Chicago’s unseen tapestry of
business ecosystems and the data centers that serve them
Q&A with Bill Winsininski
Co-founder and Managing Partner at Cofluence LLC
Q: In terms of data centers, how does Chicago compare to other US markets?
A: First and foremost, Chicago, from a location standpoint, is very simple. There are two airports. It is easy to get here. It has relatively low risk of natural disaster, and the standard attributes of the market are outstanding.
With nearly 10 million residents, the Chicago-Naperville-Elgin metropolitan area, often referred to as Chicagoland, constitutes the third-largest city in the US with the third-largest GDP in the country. The city is an international hub for finance, commerce, industry, technology, telecommunications and transportation, and is home to the corporate headquarters of 35 Fortune 500 companies.
Excellent fiber availability and strategic national proximity, combined with the large number of enterprise content end users has contributed to Chicago’s recognition as the midwestern connectivity hub. In addition, large markets in the surrounding Midwest states direct significant internet traffic through the city to elsewhere in the country. Content, media and cloud companies are naturally eager to deploy points of presence in Chicago to reduce latency for their customers making it a target rich environment for colocation and data center providers.
The business and economic climate for data centers in Chicago is also improving. Taking a cue from places like Henrico County, Va. And Columbus, that are models for attracting investment in data centers and infrastructure, Illinois Gov. J.B. Pritzker recognizes the positive business impact of technology innovation and there is strong sentiment favoring data center-friendly tax reform.
Overall, by eclipsing three million square feet of space, Chicago has cemented its place among the leading data center markets, each of which serves a vital role in the broader digital economy of the country.
Q: How do you break down Chicago from a geographic perspective?
A: There are two distinct data center markets within the Chicagoland area. There is the downtown market and the suburban market with the interconnection hub of Chicago being key.
In the western suburbs, where much of the growth is taking place, leading providers are accelerating their construction and land-banking schedules to be able to offer campus environments for hyperscale cloud and content providers. Overall, it is simply an easier experience to collocate infrastructure in the suburban areas. Several newcomers, including both national organizations and budding ventures from providers such as Iron Mountain, Coresite, Element Critical, Equinix and Digital/Dupont have recently made or are plotting aggressive entrances.
Behind it is a “supply-drives-demand” mentality that will bring even more footprint to market in 2019 which could result in Chicago passing Dallas for the first time in terms of added supply.
The downtown Chicago tells a similar story, as the central part of the city is attracting a tech-savvy younger workforce that wants to live downtown. This combined with lucrative incentives from the City, have contributed to large companies such as McDonalds, Google, Salesforce and United Airlines who have all taken new space downtown.
Q: How about from a data center services perspective?
A: It used to be that data centers were put into one of two categories:
1) Wholesale providers, who typically offer relatively large amounts of data center space while clients provide their own racks and do their own cabling.
2) Retail providers who typically lease single racks that they install and cable and customers bring in their own equipment.
Today it has become very fragmented. There are small deals structured like wholesale deals and there are large deals that look more like hybrid colocation and cloud deals. Providers will seek to differentiate themselves by offering varying levels of managed services and interconnection between network providers at their facility and/or to a variety of network providers accessed via the provider’s fiber connection to a carrier hotel.
To address this data center providers have evolved to specialize in various size deals with various management and complexity requirements. This includes the unique needs of hyperscale, a new data center consumption model being used by the world’s largest cloud and Internet businesses.
A key common denominator in all of them is an increasing recognition of the role and importance of connectivity cloud services. Gone are the days when big data centers with lots of carriers on net would enter the market and wait for customers to come. Today, the savvy data center providers and enterprises understand and start with their connectivity and cloud strategy prior to building data centers and solutions that account for exchanges, peering points and advanced software defined networking, that are highly attuned to proximity and business needs.
Q: Are there unknown or underserved areas that do not fall into the suburbs vs. downtown descriptions?
A: Good question. While there has been an increase in hyperscale deal sizes, Chicago continues to be driven – at least on the demand side – by a myriad of small and mid-size enterprises who have attempted to manage their IT environments in-house. They represent a significant underserved market where many of these are late to recognize the economic and performance benefits of IT outsourcing.
This personified in an area around O’Hare that is saturated with small and mid-size businesses serving a range of industrial business ecosystems. Within a five-mile radius there is a massive concentration of businesses encompassing light manufacturing, commercial food suppliers, import/exporters, recycling and waste services, biomedical companies, assembly, paint and chemical companies, and many more. These are much more than niche pockets. They are suppliers of components to a larger supply chain. There are ingredient companies, paint companies, chemical companies that are all part of the ecosystem in the area’s supply chain. If one of them goes down, it impacts the ecosystem companies around them. Because of this, uptime and availability is increasingly critical.
Currently, many of these are 2 – 5 cabinet environments that can no longer scale to meet business growth. It is only now, as they realize the need to migrate applications and services into a cloud or hybrid strategy, they acknowledge they can no longer deploy and manage the IT infrastructure required to advance their businesses, and they do not know where to turn.
Q: What are their options?
A: The good news for Chicago’s large concentration of industrial businesses is there are an increasing number of smaller, local providers specializing in IT migration into enterprise data centers perfectly matched provide cost-effective, tailored IT solutions that meet your business requirements now and in the future.
The best providers will reach out to the community to demonstrate their understanding and interest in becoming a viable member of the community. By aligning yourself and drawing concentric circles around your site, understanding who the players are, and becoming a viable member of the community in that region, can really help create momentum in the market.
At Cofluence, we realize that organizations are no longer constrained by their physical location and that enterprises are migrating away from their on-premises data centers. We love data center infrastructure and have seen the evolution of workloads moving to colocation, hosting and the cloud. Our team of experts want to help you with these preparations and align the best provider and technology that matches your goals and objectives. We have colocation partnerships around the globe from regional edge providers to the largest hyperscale provider on the planet. We also have multiple agreements with over 100 telecom and cloud companies to sell and support their services. There is nothing new in business that does not involve technology, we support that technology – Cofluence can help.
Bill Winsininski, CDCP is co-founder and Managing Partner at Cofluence LLC a data center infrastructure, cloud and telecommunications consulting firm. Mr. Winsininski has been in the IT business for over 20 years. His career started in the San Francisco in Technology Publishing at InformationWeek, he has worked as a data center VAR, designing and building data centers, selling and managing colocation sales teams and now managing his own firm. He sits on the 7×24 Exchange Great Lakes Region Board, Past Chairman of the Board for the Aurora Regional Chamber of Commerce, Co-Founder of OnLight Aurora, Chairman of the Board for the Data Center Sellers Association and Creator of the Fox Valley Networking Professional. He is United States Navy Veteran where he served as a Search and Rescue Swimmer in the Persian Gulf War and studied at the University of California Berkeley.