BCG-施耐德电气中国直流电源市场战略规划-20110711

ChinaL3DataCenterStrategyDetailedsummarydocumentAugust2011Confidential–ForinternaldiscussiononlyExecutivesummary(I)MarketsizingandevolutionOverallDCcapacityinChinaestimatedat~4Mm2in2010,withFinance,Telco1,IT1andGovernment,jointlyconstituting>60%ofpresentcapacityTotalDCcapacityexpectedtogrowto~6-7Mm2in2015DrivenprimarilybygrowthofDC'slargerthan500m2Finance,ITcoloandTelcocolowillhavethehighestgrowthratesIntheabove500m2segments,Finance,TelcocoloandITcoloarethemostimportantindustries,eachconstituting~20%ofpresentcapacityMegaDCs(above10,000m2)willdrivethemarketgrowthTotalDCmarketrevenuestodayareestimatedat~$2B,andareprojectedtogrowby12-18%peryeartoreach$4-5B($3-4BinDCsover500m2)by2015PurchasingbehaviorDifferencesinpurchasingbehaviorsaremainlydrivenbyindustry,e.g.IT/Telcovs.FinanceandothersInadditiontoreliabilityandbrand,Telcoplayersplacegreateremphasisonprice,whilefinanceandotherindustriesprioritizeonvendortrackrecordCost-consciousplayerssuchasIT/TelcoarehighlyinterestedinenergyefficiencyplanninganddesignTelcohasmorecentralizedpurchasingprocessesforstandardizedproducts;provincialsubsidiarieshandlemajorityofIDC-specificpurchasesMegaITparks,asauniquesegmentinChina,alsohaveuniquepurchasingcriteria,suchasfavoringinternationalbrandsandabilitytoattractendusersEspeciallytrueformegaITparksmixedwithcommercialrealestatedevelopment,andthoseco-managedbylocalgovernmentsProjectsizemayalsodrivebidtenderingprocessOne-stopshoppingismorefrequentlyadoptedforsmallprojects,whilelargerprojectsareoftencomposedofmultiplephases,forwhichbiddingisalsoperformedinphasesCompanies'ITexpertisemayalsoimpactpurchasingCompanieswithstrongITknow-howtendtorelymoreuponinternalresourcesTrendintheoverallmarketistowardturnkeysolutions1.IncludingcaptiveandcoloSource:BCGanalysisExecutivesummary(II)Competitivepositioning4typesofplayersarecompetinginthecurrentDCsolutionsmarket:ITconsultingandservicefirms,DCequipmentmanufacturers,DCengineeringfirms/SIs,andnewentrantsAssolutionproviders,IBMandHParetopofmind,whileawarenessof=S=ismedium(butweakrelativetoDCdesigncapabilities)=S=ismostwell-knownamongtheprimaryequipmentmanufacturersHowever,=S=hasclearedgeonenergyefficiencyandbreadthofproductportfolioAsanequipmentmanufacturer,=S=leadsinalmostalldimensions,butisgenerallyperceivedaslesscompetitiveintermsofpriceDCteamorganizationCurrently,aDCteamspecializedinL3solutionssitsinITBWithFrontOffice(FO)teamreportingtoITBandBackOffice(BO)teamreporting1toPEOtherBUsdirectlyhandlenon-L3offeringsforDCclientsCustomersoflargeDC'shaveexpressedfrustrationoverhavingtodealwithmultiplepointsofcontact,andlongerleadtimes(vs.competitors)forpricingandotherrequestsHP,IBMand=S=USallhaveasingleDCteamforhandlingDCsolutionofferingsHPhassolutionsales,pre-sales(FO),ProjectMgmt(BO)teamsreportingtoaTechnicalServicesVPIBMhasadedicatedDCFOteamwhichhandlestendering,solutiondesigning,etc,aswellasaseparateBOteamhandlingprojectmanagement=S='sUSDCteamhasintegratedFOandBOteams,andownssomeclientrelationshipsthroughtheintegratedenterpriseaccountmanagement(EAM)team1.SolidlineSource:BCGanalysisExecutivesummary(III)6recommend-edactionstobecometopDCsolutionsproviderintheChinamarketSegmentfocusDevelopcustomizedapproachtowinningthemostpromisingsegments,i.e.,Finance/IT/Telco/MegaparksFullyanticipateandservemegaparkcustomers'needsbyadaptingprojectapproach,enhancingcapabilityandrefininggo-to-marketstrategiesInvesttowinContinuebuildingthebrandBecomeatrustedadvisortoclientsforenergyefficiencysolutionsStrengthendesign,engineeringandturnkeycapabilities,inlinewith=S=strategyformodularizationandstandardizationEnablementRedesignDCoperatingmodelandorganizationtoimproveexecutionandcollaborationacrossChinaentitiesContinuetobuildexpertiseandrecruitpeoplewithrelevantskillsandexperienceSource:BCGanalysis12345Ourgoal:tobecometheleaderintheChineseDCmarketandatopofmindtrustedadvisortoourclients,withthebroadestofferingset,deepestindustrysolutionexpertise,andstrongestbrandimage6Reminder:ProjectapproachPhase2:DesignPhase1:DiagnosticL3datacenterstrategyforITBTargetcustomersegments;offeringsanddifferentiatedvaluepropositionfortargetsegmentsOverallbusinessmodeltoaddressidentifiedsegmentsCapabilitiesneededtoaddressidentifiedtargetsegments–offerings,pricingposition,sourcing,GTMapproach,organizationOptionstofillgapsbetweencurrentpositionasaspiredpositionImplementationroadmapMarketlandscape&trendsMarketlandscape–size,expectedgrowth,demanddrivers(framingconsistentwithIndiawork)Layoutsegmentattractiveness–basedonsize,potentialgrowth,needs,etc.SE/ITBL3competitivepositioningAssessmarketperformanceEvaluateSE/ITBpositionrelativetokeycompetitorsandidentifygaps–e.g.,offers,valueproposition,pricing&profitability,sourcingmodels>MIdentifymajorgapsininternalprocesses,e.g.,handovers,pricing,design,sourcing,etc.MLOanalysistobedonebyITBteamleveragingBCGmethodologyL3datacenterbusinessplanSummaryP&L/profitabilityHigh-levelresourceandinvestmentrequirements(lightertouchvs.Indiawork,i.e.,nodetailedfinancialscenarios)SCM1(4weeks)(4weeks)45CustomersegmentanalysisKeycustomersegments–needs(productsvs.solutions),buyingmodel(physicalinfrvs.IT),buyingbehavior(purchaseprocess,decisioncriteria)132AgendaMarketsizingandevolutionCustomerpurchasingbehaviorCompetitiveanalysisSE/ITBDCsalesorganizationHighlevelrecommendationsXxxxx-xx/FooterTheDCinfrastructure1marketisestimatedat~$2Bin2010,andexpectedtogrowto~$4-5Bin2015Revenue/PAMbyyear($B)54321012-18%NewBuild+Exp.Upgrade/RetrofitManagedServices2015~3.9–4.92.91.10.42014~3.4–4.32.61.00.42013~3.2–3.82.20.90.42012~2.8–3.22.00.70.32011~2.4–2.71.70.60.320102.11.40.50.3Projected2011-2015DCmarketopportunitybyrevenuestream2010estimate,basedonbottom-upbuildofmarketopportunity,triangulateswellwithtop-downestimateof~$2.1USDMajorityofmarketopportunity(~75–80%)isrepresentedbyDC'sabove500m212-18%PAMCAGRprojectionsassumeannualGDPgrowthcontinuesat7-10%,inlinewiththe12th5-yearplan1:"NewBuild+Exp."costbasedoncomponentmixandpricingof'typical'DC(segmentedbysize)forSchneiderrelevantPAM.Assumedsub-500m2DCaspossessing2kW/rackat40kWcapacity,500-2,000m2DCas3kW/rackat1,200kWcapacity,and2,000m2+DCas4kW/rackat3,000kWcapacity."NewBuild+Exp."revenuebasedChina-specific=S=offerings:UPS,switchgear,criticalpower(electrical)distribution,CRAH,chiller,civil(raisedfloor),racks,mgmt&security,lighting,facilityengineering."Upgrade"includesUPS,switchgear,CRAH,chiller,andracksatfullpricewithcriticalpower(electrical)distributionat50%.ManagedServicesincludeAMCandO&M.Source:IDC,CCID,SE/ITBinternaldata,Expertinterviews,BCGAnalysis46%28%15%Energy11%10%Other15%IT/NewMedia3%6%34%51%11%Transportation7%35%52%11%Education9%50%41%8%Government15%40%40%16%4%Finance20%22%51%100500100806040200ITColo10%21%31%40%TelcoColo10%21%21%29%18%Telco5%62%27%11%5%15%6%%splitbysizecategorySource:IDC,CCID,CCWResearch,Expertinterviews,BCGAnalysisCaptiveDCMarket:~80%3rdParty:~20%OverviewoftheDCmarketforallfacilitiesabove10m2

Finance,government,telco,andITjointlyconstitute>60%ofthemarketBreakdownofChinaDCcapacitybysurfacearea(2010)Approximately4.3Mm2oftotalDCcapacityCaptiveMegaCaptiveEnterpriseCaptiveMid-tier3rdPartyMega3rdPartyEnterprise3rdPartyMid-tier10,000+m22,000–9,999m2500–1,999m2CaptiveLocalizedDC3rdPartyLocalizedDC100–499m2CaptiveServerroom3rdPartyServerroom10–99m2DCCapacityIndustryMix(%)~4Mm2ofDCcapacityexpectedtogrowto~6-7Mm2by2015

Newbuildcapacitymainlycomesfromabove500m2DC,requiringSchneider'sfocusinthefutureSource:IDC,CCID,CCWResearch,Expertinterviews,BCGAnalysisAsgrowthcomesprimarilyfromthelargersegments,wewillfocustheanalysisonDCslargerthan500m2~2.0~0.3MegaDC~1.1-1.34~1.2–1.4~0.2~0.73~0.5–0.6~2.2-2.3DCCapacity(millionm2)2~1.1-1.2ServerRoom0EnterpriseDC~1.2LocalizedDC1Mid-TierDC52010(CurrentCapacity:~4.3Mm2)2015(ProjectedCapacity:~6.2–6.9Mm2)Size10-99m2100-499m2500-1,999m22,000-9,999m210,000+m2Minimalgrowth~12-15%CAGR~30-35%CAGR1000100806040200ITColo13%TelcoColo12%Other13%IT/NewMedia3%505%Energy6%Transportation6%Telco8%Government14%Finance21%EducationSource:IDC,CCID,CCWResearch,Expertinterviews,BCGAnalysisCaptiveDCMarket:~75%3rdParty:~25%By2015,~25%ofcapacityexpectedtobe3rdpartyBreakdownofChinaDCcapacitybysurfacearea(2015)Approximately6-7Mm2oftotalDCcapacityin2015DCCapacityIndustryMix(%)Finance,Telco,ITandGovernmentareexpectedtocontinuetocomprisemostofDCcapacityStronggrowthpotentialacrossalltheindustries

ITColo,TelcoColoandFinancearethe3keysegmentsDCcapacitymixbyindustryGrowthpotentialMaindriversGovernment2FinanceEducationTransportationEnergyTelcocaptiveIT/NewMediaOther1TelcoColoITColo15%3%5%6%7%9%20%15%10%10%12th5-yearplanpromotesoverallindustryupgradeandmodernization12"GoldenProjects"since11th5-yearplanpromotinge-GovernmentFocusoninterconnectioninthe12th5-yearplanDevelopmentofcloudcomputersandco-locationIDCactivities1.Includesmedia,manufacturing,processing,healthcare,etc.2.Governmentbureaus,publicsecurity,etc.—doesnotincludeSoE's3.HighSpeedTrainSource:Pressresearch,Expertinterview,BCGanalysisVeryhigh'Smartgrid'developmentarisingformautomationofutilitiesinfrastructureOver50%ofthe4trillionRMBanti-crisispackageinvestedMediumOver25%of4trillionRMBanti-crisispackageinvestedontransportationManagementofinformationlinkedtoHST3,airlines,subways,freewaysMedium"MidtoLongTermPlanningofReformandDevelopmentofNationalEducation"publishedbytheMinistryofeducationin2010Focusoninformationtechnology,cloudcomputing,M2MHighMedium-High"DirectivesonManagementofDCinCommercialBanks",publishedinJune2010byChineseauthorities,urgingconstructionofDCsandDRC'sMedium-HighStronggrowthindemandforco-locationandcloudservicesGrowthofmegaITparksdrivenbylocalgov'tincentivesMediumHighDemandforstorage,processing,strongerin-houseanalyticscapabilitiesDevelopmentof3G/4GnetworkanddataservicesMedium-HighMedium-High100806040200ITColo18%10%7%83%TelcoColo22%50%31%19%Other6%Education3%Energy4%Transportation100IT/NewMedia4%Telco8%66%34%Government11%4%20%Finance20%20%58%22%50080%%splitbysizecategorySource:IDC,CCID,CCWResearch,Expertinterviews,BCGAnalysisCaptiveDCMarket:~60%3rdParty:40%For+500m2DCs,40%are3rdpartyand~20%are+10,000m2

~1/3oftotalDCspaceinChina(~1.2Mm2)isabove500m2

BreakdownofChinaDCmarket500m2/DCandup(2010)Approx1.2Mm2

CaptiveMegaCaptiveEnterpriseCaptiveMid-tier3rdPartyMega3rdPartyEnterprise3rdPartyMid-tierFinanceandgovernmentaccountfor~50%ofcaptivespace10,000+m22,000–9,999m2500–1,999m2DCCapacity(millionm2)TelcoColoandITColohavesimilarmarketshare3rdpartyDCsareexpectedtogrowsignificantlyfasterthancaptive(for500+m2DCs)DCCapacity(millionm2)543210+20-25%/YCaptive3rdParty20152.9–3.31.4–1.61.5–1.720101.20.70.5CAGR~25-30%~15-20%Note:DC'ssmallerthan500m2havebeenexcludedfromthisanalysisSource:IDC,CCID,CCWResearch,Expertinterviews,BCGAnalysisGrowthdrivenlargelybymega-sizeddatacenterprojects3rd-PartyColoParksCaptiveBFSIUseIBM/RangeTelcohasannouncedoneoftheworld'slargestITfacilities(at~580Km2)tobelocatedinTianjinwith~100Km2committedforDCusage(tobecompleted2015/16)CentrintoconstructDC'sof~78K,~100K,and~280Km2innext5years1ChinaConstructionBankexpectstocompletea100Km2facilitywithinthenextfewyearsforcaptiveuseChinaDCm2projectionsto2015(500+m2)Shareof3rdpartycolowillgrowfrom40%in2010tomorethan50%in2015ThreetypesofmegaDCdevelopersareemergingCaptiveUse'Traditional'colos'Non-traditional'colosPrimaryindustriesExampleFirmsKeydrivers/motivationsFinancialservicesEspeciallythe'Big5'stateownedbanksInsurance(ChinaLife)TelecomoperatorsBig3:ChinaMobile,ChinaTelecom,ChinaUnicomITspecialistsFirmsseekingtodevelopcommercialrealestatebusiness,etc.FirmswithstronggovernmentalrelationshipsFSfirmshaveparticularlystringentrequirementsfordatasafetyandrecoverycapabilitiesTrendtowardsconsolidationofdatanecessitatesbuild-outofmegaDC'sDatacenterstendtorepresentacorebusinessfortheTelecomandITplayersRelativelyconcentratedmarket(competitorswithlargemarketshares)drivingtrendtowardmega-sizeddatacenters'Non-traditional'playersareleveraginggovernmentincentivestodevelopmega-sizedITparks;businessmotivesnotalwaystodevelopDC's,butDC'sareoftenacorecomponentofITparksGovernmentprovidesfavorableincentivestodevelopmegaDCprojects;businessmotivesdrivedevelopersSource:Pressresearch,Expertinterviews,BCGAnalysisAgendaMarketsizingandevolutionCustomerpurchasingbehaviorCompetitiveanalysisSE/ITBDCsalesorganizationHighlevelrecommendations41externalinterviewsalongwith20internalinterviewswereconducted...Telecom4Telecom(asColos):ChinaMobile(2)ChinaUnicom(2)IT/Others5IT-Colo:21VianetCentrinGDSDr.PengKDDI5ITCloudcomputingparks:GophaPacnetRangeDCParkShanghai21hubZiguang1Internet:Shanda.

IT/Telecom4Telecom:ChinaMobile(2)ChinaUnicom(2)2Internet:TencentAlibabaFinancial6Banking:BoCCCBICBCBankofCommunicationsGuangdongDevelopmentBankCRBank3OtherFinancials:GuotaiJunanSecuritiesShenzhenStockExchangeChinaPacificInsuranceGovernment/Education1Government:ChinaScienceInstituteManufacturing,ServicesandOthers2Manufacturing:SchindlerNokia1Energy:JilinOilCaptiveDCs3rdparty&othersSE/ITBteamsITB:ProductmanagersSegmentmanagersMarketintelligenceFinanceEtc.PECPowerBUBuildingBULifespaceBU

InternalExperts5Alliance/ExpertsTeamsunNeusoftChatone(2)ChinaDesignInstituteDataCenter-Dynamics3Competitor:Emerson(2)DellHuawei(2)

Experts*TelecomplayerswereinterviewedaboutboththeCaptiveaswellastheCo-looperationsSource:Clientinterviews,BCGanalysis...tounderstandthepurchasingbehaviorofDCdevelopers,DCmarketevolution,andthepositionof=S=HowDesign,BuildandOperatephasesarelinkedinaDCprojectGrowthtrendsmovingforwardPurchasingcriteriaindifferentphases=S=competitivepositionondifferentdimensionsUserexperiencesandunmetneedsExpertsMarketsizeandgrowthpotentialIndustryandsegmentspecificitiesMarketcompetitionNewmarkettrends,e.g.DCvs.ACInternalinterviewsCurrentL3DCorganizationandprocessPainpointsorareasforimprovement=S=advantagesanddisadvantagesInterviewscustomizedandadaptedtodifferentcustomerprofilesCaptiveDC3rdpartySource:BCGanalysisCustomerneedsandpurchasingbehaviorsvarybysegment,butmayalsodifferbyprojectsizeandITexpertiseProjectsizeSmall:preferone-stopshopLarge:utilizephasedapproach,usuallywithdifferentsetsofvendorsineachphaseITexpertiseIT-oriented:internaltechnicalteamwithstrongcapabilityprefertodoworkin-houseNon-IToriented:prefertoinvolveexternaltechnicalconsultantsandoutsourcePrioritizereliability,brand,priceCentralprocurement,heavyHQinfluencePrioritize

reliability,brand,featuresMoredecentralizedprocurement(byend-user)MayprioritizeothereconomicandpoliticaldriversProcurementbehaviorisdependentonunderlyinginterestsofkeystakeholdersIT/TelecomMegaparksFinance/Others1324TrackrecordandEEkeyindesignforIT/Telcos,brandandreliabilityimportantforequip.purchase113Decreasingorderofimportance42567Purchasecriteria

PriceBrandMarketexperience/TrackRecordReliabilityPastExperiencewithVendorDesign&ConsultingCapabilityFeaturesEnergyEfficiencyBreadthofcompanyproductofferingKnowledgeofexistingequipmentSource:Clientinterview,BCGanalysisDesignBuildITO&M123131234564567745DesignBuildFinancial/OtherO&M1231321234564567475DesignBuildTelecomO&M12312312345656774524Energyefficiencytop-of-mindforIT/TelcosReliabilitymajorconcernforallTelcosarelessbrandsensitive，thoughstillamajorconcernStrengthofvaluepropositionforsegment(incurrentstate)LowMediumHighPurchasecriteriaSE/ITBwellpositionedonbrandandreliability,lessondesigncapabilitiesandprice

PriceBrandMarketexperience/TrackRecordReliabilityPastExperiencewithVendorDesign&ConsultingCapabilityFeaturesEnergyEfficiencyBreadthofcompanyproductofferingKnowledgeofexistingequipmentSummaryofSegmentValuePropositionSource:Basedoncustomerinterviews;BCGAnalysisDesignBuildITO&M2111233321DesignBuildFinance/OthersO&M111222333DesignBuildTelecomO&M121332213OPEXanalysis:ChineseDCshavesimilarenergycostconcerns,butmaybemoreskepticalofenergyassessmentsChineseDC'senergycostaresimilartothatofUSandEurope...Needtopartnerwithclientsasatrustedadvisorsoastodevelopthemarketwithrelevantreferencecases33.9%36.3%34.8%US2010ChinaEuropeEnergy0%ofOPEX4030Source:APConlinesimulator,Interviewfindings,BCGanalysis...butthemarketisskepticalaboutenergyassessments"Electricitycostscanvaryfrom30%oftotalOPEXto60%,dependingonthedealsandsupportstheDCreceivesfromthegovernment;attime,themunicipalgovernmentswillbringDCownerstonegotiatewiththeelectricityauthoritiesforbestdeals!"-Director,CentrinTechnology"Thereisvalueinauditingthefacility,butcannotbedonebySIsandequipmentvendorsduetopossibleself-benefitting."-Ex-PresidentofDataCenterOperations,Dr.PengEnergycostvary,maybeashighas50%basedoninterviewfindings"The(EE)teamswillneedtobeabletoprovideconcreterecommendationsinenergyre-configuration,andevaluationofoperatingquality.Wehavebeenintouchwithsomevendorsbuttherewerenotmuchsuccesscasesforustoreference."-SeniorProjectManager,GDSBackup1Procurementprocess:telecoms'centralprocurementheavilyinfluencedbycorporateHQ1CTO/CIOTechnicalTeamsProvincialsubsidiaryLocalBranchProcurementOfficeHQFunctionsLocalFunctionsSetsoverallstrategyfordatacentersPlanningTeamResponsibilityImpactonSelectionAccessibilitytoVendorsLowHighlyrelationshipbasedItemsImpactedSolutionpartnerStrategicallianceTechnologydirectionCollectsinputsfromalllevelsoftheorganizationAllocatesresourcesbasedonbusinesstargetsLow-MediumProvincialprojectsbudgetLongtermsolutionselectionAssessescentrallyprocuredequipmentExperimentsw/newtech(D/C,Energyefficiency)Medium-HighOpentovisitsfromvendorsStandardequipmentSolutionNewtechnologyUpdatespreferredvendorlistNegotiatespriceforannualprocurementLowAvoidinteractionwithvendorsAllcentrallyprocureditemsAllocatesbudgetforpurchaseCouldchooseprojectmodelManageslocalprocurementProducesannualprocurementlisttoHQProjectmodelProcureditemsMedium-HighInitiatesrequestforequipmenttoprovincialcompanyProcureditemsMediumSource:BCGanalysisPointsofinfluenceEquipmentprocurementprocess:ChinaUnicomlesscentralizedcomparedwithCMCCandChinaTelecom1TechnologyTeamFacilityTeamProvincialCompanyLocalBranchProcurementOfficeHQFunctionsLocalFunctionsEvaluates/experimentswithlatestvendortechnologyDCResearchCenterCreatesguidanceforpreferredDCconfiguration/equipmentCreatesnewbusinessmodel/coordinateswithnewpartnersUpdatespreferredvendorlistbasedoninputInitiatesequipmentrequestCentrallyprocuresbasedonprovinciallistAllocatesbudget134ChinaUnicomReceivesrequestedequipment2Evaluates/experimentswithlatestvendortechnologyCreatesguidanceforpreferredDCconfiguration/equipmentCreatesnewbusinessmodel/coordinatewithnewpartnersUpdatespreferredvendorlistbasedoninputInitiatesequipmentrequestProcuresbasedonpreferredvendorlistAllocatesbudget34Receivesrequestedequipment21CMCC/ChinaTelecomSimilartoCMCC/ChinaTelecomTechnicalspecsevaluatedandscoredSource:BCGanalysisITParks:OwnershipandoperatingstructuresdifferbetweendifferenttypesofmarketplayersSource:Clientinterview,BCGanalysisMarketPlayersLocalgovernmentneedingjobcreation/zonedevelopmentProfit-seekingITcompaniesITcompaniesturnedreal-estateinvestorsOperatingStructurePacnetwilloperatethedatacentersOperatingteammaybeinfluencedbygovernmentdecisionsOperatedbyownteamselectedbycompanySeeksalliancesinmanyareasofoperationIncludingDC's,conventioncenters,cinemasLikelytooperatewithownteam2OwnershipStructurePacnetinvestedRMB150MinconstructingtwodatacentersChongqinggovernmentplanstoinvestRMB40BillionfortheentireprojectITcompaniesinvest,buildandownthedatacentersNoofficialaffiliationwiththegovernmentJVprojectbetweenSOEandforeigninvestorConstructedbyZiguang'ssubsidiarySelf-raisedcapitalITParks:Purchasingcriteriaareeconomicallybased,political/regional-economicdriversarealsocriticalSource:Clientinterview,BCGanalysisGenerateprofitfromITco-location/cloudcomputingbusinessesImproveperformanceoflocalgovernmentPromotelocaleconomyCommercialrealestatedevelopmentDevelopIT-serviceindustriesIT-colocation(smaller)BusinessDriversLocalgovernmentneedingjobcreation/zonedevelopmentITcompaniesturnedreal-estateinvestorsDecisionProcessMultiplestakeholders,PacnetmakesinitialselectionGovernmentagenciesinvolvedinmanyphases,decisionstobevalidatedbydifferentofficesIncludingcitylevelofficials(市委),mgmtcommittee(管委会)KeydecisionsaremadebytopmanagementFamiliarwithDC-relatedvendorsFlatorganization,keydecisionsaremadebytopmanagement2KeypurchasingcriteriaFirmsthatcan"reducetherisk"aresoughtafterto:CreatejobsSellDCcapacityBringrecognitionLargeinternationalbrandsadvantageousPurchasebasedonROIandtrackrecordWillingtoestablishlongtermallianceswithtopbrandOEMsEEdesignimportant,startingwithsiteselectionMayprefervendorswithabilitytogenerateadditionalbusinessSeekinternationalbrandforfuturereference/validationWelcomesexternalmanagementteamsthatcanbringexpertise(Ziguang)Profit-seekingITcompaniesProjectsizemayalsodrivebidtenderingprocess3Bidtendered1.Likelyscenario:maybedoneinseparatelybetweendatacenterengineeringandequipmentselectionSource:Clientinterviews,BCGanalysisLarge(5,000m2andabove)Medium(2,000–5,000m2

)Small(2,000m2andbelow)Conceptualanddetaileddesignscompletedbysamedesigningfirm(designinstitute)Require-mentsdefinedbyinternalteamConsultingfirmsengagedwithscoping/approachRequirementsdefinedthroughroundsofdiscussionwithclientConceptualdesigniscompletedbyconsultingfirmsDetaileddesignoutsourcedRequirementsdefinition,design,andprojectmanagementareperformedincollaborationbetweenonefirmandinternalresourcesOnebidistenderedforthedesigningportionoftheprojectCivilEngineeringfirmchosenConsultationRequirementDefinitionConceptualDesignDetailedDesignDataCenterEngineeringEquip.SelectionEquipmentbidstenderedCoordinationfirmchosen1EquipmentbidtendercoordinatedbychosenfirmInternalITcapabilitiesmayalsoinfluencepurchasingandoutsourcingdecisions4LimitedITCapabilityStrongITCapabilityDesignBuildO&MMainlyin-house,outsourcespecifictasksQuotesfromInterviews"ChinaUnicommanagesallofitsowndatacenterssincewearethemostfamiliarwithourequipment"-SeniorTechnologyManager,ChinaUnicom"LackofpersonnelandR&DbudgetresultsinCCBbeingthelargestIToutsourcingcompanyinChina,withhundredsof3rdpartyvendors.Besidesthecoreactivities,mostofthedatacenteroperationsareoutsourced.-SeniorITManager,ChinaConstructionBank(CCB)"Whenassessingoutsourcingconsiderations,costisnotthemaindriver.Instead,brandandknowledgeofproductwillbethekeycomponents"-COO,GuotaiJunanSecuritiesITcapabilityessentialtoin/outsourcingdecisionsEngagesexternalhelpwithallaspectsofplanningDefinesownequipmentspecsStrongrelationshipwithmajorvendorsInternalmanageroverlooksprogressExternalteamhelpswithRFPdraftLittleknowledgeofmajorvendorsExternalcoordinatingteamtomanagevendorsInternalmanagementteamOutsourcesroutinetasksWelcomesexternalvalue-addedteams(audit,assessment)Hesitanttotryvalue-addedservicesSource:Clientinterview,BCGanalysisAgendaMarketsizingandevolutionCustomerpurchasingbehaviorCompetitiveanalysisSE/ITBD