The data center that M&T Bank Corp. is moving into was built to ward off failure - and to handle much more growth.
The Amherst complex is served by power lines that connect to two separate National Grid substations. If both external power sources are disrupted, hulking on-site generators take over. The structure is sturdy enough to withstand most tornadoes and earthquakes.
Data centers are big on redundancy to protect information from being lost and to prevent service breakdowns. M&T even has a backup data center – in Delaware.
The Buffalo Niagara region has a pair of significant private-sector data center projects taking shape: M&T’s project and another by Yahoo. The M&T facility, built by HSBC in 2001, is being equipped to handle more growth at the bank.
The Yahoo facility is a prototype for centers in similar climates. It is cooled only by outside conditions and has no air-conditioning systems.
Both are being heavily subsidized with tax breaks, which has stirred controversy because the projects generate so few jobs. In the case of the Yahoo center, tax breaks and low-cost power have added up to more than $2 million per job created.
Advocates say the centers bring more than jobs to the region. They bring attention and prestige that could attract more projects, and they generate massive spending to keep operating and up-to-date.
Over the course of a decade, M&T expects to pour about $100 million into its new data center, as well as other space in Amherst that will be renovated. In the Town of Lockport, Yahoo is preparing for a $170 million expansion of a $150 million data center complex that debuted in 2009.
M&T is steadily moving into its fortress-like data center on Park Club Lane in Amherst, built in 2001 by HSBC.
Most of the concrete building is below grade, with thick walls and a berm protecting the exterior. The setting is ultra-secure because the technology being installed inside is at the high-tech heart of M&T’s operations, supporting everything from customer deposit information, to consumer access to the bank’s website, to company email.
“Our data center services our entire footprint,” said Mark C. Kumro, M&T’s group vice president of technology infrastructure operations. “It’s not like this is a regional data center just for Buffalo branches, Buffalo customers. It services the whole corporation.”
Buffalo-based M&T already has a data center in the region, on Commerce Drive in Amherst. When the center debuted in 1991, M&T had 115 branches and $9 billion in assets. Today, M&T has 725 branches and $83 billion in assets, and cutting-edge technology throughout.
M&T essentially outgrew its Commerce Drive data center. The time had come to upgrade the technology, and to do that more electricity was needed, Kumro said. “As technology has grown and expanded, you’re doing more computing in a smaller square foot. But you’re consuming more power to do that. So the linchpin point has been power.”
M&T’s appetite for data storage is growing, as electronic statements are imaged and stored, said Frederick M. Krajacic, who oversees construction and property management in M&T’s corporate services division. “All that has to sit someplace, and it’s going to sit here and be replicated down in Delaware.”
The Park Club Lane location became available after HSBC opted to consolidate its data center operations in Illinois.
“When you look at data centers, there’s not a lot of supply, and not a lot of demand,” said Keith M. Belanger, senior vice president in M&T’s corporate services division. “There’s a very thin market. It was fortunate for HSBC and fortunate for us that their need and our need lined up nicely.” M&T bought the property in 2011 for nearly $9 million.
Meanwhile, in Baltimore, M&T replaced a backup data center the bank had acquired through buying Allfirst. In that situation, M&T built a new data center – $30 million for construction and technology – in Millsboro, Del. “You don’t want to have all your eggs in one basket, from a geography standpoint,” Belanger said.
M&T completed the Delaware project last year and plans to finish moving into the new Amherst data center by later next year.
“The two of them should hopefully last us another 20 years,” Belanger said. “You don’t do a lot of these in a career, and we’ll have done two within a short period of time, but they should set us up very well for the future.”
About 40 employees work in M&T’s data center on Commerce Drive, and they will move to the Park Club Lane site.
M&T plans to spend $19 million this year on the Park Club Lane site, and $11 million next year to install equipment and relocate operations from Commerce Drive. In all, M&T plans to spend $105 million over 10 years on both the data center and renovating space at the Commerce Drive site that the bank’s data center will leave.
When M&T decided to pour millions into its new Amherst and Delaware data centers, it did so with growth in mind, Krajacic said.
“We didn’t want to be in a position where we could not grow in a significant step at a point in the future because our data center was too small to accommodate that next level of growth,” he said. “So this is really a long, long-term strategic investment to allow for bank growth of almost any size.”
M&T has received financial support for its investments. The Amherst Industrial Development Agency in 2011 approved $8.5 million in sales tax incentives, related to the renovation and technology improvements. M&T also assumed a payment-in-lieu-of-taxes agreement HSBC previously had with the Amherst IDA. And M&T was approved for three megawatts of low-cost hydropower from the New York Power Authority to support the project.
Yahoo’s warmer side
In the Town of Lockport, Yahoo’s East Coast data center resembles a series of chicken coops connected to each other. The unusual design for a high-tech operation has a practical purpose. The center proves that a data center need not feel chilly inside to run effectively.
“This data center is different in that it’s one of the first of its scale in the world to cool with just outside air year-round,” said Paul Bonaro, director of data center operations for the Eastern U.S. and Europe, Middle East and Africa. “A lot of computer rooms will use outside air when it’s cool out, and then convert to their air conditioning systems [in hot weather]. There’s a huge savings if you don’t have to buy those air conditioning systems and install them and maintain them. And there’s a huge energy savings operationally in not having to run them.”
The design allows for greater savings in costs and energy use. But do the higher-than-typical indoor temperatures put the computer systems at greater risk of failure?
“Three years of operating in these conditions have proven that the hardware failure rate is no different from any other Yahoo data center with a traditional setup,” Bonaro said.
Yahoo viewed Buffalo Niagara’s climate as an asset for its project.
“It’s not necessarily the real cold you’re after, it’s just being moderate in the summer,” Bonaro said. “Computers can tolerate quite a bit more than a typical data center would provide for them. A lot of data centers have a very strict environmental envelope they keep. This building expands on that, to the maximum allowable range by the manufacturer, not necessarily the industry conventional wisdom. So it kind of challenged a lot of that.”
Yahoo has 13 generators on site, ready to supply backup power if necessary. The company also has its own substation, transforming power it receives into the wattage its operations require.
Ninety full-time employees work at the Yahoo complex, a figure that includes a network operations center located on the property, as well as some contract workers and security personnel.
The California-based company plans a $170 million expansion at the Lockport site, including a call center that is expected to create 115 jobs. And Yahoo has bought land to allow for even more growth.
The company’s expansion has not come cheap. The Town of Lockport Industrial Development Agency recently approved a $30.5 million incentive package to assist with the $170 million expansion. The company is also receiving state tax credits and low-cost hydropower through the Power Authority.
Good Jobs First, a nonprofit organization based in Washington, D.C., put the incentives awarded to the 2009 Yahoo project on its list of 240 “megadeals” among projects with the highest costs per job, based on the incentives received per number of jobs projected to be created.
Good Jobs First used research by The Buffalo News from 2010 that showed the incentives for Yahoo added up to $258 million, including a sales tax exemption on construction material and equipment purchases, a 10-year local property tax abatement, and discounted power. That comes to almost $2.1 million in incentives per job.
Good Jobs First said the “megadeals” projects reflected incentives that were far out of proportion to the jobs they created. (New York State had 23 of the list’s 240 “megadeals,” second among all states.)
But the project’s defenders say Yahoo has delivered on its investment commitment, has been a good corporate citizen, and helps build the region’s profile in the quest to attract other employers.
Hiring for the data center has worked out well, Bonaro said. Yahoo has attracted facilities personnel who have worked in other industries.
As for information technology jobs, Yahoo has worked with area colleges, universities to find talent, he said, and Yahoo’s hiring continues with the expansion on the way.
“I think it speaks to how happy they are with what they’ve got, with the quality of the employees in the area,” Bonaro said.