The booming data center business – Switzerland’s new raw commodity?

Largely unnoticed by the public, a new industry has developed here in Switzerland in the past years. Data centers have been springing up everywhere and are increasingly attracting foreign companies to Switzerland. Data volumes continue to grow and this data is as vital and valuable as raw commodities.

The new data warehouses have one thing in common. They are mostly inconspicuous or even somewhat forbidding. The buildings usually do not have windows, are protected from prying eyes by high fences, and cameras monitor all movement on the grounds. Access is restricted to just a few employees who have to go through multiple security checks to gain entry. Badges and access codes alone are not sufficient. A hand vein scan is used to unequivocally identify personnel and open an interlock to the next secured area. Employees must pass through four or five such zones before they can enter the first server room.

Security and constant availability are key

The security measures for entering a data center quickly make it clear that the information stored there is extremely important. As are data security and availability for the companies who lease space in these data warehouses. They need their data to be permanently available. It would be fatal for them if their IT systems went down.

Adequate measures ensure the constant availability demanded by customers. For example, in the unlikely case of a total power outage, modern data centers like those run by us, the Green Datacenter AG, have multiple 3,000 PS diesel generators to power their customers’ servers. The cooling systems are designed for uninterrupted operation, as are the fiber-optic connections from many providers that are routed into the building from different sides.

Such an infrastructure, however, comes at a price. The cost of building and operating such high-security data centers is high. As a result, companies are increasingly housing their data with data center providers instead of investing in their own infrastructures.

Switzerland offers excellent conditions

In Switzerland, around CHF 1 billion has been invested in new data centers in the last six years. An outright boom that is not least due to the country’s special advantages. The main arguments in favor of building data centers in Switzerland are the well-functioning legal system and extensive data protection, but also the general stability of Switzerland and the high availability of IT specialists. In addition, the country’s fiber-optic and energy infrastructures enjoy an excellent reputation. It is therefore not surprising that a Credit Suisse study estimates that a quarter of Europe’s current data volume is stored in Switzerland.

There are especially a lot of data centers in the Zurich – Bern – Basel business region. We as Green Datacenter AG can confirm the appeal of this region. We operate five data centers in the Greater Zurich Area – the low-risk location combined with outstanding accessibility were important prerequisites for us when deciding to invest here. Our company invested CHF 120 million in the last building project and another data center will follow. It took over a year simply to decide on the location.

The trend continues

A costly undertaking for data center operators – but one that pays off. At present, nobody can complain about a lack of demand. Data volumes are growing by 40 to 60 percent each year. At the same time, the regulatory requirements for housing data are becoming more demanding. As a result, companies are increasingly focusing on their core business instead of investing in their own IT infrastructure. It costs less to purchase these services from specialized providers.

But it is not just large companies that are outsourcing the storage of their data – many providers are consciously targeting small customers with specific offerings. Startups and SMEs often lease when they need 1/3 of a rack of server space for storage. Sometimes they dispense with their own infrastructure altogether and completely store their data on virtual servers. In light of this widespread demand, it is currently unlikely that the trend toward storing data in external data centers will decrease.

About the author

After obtaining a degree in economics from Boston University, Frank Boller started his ICT career at Hewlett-Packard. His last position there was as General Manager of the company’s operations in Switzerland. He moved on to Diax Telecommunications (later Sunrise) where he held the position of Chief Executive Officer. He subsequently joined UPC Cablecom as head of the consumer markets division. In January 2016, Frank Boller took over operative management of Internet provider and data center operator green.ch. The industry expert is Vice President of the major professional association SwissICT and represents the concerns of ICT activities in Switzerland.