451 Research: CentriLogic continues growth on the back of expanding services and cloud

451 Research Group releases industry impact report on CentriLogic

Analyst: Carl Brooks – 13 Aug, 2015

Following the 2014 acquisition of Adveniat, which allowed CentriLogic into new overseas territory in the US Virgin Islands, the company has continued to grow its fleet of managed infrastructure services and customers, and expects to see growth rates of around 30% for 2015, as it has for the last several years. The company says this is due to a sustained appetite from new and existing customers for more services and infrastructure, as well as its ability to add new capacity and capabilities, and to operate an efficient IT services business.

The 451 Take

CentriLogic is a good example of a midsize hosting provider that is able to capitalize on both the appetite for cloud-like environments and services, and the thirst for IT services and operations support over and above the raw infrastructure. Its growth reflects its ability to meet demand as it comes. As it gets larger, it will face perennial challenges in maintaining efficient operations and talent, and it still faces a challenge as the infrastructure markets mature and services overtake facilities, but in the context of the managed infrastructure and cloud markets, it is a company in the right place at the right time.

Context

Founded in 2007, CentriLogic is a full-service managed infrastructure and cloud provider with a portfolio that covers everything from colocation to public cloud (via spinoff IaaS provider Mothership1). It has been on a steady growth trajectory that has paralleled the growth of the managed infrastructure market thanks to a strategy of high-touch support and being technology-forward (CentriLogic launched its first iteration of IaaS in 2010) as it looks for regional expansions and customers that will grow their spending. The company says it practices what it calls ‘hybrid adaptive hosting,’ meaning it will mix and match whatever kind of hosting environment the customer requires, and it has productized a lot of the more common implementations. Like most midsize hosters in the field, CentriLogic says a very large portion of new business explicitly comes in the form of hosted private cloud and hybrid cloud, where customers ask for links and control planes that span existing datacenters with new hosted cloud environments. It also uses compliance services as a selling point – a fairly common and still strong differentiator versus public clouds.

In terms of regional strategy, CentriLogic puts workloads where it can optimize price to performance, citing North Carolina as an area substantially cheaper than the slightly more northern global datacenter hub in Virginia, but now with enough connectivity and power on demand to support efficient, high-density cloud deployments.

Strategy

This year, CentriLogic completed the second phase of expansion in its North Carolina facility specifically to support managed cloud infrastructure, the end stage of a $4m investment begun in 2014 following the 2013 purchase of Dacentec. In the UK, it made significant network capacity upgrades to its Bracknell facility and gained G-Cloud 6 certification, meaning it can sell to UK public sector organizations – it also uses that certification as a proof point to private customers with high security concerns. Most recently, CentriLogic gained PCI DSS 3.0 accreditation, which means that it can use its more efficient IaaS platform for PCI-compliant workloads. It says that the next expansions may come on the West Coast of the US or in Canada, but has not announced specifics yet, and indicates that it is open to more acquisitions to do so. It’s in a good place, since the dedicated managed infrastructure and cloud market is expected to reach $80bn by the end of 2016, with a CAGR well over 20% for most segments.

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