Indonesian Data Center Market Study

Build · Compete · Grow
Indonesian
Data Center Market
Study
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Ipsos' Confidential and Proprietary information
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without the prior written consent of Ipsos.

Build · Compete · Growindonesia.bc@ipsos.com2
Driven by growth in internet and smartphone penetration, e-commerce is expected to continue growing at more
than 20% per annum into 2020. This trend is expected to rapidly increase demand for cloud services, with a
corresponding increase in the requirement for new Data Center (‘DC’) capacity
Indonesia’s DC construction market is expected to grow by 11.4% a year between now and 2020, supported by
the expansion of colocation and managed hosting services provided by key DC suppliers to both large enterprises
and SMEs
Technology companies are racing to deliver more advanced equipment (green data center, modular data center,
high density, software-defined data center), with consequent impacts on overall Data Center design
In terms of total DC market size, telco/DC providers account for 87% of the market, followed by government
agencies (6%) and financial services (3%)
It is perceived that a ‘single point of contact’ together with a strong client portfolio and reliable locally-based
backup are key considerations for DC owner/customer when choosing their main contractor.
EXECUTIVE SUMMARY

THREE MAIN IMPLICATIONS FOR DC CONSTRUCTION VENDORS
Segment Focus – Page #15
for more detail
Different DC solutions –
Page #16 for more detail
Project Delivery – Page
#17 for more detail
 Tier III is expected to be the most valuable market for DC construction. DC construction vendors should be able to
capture this opportunity by approaching DC service providers or government agencies/state owned enterprises
who want to build or upgrade DC facilities. DC construction vendors also need to be able to find the right
partners who have capabilities / experience in building Tier III centers.
 There is a clear customer demand for end-to-end solutions. DC construction vendors therefore need to be able
to build capabilities or engage with multiple vendors to provide these solutions.
 Although many system integrators claim they are able to provide end-to-end solutions, in fact, the actual
number who can do this is small and mainly comprised of big players such as IBM, HP and Huawei. These
providers are able to provide a ‘full spectrum’ range of services starting from site assessment, design & build, IT
infrastructure, and DC management services and support.
 As most customers prefer to engage with a single point of contact, DC construction vendors can act as a DC
consultant/system integrator, having special access to customer. In terms of engaging with other parties, DC
construction vendors might engage with other system integrators who can manage the rest of the suppliers or
alternatively the vendor might directly recruit suppliers for each sub-component. The latter option could
potentially generate better margin as long as the vendor possesses good project management and supplier
management capabilities.

Driven by growth in internet and smartphone penetration, e-commerce is expected to continue growing at more than 20%
per annum into 2020. This trend is expected to create new demand for cloud services...
INTERNET PENETRATION, E-COMMERCE, AND DATA CENTER
Source: BMI, Technavio, Trade Interviews, Ipsos BC Analysis
The growing need for cloud services is correlated with the increase in the wider e-commerce market
 Surging internet penetration covering 40% of the population as of 2015 and estimated to reach 46% by 2019.
 Increasing adoption of smartphones, with users expected to rise from 55 million in 2015 to 92 million in 2019,
will continue to support the growth of the country’s e-commerce market, driving e-commerce activity through
mobile devices.
Of the c260 million Indonesian population,
• 39% are active internet users
• 30% are active social media users
• 25% have smartphones
CAGR
(‘16 – ’20)
9.5%
11.6%
CAGR:21.7%
8.8%CAGR:46.4%
1,800 2,600
4,610
5,650
12,390
2013 2014 2015 2016 2020F
E-commerce Market Size (USD Mn)

The increased growth of the cloud services market, driven by e-commerce and the demands of SMEs for low-cost
storage solution, will in turn drive increased demand for Data Center construction
DATA CENTER MARKET OVERVIEW IN INDONESIA
Source: BMI, Technavio, Trade Interviews, Ipsos BC Analysis
 There is an opportunity for cloud solutions to rapidly grow in popularity as the supply of solutions increases
alongside network and Data Center investment
 Software-as-a-service (SaaS) is expected to be the largest component of the cloud market over the medium
term due to a large adoption of cost-efficient cloud solutions by SMEs
Indonesia Data Center Market
(billions USD)
1.1
1.4
1.8
2.3
2.8
3.2
2015e 2016e 2017f 2018f 2019f 2020f
CAGR: 24.65%
Cloud Computing Spending in Indonesia
(millions USD)
188.0
239.1
307.5
400.0
511.3
637.6
2015e 2016e 2017f 2018f 2019f 2020f
CAGR: 27.67%
1 USD = 13,300 IDR 1 USD = 13,300 IDR

The growth of the Data Center Market will inevitably create demand for DC construction projects
DC CONSTRUCTION: MARKET SIZE
Source: Trade Interviews, secondary research, Ipsos BC Analysis
Indonesia Data Center Construction Market
Size by square meters (in thousands)
• Indonesia’s DC construction market is expected to grow at 11.4% a year. The growth will be mainly supported by the growing of DC
provider services who provide colocation and managed hosting services for both large enterprises and SMEs. Other industries, such as
financial services, telecoms, and government agencies could be requiring new DC constructions for reasons of regulatory compliance.
• Most upcoming facilities, especially for DC service providers, are expected to be of Tier 3 or Tier 4 standards, boosting the overall
market value considerably.
• The figures shown above already include new construction, renovation, and upgrade. Innovations in technology in the DC infrastructure
space will prompt many enterprises to renovate their data centers to make their IT environment more ecofriendly, reducing electricity
costs. These new technologies usually deliver reductions in operating costs significant enough to justify the additional investment.
170
197
226
259
296
337
2015 2016 2017 2018 2019 2020
Indonesia Data Center Construction Market Size
by values (in trillions Rupiah)
1.5 1.7
2.0
2.2
2.5
2016 2017 2018 2019 2020
CAGR: 11.4% CAGR: 10.64%

Technology companies race to deliver more advanced equipment, impacting on Data Center designs
KEY MARKET TRENDS IN DATA CENTER CONSTRUCTION
Source: Trade Interview, Secondary Research
KEY TRENDS
Construction of Green Data Center
 DC customers are seeking to build data centers
that consume significantly less power overall.
This requires energy efficient IT, power, and
cooling infrastructure. For example, new
cooling solutions such as liquid-based cooling
technology and In-Row cooling will optimize
results while using less power.
High Density
 High density data center design will
become increasingly important as
technology continues to advance
 There will be increased demand for
infrastructure management (‘DCIM’)
software for real-time monitoring and
management of DC infrastructure
Implementation of SDDCs
 By using virtualization of the physical
infrastructure combined with intelligent
software systems, efficiency will improve,
costs will be lower, availability higher and
security will be better.
Modular Data Center
 The idea of a Modular Data Center is for
mobility and flexibility. Modular Data
Centers can be preferable for certain
cases, for example, provision in rural areas
as part of e-government initiatives, or
enabling incremental capacity expansion
by Data Center providers.

Multiple stakeholders are involved in a Data Center construction project, but customers prefer to engage with a single
point of contact: usually, this will be a system integrator
INDUSTRY STRUCTURE AND KEY STAKEHOLDERS
Source: Trade Interviews, Ipsos BC Analysis
Electric
Owner/User
DC Sub Contractor 1
HVAC
DC Consultant Civil Consultant
DC Implementor
(Main Contractor)
 Some DC construction projects utilise a tri-partite structure with
DC consultant, civil construction consultant, and DC main
contractor especially for government projects and new DC ‘green
field’ projects.
 DC Consultants are a single point of contact for the DC
owner/user, and commonly provide DC consultancy and design.
Most of the big DC consultants such as IBM and HP often have
dual roles (design and implementation) at the same time in a
project.
 DC implementors act as the main contractor, dealing with several
vendors. Critical success factors for this role are excellent project
management and vendor management capabilities.
 Depending on the project and the vendor, some DC sub-
contractors can also independently conduct design in addition to
implementation for their particular specialized sub-component of
a DC project. This vendor could be the manufacturer or distributor
of the relevant product.
DC Construction Ecosystem
DC Sub Contractor 2 DC Sub Contractor 3
Renovation &
Architect
Fire Suppression DCIM
2
1
3
4
1
2
3
4

While there are various versions of project delivery model, the procurement process is mostly needed at pre-construction
and construction implementation stage
PROCURE-DESIGN-BUILD
• Develop facility
criteria and Owner
Requirements
Data Center Facility Infrastructure Project
Pre-design
Development
Pre-construction Design
Construction
Implementation
Post
Construction
Key Activity
Key Attributes
Owner Consultant Designer System
Implementor
Vendor
Key
Stakeholders
• Kilowatts/Rack
• Systems Capacities
• System Redundancy
• Maximum Utilization
of Space
• Infrastructure Layout
• Specify all components
• Request pricing from
vendors
• Recommend qualified
products
• Finalize budgets
• Coordinate delivery
• List of components’
prices
• Project
documentation
• Architectural,
Structural, Civil and
M&E Construction
Documents
• Local Jurisdiction
Permitting
• Project Schedules
• Construction
Management
• Contract Procurement
• Mechanical Scope
• Electrical Scope
• Architectural Scope
• Fire System Scope
• DCIM Scope
• Documentation/O&M
Manuals.
• Customer Support.
• Routine Preventative
Maintenance
• Inspection, testing,
commissioning, and
training
Legends

EXAMPLES OF LEADING SYSTEM INTEGRATORS IN INDONESIA
Emerson data center was
spun off from Emerson
holdings, and is in
partnership with DKSH
Indonesia as their
product principal.
Formed in the late
1960s, Jaya Teknik is part
of the group Jaya
Konstruksi which is one
of the leading civil
contractors in Indonesia.
Jaya teknik distribute
Emerson’s Liebert in
indonesia
Source: Trade Interviews, secondary research
DKSH – Emerson Jaya Teknik HP IndonesiaAPC SchneiderIBM Indonesia
IBM is one of the global
leaders in information
technology and services.
IBM has designed and
delivered more than 1,000
modular data centers for
customers around the
globe.
APC by Schneider Electric,
a global leader in critical
power and cooling
services, provides
industry leading
hardware, software and
services, designed to
ensure availability and
higher energy efficiency.
HP specializes in
consulting, design,
implementation and
assurance services for
data centers. They design
and build custom or
modular, multi-tier
datacenters. They have
designed over 65 million
square feet of data
center space around the
globe.

EXAMPLES OF OTHER PROMINENT SYSTEM INTEGRATORS IN INDONESIA
Source: Trade Interviews, secondary research
Berca
Hardayaperkasa
Teracom
International
Daya Cipta
Mandiri
Prastiwahyu
Packet SystemsBina Data MandiriSiemens IndonesiaMustika Memadata

In terms of total DC market size, telco/DC providers account for 87% of the market, followed by government agencies (6%),
and financial services (3%)...
CUSTOMER SEGMENTATION
Data Center Market Size split by Customer
Type (in sqm)
 Telcos/DC service providers account for the majority of the
market and this is expected to increase in the next couple of years
 Colocation and/or IT managed services (i.e. web hosting, mail
server, virtual private server) will attract SMEs to outsource
their IT infrastructure to them in order to reduce their capital
expenditure and eliminate maintenance cost.
 Government constitutes the second largest part of the market
 Government agencies are leveraging the advances of
technology to redefine their business and provide improved
citizen services. All provinces in Indonesia are encouraged to
implement e-government, requiring structures such as data
centers.
 Other highly regulated industries such as banking and energy are
also key DC customers
 Regulations push these industries to invest and build their
own DC not only for main operations but also for disaster
recovery purposes.
170,000
12,000
6,000
4,000
2,000
2,500
Telco/DC Provider Government
Financial Services Energy
Manufacturing Other Enterprises

DISTRIBUTION OF THE MAIN DATA CENTER CLUSTERS IN INDONESIA
 Jakarta is still the most preferred location for DC facilities since it is the most accessible from a logistic perspective for both suppliers
(vendors/suppliers) and customers (enterprises) and does of course contain a disproportionate number of key headquarters and institutions
 DC providers are starting to establish new DCs outside Jakarta or even outside Java for some considerations
 Electrical power source is the key for DC facilities. Therefore, they look for the most convenient location where provides stable power (e.g.
West Java such as Cibitung or Bogor are preferable since there are a lot of energy source and close distance with Jakarta
 Balikpapan has quite significant DC facilities since the location is considered at very low risk of earthquake
Jakarta: 73,270 sqm
West Java: 20,537 sqm
Surabaya: 14,600 sqm
Balikpapan: 40,606 sqm
Pekanbaru: 4,500 sqm
Batam: 1,300 sqm
Bali: 7,000 sqm
Medan: 100 sqm
Palembang: 100 sqm

Single point of contact together with credible client portfolio and strong local service and support are key
considerations for DC customers when choosing their main contractor
CONSIDERATION POINTS
Source: Trade Interviews, Ipsos BC Analysis
Single point of contact Local support team including
vendor capabilities (product's
quality)
Having a single point of contact is one of
the most important criteria for DC
owners/customers in selecting who will
be their main contractor. Customers
prefer to engage with the minimum
number of parties possible and tend to
choose a main contractor that has strong
project management and vendor
management capabilities.
It is important for any DC contractors to have
adequate and strong local execution team
since DC constructions require long term
relationship between the owner and the
contractor. By having sufficient local support
team, requests and communication could be
accommodated faster and easier. In addition,
owner choices tend to be driven more by
product brand than by vendor brand.
i
Company’s Portfolio
The company’s client portfolio is
considered to be an important factor in
assessing the right partner for the DC
customer. A credible portfolio helps
showcase their real world experience
and capabilities.

Tier III DC construction market is the highest among the four different tiers
MARKET OPPORTUNITY
1,532 377
38
Total Tier I Tier II Tier III Tier IV
2.48%
24.61%
64.82%
8.09%
993
124
In billions IDR
The Estimation of Total Market Size by Values for
Data Center Construction in 2016
 Tier III DC construction market is estimated to contribute
the most to the overall market size, accounting for almost
65%
 Most Tier III DC owners are DC service providers who provide
colocations and IT managed services to enterprises
 This estimation includes new DC construction, DC renovation
and Tier upgrade. It is expected that many DC service
providers who currently have Tier II will upgrade their facilities
to Tier III due to competition in retaining their customers or
even appealing new customers
 Apart from DC service providers, other type of customers who
require and build Tier III Data Centers are government
agencies or state owned companies that might have more
budgets and requirements
 The overall Tier II DC construction market might be lower
than Tier III but in terms of number of DC facilities, Tier II
would be still higher than Tier III since many customer types
would still prefer to build Tier II DC rather than invest more
billions just for Tier III DC

Many suppliers offer different solutions depends on their capabilities and partnership with other parties
MARKET OPPORTUNITY
 Data Center Assessment
 Site Assessment
 Infrastructure Assessment
 Operational Assessment
 DC Consultancy
 Design and Development Consultancy
 Business Continuity Plan
 Disaster Recovery Plan
 Auditing - Operational and Procedure
 Training - Disaster Recovery Institute (DRI Indonesia)
 DC Design and Development
 Building, Data Center and Utility Design
 DC Infrastructure Design and Implementation
 IT Infrastructure (Server, Storage, Network)
 DC Operational
 DC Collocation/Managed Services
 Project Management
 Different suppliers/vendors have different DC solutions
depends on their capabilities
 Most of the suppliers/vendors only provide solutions limited to
particular sub-components of DC. For example, vendors such
as Dwi Mitra and Lapaslindo only provide M&E related
solutions. They partner with other vendors together to build
DC facilities.
 Other vendors such as IBM can offer end-to-end DC solutions
to their customers. Although they only have relatively small
local teams they engage closely with their partners/suppliers
to provide their solutions
 IT infrastructure hardware supplier expanding their services to
being a full spectrum DC supplier is more likely than the
reverse. For example, many DC facilities system integrator
(e.g. Packet System, Dimension Data, Berca) started their
business from IT infrastructure such as servers, storage, or
network and now act as a main contractor for DC facilities
constructions
end-to-end DC solutions

Most of the customers prefer to deal with a single point of contact to minimize communication complexity
MARKET OPPORTUNITY
Electric
Owner/User
DC Sub Contractor 1
HVAC
DC Consultant Civil Consultant
DC Implementor
(Main Contractor)
Example Project Delivery Model
DC Sub Contractor 2 DC Sub Contractor 3
Renovation &
Architect
Fire Suppression DCIM
 Many suppliers or vendors can act as a main contractor
or sub-contractor depending on project circumstances...
 Suppliers who can be a main contractor/project manager
for a relatively small DC construction might be just a sub-
contractor for the larger project
 Suppliers who have small number of technician or run out
of execution team might need to outsource their additional
team from their partners
 Large DC construction projects normally invite product
principal (e.g. Emerson, APC Schneider, IBM, HP) to
participate in the tender. Many small to medium system
integrators or distributors can find it difficult to be part of
the tender process.
 Most of the customers prefer to deal with single point of
contact
 Many IT infrastructure vendors, as trusted existing
suppliers of IT services, will often be the first preference of
their customers for supplying their DC facilities, even when
they might not have such capabilities.

YOUR IPSOS BUSINESS CONSULTING CONTACTS
Having opened our first office in 1994 in Hong Kong, and completed our first project in ASEAN in 1995, Ipsos Business Consulting is immensely proud of
its unique Asian heritage. With 20 years’ experience of the ASEAN market we offer clients the best geographical coverage and solid experience across
the region.
Douglas Cassidy
Head of Consulting
Jakarta Office
Douglas.Cassidy@ipsos.com
+62 21 527 7701 Ext. 168
Ipsos BC Jakarta - Indonesia
3rd Floor, Graha Arda, H.R. Rasuna Said Kav B-6, Jakarta, Indonesia 12910. Tel: +6221 5277 701. Fax: +6221 5277 702
Feri Kurniawan
Consulting Manager
Jakarta Office
Feri.kosasih@ipsos.com
+62 21 527 7701

Indonesian Data Center Market Study

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