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Why Might End Up Building Data Centers

SaaS leader (s crm) is growing so fast that the company is considering the possibility of building its own data centers within the next few years, Rich Miller reported at Data Center Knowledge. According to Miller’s article, VP of Technical Operations Frank Guerrera told the audience at the DataCenterDynamics conference that the company, which currently leases its 76,000 square feet of global data center space, will almost certainly grow its operations to the point where it just makes more sense financially to build and run its own property. However, he added, it won’t be driven by cheap land and power like other data center operators, including Facebook, Google (s goog), Amazon (s amzn) and Apple (s appl). This likely has a lot to do with the differences between’s SaaS business and those of other cloud providers.

Providing software as a service to tens of thousands of customers — including many large enterprises — means that must be able to ensure optimal performance, which likely is why Guerrera emphasized that network density is one of the company’s key criteria in selecting data center sites. “We look for peering points, so we can’t build in some of the cheapest places,” he said. “When we go and build our own, it will be to our own criteria.” It’s a strategy we’ve actually seen before from cloud providers, especially those more focused on maximizing performance than on hosting huge numbers of servers. Beside, has efficiency down to a science already: as Miller reports, the company’s current distributed data center footprint still only comprises about 3,000 servers, which is roughly the size of one mid-sized data center. Facebook, by contrast, has a single Hadoop cluster comprised of 3,000 servers.’s growth is being driven by a number of factors, including the regular rolling out of new social features to its flagship SaaS business, as well as its burgeoning cloud computing infrastructure business. is aiming to drive adoption of its PaaS offering, including through a partnership with VMware, and it recently launched its service. Further, the company bought PaaS startup Heroku in December, which is currently hosted atop Amazon Web Services, but it makes sense that might want to pull Heroku in-house at some point, especially if business continues to grow as it was doing pre-acquisition.

But appears to be holding out hope that something will happen between now and the time it has to purchase data center real estate that will enable it to keep renting space, instead. Guerrera reiterated a stance often echoed by fast-growing web companies, which is that it’s a software vendor and would rather not spend its resources building data centers, adding that “If there are large facilities out there that can meet our needs, we would take a look.” Considering its still relatively small server count, Guerrera and his team have some hope to hold on to, but its business — both in terms of customers and scope — is growing fast and will likely require a lot more servers than it makes financial sense to rent.

Image courtesy of Flickr user ddgenome.

One Response to “Why Might End Up Building Data Centers”

  1. Curious why would not follow the approach used by Netflix and utilize AWS if it is really interested in a software only space? Netflix seems to have proven that the AWS model works with large number of customers in applications like video streaming where response time and performance are critical.