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October 16, 2013

Sierra Data Centers Introduces Geographic Diversity with PoP in Akron, Ohio

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Sierra Data Centers Introduces Geographic Diversity with PoP in Akron, Ohio

Analyst: Michael Levy 14 Oct, 2013

Datacenter services provider Sierra Data Centers is pursuing an initiative to complement its company-owned datacenter in Pittsburgh by incorporating leased colocation capacity in geographically diverse locations into its footprint. This direct response to customer demand for capacity on separate power grids has brought Sierra to lease capacity with Fibertech Networks in Akron, Ohio. The suite will start at just 300 square feet, but Sierra anticipates the footprint will scale healthily. In addition to Sierra deploying a point of presence for its cloud platform in the Akron location, two of its colocation customers will be deploying hardware. Other locations that Sierra would like to expand into include Philadelphia; Harrisburg, Pennsylvania; and Oklahoma City.

Context
Bruce Freshwater, who previously founded InnovationsTech and NetServe365, founded sierra in 2006. The Pittsburgh-based company maintains four separate brands:
•Sierra w/o Wires: This is Sierra’s full outsourced IT offering that emphasizes remote management. This reaches up into the application layers with a software development practice that specializes in .NET, but also works with other languages.
•Sierra Data Centers: A datacenter services practice that offers colocation, managed services, and public and private IaaS.
•Sierra Connectivity: This is the company’s managed connectivity practice. Offerings include managed voice, data, hardware, Internet, and bill consolidation and auditing services.
•Sierra Media Services: A provider of digital media asset management and workflow automation. Offerings include media vaulting, transcoding, metadata analysis, content storage, search capabilities and case management. This unit primarily serves legal and educational institutions.

Sierra provides its multitude of services from a proprietary datacenter in Pittsburgh. The facility offers 4,500 square feet of usable raised-floor space that is at 20% capacity. Its 6.5MW of critical power are supported by UPS systems configured with 2N redundancy and diesel generators configured with N+1 redundancy. There are 17 carriers built into the datacenter, and Sierra leverages three of those to provide its own blended network. Thus far, Sierra has not received any institutional financing – it has been using personal funds exclusively. However, the company is interested in opportunities. In 2012, Sierra Data Centers experienced 31% Y/Y revenue growth.

Customers
Sierra Data Centers has 92 customers – both SMB and enterprise – that deploy 1.5 cabinets on average. Around 40-45% of clients are headquartered in Pittsburgh, and 70% leverage either managed or cloud services beyond colocation. The company has experienced uptake from healthcare, e-commerce, manufacturing, voice, biometric and streaming media providers. Sierra sees concentrations of out-of-region customers in California, Ohio and Louisiana.

Competition
Pittsburgh is home to an underserved multi-tenant datacenter market. With few competitors, Sierra sees little pricing pressure. The company purportedly only competes with SunGard Availability Services and Expedient Data Centers. We believe the company likely runs into Ascent Data, TeraSwitch Networks, zColo and 365 Main. Since the company’s primary competitors are managing a much larger, diverse footprint, Sierra emphasizes its locally oriented ‘one throat to choke’ high-touch service as a major differentiator.

The 451 Take
Sierra Data Centers stands out in this immature market with an impressive carrier density and 2N redundancy on its UPS systems. The company’s datacenter, though, is rather small, limiting its growth potential in the Pittsburgh market. Adding locations in other geographies, however, is a prudent move. We recommend that the company seek physical locations where it has clusters of customers – California, Oklahoma and Louisiana – to increase stickiness and hedge against local competition that may seek to wrestle customers away.

Sierra w/o Wires, Inc. and Sierra Data Centers, Inc., both founded in 2006, are leading Pittsburgh-based Information Technology service providers specializing in remote systems monitoring, remote systems management, cloud/virtual hosting, physical machine hosting, software development and hardware and software reselling. The Sierra companies provide services and support to customers across the United States and in four countries and meet mission critical computing needs and help customers to improve IT operations.