w w w . H o s t i n I r e l a n d . c o m

PERCEPTION OF IRELAND AS A DIGITAL ASSET HOSTING LOCATION Surveys Conducted by Host in Ireland

JULY- SEPT 2014

08  Fall  

HOST IN IRELAND INDUSTRY SURVEYS JULY – SEPTEMBER 2014

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Table of Contents 3……………Executive Summary 3-7…………SURVEY: Strategic Opportunities and Drivers

• Objective: Understanding the U.S. market view on hosting in Ireland. Determine who is making global decisions on digital asset hosting. Discover which criterion is measured when selecting a digital asset hosting location.

• Targeted sample: U.S.-based companies. 8-11………..SURVEY: Key Growth Drivers

• Objective: Understand the current sectors covered as well as the perceived key growth drivers and inhibitors.

• Targeted sample: Irish-based companies.

12…………Conclusion

About Host in Ireland  Host in Ireland is an industry-led marketing initiative developed to promote the benefits of Ireland as an optimum location to host digital assets in the EMEA region. Offering U.S. and globally-based organizations premium options as well as timely information related to digital asset hosting, Host in Ireland demonstrates why Ireland is more cost-effective, efficient, reliable, secure and accessible than other regions in Europe. Host in Ireland serves as a collaborative partner for global organizations seeking networking and business opportunities as well as information on Ireland’s governmental policy.  

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Executive Summary During a six-week period beginning in July and ending in September 2014, the Host in Ireland team conducted a series of market-based surveys to identify key drivers for hosting digital assets in Ireland. This document summarizes key findings extracted from two surveys: “Strategic Opportunities and Drivers”(U.S. market) and “Key Growth Drivers” (Irish market). Overview: Strategic Opportunit ies and Drivers Host in Ireland targeted three industries: technology, financial services and healthcare. While less than half of the respondents hosted their own digital assets, more than 52% considered digital asset hosting to be an extremely important factor when meeting market demand and customer needs. This survey indicated that CEOs (65.6%) and CTOs (34.4%) were the key decision-makers in the U.S. market when selecting digital asset hosting locations. Executives chose a digital asset hosting solution based on four factors: network connections to enable them (Pipes), followed by the ability to support business with in-house expertise (People), the cost of energy (Power), as well as political and economic stability (Policy). Of those surveyed, more than 51% of the respondents are not currently considering Ireland as a location to host digital assets. Figure 1: Strategic Opportunities and Drivers [U.S. Market Survey] The majority of respondents surveyed work within telecommunications and carrier/service provider companies in the technology, financial and healthcare sectors.

0.0%! 5.0%! 10.0%! 15.0%! 20.0%! 25.0%! 30.0%!other!

Medical Devices!Web Security!eCommerce!

Content Provider!Industrial Goods!

Retail!Media, Entertainment and Leisure!

Application Software!Internet Providers / IXPs!

Financial Services!Enterprise!

Business Software & Services!ICT!

Engineering!Carrier/Service Providers!Small/Medium Business!

Cloud Soultions/ Saas Provider/ Saas Software!Telecommunications Services!

Demographics!Company Type!

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Figure 2: Strategic Opportunities and Drivers [U.S. Market Survey] The top industries targeted by respondents include technology, financial services, healthcare, government, and professional services including legal/accounting firms.

Figures 3 & 4: Strategic Opportunities and Drivers [U.S. Market Survey] A little less than half (48%) of respondents host their own digital assets. Yet digital asset hosting was extremely important to the majority (52.7%) of respondents – both directly and indirectly hosting for their businesses.

0 20 40 60 80

100 120

Industries Targeted by Respondents

52.7% 20.4%

12.6%

9.6%

4.8% How important is digital asset hosting to your business?

Extremely important.

Somewhat important.

All companies have digital assets to manage.

It’s an aspect of our business, but we don’t emphasize this. It’s not important to us at all. We are a brick and mortar business.

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Drivers behind expansion

Figure 5: Strategic Opportunities and Drivers [U.S. Market Survey] Of the surveyed participants, 65% indicated the CEO is the key decision-maker when choosing a location to host digital assets.

Figures 6 & 7: Strategic Opportunities and Drivers [U.S. Market Survey] The majority of respondents (58%) want to expand into Europe in response to market demand.

No!42%!

Yes!58%!

Respondents looking to expand into Europe!

25.0% 17.2%

65.6%

34.4%

3.1% 0.8% 1.6%

14.8%

0.0%!

10.0%!

20.0%!

30.0%!

40.0%!

50.0%!

60.0%!

70.0%!

CIO COO CEO CTO CMO CMT CRO CFO

Key Decision Makers in Site Selection for Digital Asset Hosting

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Figure 8: Strategic Opportunities and Drivers [U.S. Market Survey] Respondents were asked to rate the 5 Ps (People, Pipes, Policy, Power and Pedigree) on a scale of one to five - five being the most important and one being the least important. The majority of respondents selected “Pipes” as the key consideration when hosting digital assets internationally.

Figure 9: Strategic Opportunities and Drivers [U.S. Market Survey] The majority of respondents stated they did not have specific services needs in Ireland. Of the 27% of respondents with specific needs to/from the Ireland:

• 54% are looking for data center providers • 46% are looking for colocation providers • 29% are looking for domestic network operators • 36% are looking for international network operators

3.66!

4.15!

3.80!

3.55!

3.42!

0.00! 1.00! 2.00! 3.00! 4.00! 5.00!

Power: Costs of power is reasonable and affordable as well as accessible.!

Pipes: Network connectivity/fiber providers are plentiful.!

People: The location has a pool of qualified employees.!

Policy: New business programs and tax incentives.!

Pedigree: Notable corporations populate the area already.!

The U.S. Market Rates the 5 Ps

54%!

46%!

29%!36%!

11%!

54%!

11%!14%!

18%!11%!

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Col

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Con

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Rec

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What are the service needs you currently have to/from Ireland?

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Figure 10: Strategic Opportunities and Drivers [U.S. Market Survey] Even with the high demand for expansion, the majority (52%) of respondents said they are not considering Ireland as a digital asset hosting location.  

Key Takeaways:

- We must continue discussions with ‘C-level’ executives at target organizations to educate them on the value of hosting in Ireland.

- We must ensure competitive pricing is available for power. This is a considerable cost factor, particularly for those companies seeking data center and/or colocation space.

- The technology pedigree of Ireland, while impressive, is the least important factor. However, the country’s policies related to data protection are a very important consideration.

- Europe is a key expansion location for consideration, but Ireland is not amongst the countries considered. Finding a way to identify Ireland as a core European location, coupled with benefits such as network accessibility and strengths, should be considered when developing marketplace positioning.

- Ireland’s ability to serve the hosting market effectively cannot be based on the perception that there is no need to do business to/from Ireland. One way to address this issue is to highlight how our available connectivity and capacity enables companies to connect directly to Ireland and/or other European locations, allowing companies to bypass London and other high-traffic locations that can add considerable latency to Internet traffic.

- Data center/colocation services along with network connectivity (domestic and International) remain the key requirements for companies seeking services to/from Ireland.

Yes, I am considering

Ireland.30%

No, I am not

considering Ireland.

52%

I already host digital assets in Ireland18%

Consideration of Ireland as a digital asset hosting location!

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Figure 1B: Key Growth Drivers [Irish Market Survey] The majority of respondents have clients located in the U.S. (25%) followed closely by Ireland (23%) and the U.K. (23%) equally.  

Key Growth Drivers Irish Market Survey Overview: Key Growth Drivers for the Ir ish-Based Market More than 52% of the respondents provide wholesale, retail, colocation and/or managed services. From the survey, the key decision-makers choosing global digital asset hosting locations for these global corporations are company CIOs (44%) followed by CTOs (37%). Similar to the respondents of the Strategic Opportunities and Drivers Survey, the key growth drivers for the Irish-based market are customer demand, followed by incentives and proximity to fiber networks. The types of information/data they use to host digital assets include storage (68%), content (48%) and Big Data analytics (44%). The biggest hurdles indicated included energy costs, change in taxation policy and increased competition. The companies representing the new wave of demand were cloud solution/SaaS providers, followed by entertainment/content and healthcare companies.

U.S. 25%

U.K. 23%

APAC 7%

Europe excluding the U.K.

19%

CIS 2%

Ireland 23%

Australia 1%

Client Location!

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84.0%

12.0% 12.0% 16.0% 16.0%

32.0% 28.0%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0%

- Customer demand

- Hedging of the market demand

- Costs of power

- Costs of real Estate

- Energy efficiencies

- Incentives - Proximity to fiber

networks

What are the key drivers for your market expansion decisions?

44.4%!

3.7%!

37.0%!

0.0%! 0.0%! 0.0%!

14.8%!

0.0% 5.0%

10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0%

CIO! CEO! CTO! CMO! CMT! CRO! CFO!

In global corporations, who are the key decision-makers for digital asset hosting locations?

Figure 2B: Key Growth Drivers [Irish Market Survey] In global corporations, the CIO (44%), followed by the CTO (37%), have the most influence on digital asset hosting locations.  

Figure 3B: Key Growth Drivers [Irish Market Survey] Customer demand (84%) is the key driver behind market expansion of our respondents.  

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44.0% 48.0% 32.0%

44.0%

8.0% 20.0%

68.0%

40.0%

0% 10% 20% 30% 40% 50% 60% 70% 80%

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- Sm

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- Sto

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- Dat

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View on Global Drivers for Demand of Data Center/Colocation/ Hosting Services

84.0%

40.0% 36.0% 48.0% 48.0%

0% 20% 40% 60% 80%

100%

Energy Costs Lack of telecoms diversity

Data protection

Change in taxation policy

policy

Increase in competition

Factors inhibiting the Continued Growth of the Digital Asset Hosting industry in Ireland

Figure 3B: Key Growth Drivers [Irish Market Survey] Storage (68%), content (48%), Big Data analytics (44%) and customer applications (44%) are the top reasons respondents are looking to expand globally.  

Figure 4B: Key Growth Drivers [Irish Market Survey] Recurring challenges of selling Ireland as a digital asset hosting solution include: • Cost • Connectivity • Competition  

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42.3%!

23.1%! 26.9%!

46.2%!

15.4%! 11.5%! 15.4%!

65.4%!

23.1%! 26.9%!

0%!10%!20%!30%!40%!50%!60%!70%!

New Markets Representing the New Wave of Companies Considering Hosting Digital Assets in Ireland!

Key Takeaways:

- We need to identify the key ‘C-level’ personnel responsible for making decisions, which will ensure companies provide the right type of information and data that is most important to them: cost, connectivity and policy (Pipes/Policy)

- In order for Ireland to be top-of-mind, we need to address the competitive pricing issues related to space, power and connectivity – the three key elements that serve as the basis for hosting decisions.

- While U.S. companies are targeting technology, healthcare and financial entities, the perception is that key drivers for demand are data storage needs, content and big data analytics. Customer applications and data protection are also high on the list of the types of technology that leverage data center/colocation/hosting services.

- With customer demand and proximity to fiber networks leading the way, the least important issues were heeding market demands along with the cost of power. However, costs overall are a key issue, and as we learned in the Strategic Opportunity and Drivers Survey, costs associated with power could hinder large deals.

Figure 5B: Key Growth Drivers [Irish Market Survey] The majority of respondents selected cloud solution and SaaS (65.4%) companies as the next wave of digital asset hosting in Ireland.  

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IN SUMMARY

58% of U.S. based companies are considering expansion into Europe over the next 12 months; however, 51 of respondents are not considering Ireland as a digital asset hosting location. For Ireland to flourish as a prime location to host digital assets, it must overcome these pricing issues. Although energy costs are high, Ireland has a pro-business government model that includes lower tax rates and EU Data Protection compliant legislation. Only the Irish-based respondents recognized Ireland’s pro-business government policies; these policies are not being communicated globally. Emphasizing the strength of these policies, coupled with positioning Ireland as a key European hub, will be fundamental to Ireland's success in the digital asset hosting ecosystem. Ireland's ability to offer direct connectivity, bypassing the London Metro area, attributes to its strength as a digital asset hosting location. With the prevalence of data centers along with colocation solutions, Ireland is able to meet the market demand from a real estate perspective; however, the relatively high cost of power is a hindrance to winning business. Finally, the country’s policies are cutting-edge and have not been communicated effectively – yet. If we make certain our connectivity, power costs and policies are well understood and meet or exceed market expectations, we can shift the conversation from Europe to ‘Ireland as Europe,’ in a much more effective way.