In a change of heart that caused dismay for the City fathers of the proposed site, global financial services firm HSBC bailed on its own plans to build a new £300m data center in North Yorkshire, citing an internal review and claiming that its data center needs could be met by the existing infrastructure.

The decision was announced – a week before Christmas. Granted, no ground had been broken at the facility on the edge of the historic city of York, and no redundancies were announced as a result.

But locals had been keyed up by the prospect of 2,000 construction jobs and up to 100 full-time positions once the facility was online. Indeed, a report to the City of York Council’s planning committee, when the plans were given the green light in February 2009, enthused that the data center would create “substantial socioeconomic benefits” in the locale, both during the construction phase and beyond.

York Burghers must now find an alternative use for the 30-acre site on the Vangarde Business Park at Monks Cross, located on the outskirts of the city, which had been earmarked for the proposed 325,000 sq meter site. The site was to become both a key centre for the bank to process banking transactions, but also something of a green IT showcase; for instance, using the excess heat produced to heat a local swimming pool.

HSBC’s chief technology and services officer, Ken Harvey, said in a statement: “We have determined we can meet our foreseeable short- and medium-term European business needs with this expanded capacity and through better utilisation of our global data center network.”

Multinational HSBC has existing data centers in Hong Kong, Chicago and Mexico City, and has recently opened new UK data centers in Hertfordshire, with a Leeds/West Yorkshire base due to become operational midyear.

Stressing that HSBC had invested heavily in its data centers in the UK since 2007, the news is still a definite blow for the area. When touting its plans last year, HSBC had said that when the data center was complete it would be paired with the other site in Yorkshire to become its “largest and most important data center facility in the world”.

In these times, bankers being careful with their expenditure is a sensible course of action. “One of the reasons why we remain a strong, independent organisation is that we are prudent with our expenditures. This was not an easy decision, but it was the right [one] for our business,” explained Harvey. (HSBC is one of the few banks that did not take taxpayer rescue money at the height of the late 2008 global credit crunch.)

HSBC declined to add any information to what it had said in its announcement, but the decision clearly underlines that data center construction is more about pounds, shillings and pence than green economics. “The luxury of consolidating sites and building one mega data center in the UK would have reduced operational costs – including losing some more UK jobs – but at a huge capital expenditure,” points out Ian Bitterlin, chief technical officer at Prism Power, a switchgear supplier.

“With the current focus on government financial intervention in the banking sector, it actually makes good PR sense to be seen as prudent and making do with existing data centers. And while it is a shame for the new Yorkshire development, many HSBC employees in other parts of the UK will be thinking that Christmas just came twice,” says Bitterlin.

Technology would also have played a part here, he believes. “It would appear from even the most cursory inspection that HSBC has more than enough raised floor in the UK and overseas, especially if it buys the latest IT hardware and virtualises it heavily – the power and cooling reductions of new hardware are substantial.”

In any case, HSBC will have to look to maximise throughput out of its existing plant, which would make it hardly unique among data center operators. To do this, believes Andrew Barnes, senior vice president of corporate development at business continuity shop Neverfail, the firm will be looking to determine exactly which applications are business critical and which systems can afford some level of downtime.

Prioritising these applications to ensure critical data is available around the clock will be crucial. “Running all applications and data from one data center gives businesses a great opportunity to determine exactly which applications are business-critical and which systems can afford some level of downtime,” says Barnes. “In a single data center, businesses can still create a resilient environment that not only meets the needs of the business, but also the IT budget, by prioritising which applications need to function around the clock.”

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Keywords: HSBC, data center construction, York data center