plug in the content.
IBM hosts some of the busiest Internet sites in the world, including the New York Stock Exchange, Macy’s and Victoria’s Secrets in the U.S., along with Air Canada and Canadian Tire in Canada.
“We come with 30 years of experience doing this,” Lovell said. “We’ve taken that 30 years and adopted it for the e-business environment.”
Two interconnected electrical grids, each of which can function independently, supply redundant power to the Calgary centre.
In the unlikely event that both grids go down, three diesel generators onsite will automatically supply enough power for the equivalent of 3,000 homes.
Access to the centre is controlled through both physical security and an electronic badge. Once on the floor, customers need their own electronic card to get into their isolated “cage” or cabinet.
A customer’s physical space depends on the size of the application, such as how many servers are required.
Lovell says IBM hopes to attract the entire range of potential customers, including sectors such as oil and gas and other natural resources, high-tech, banking and finance, and distribution and retail.
Analyst Dellazizzo expects that some of those customers will likely come from beyond Calgary, since a hosting centre’s geographical location is becoming less of a concern.
