April 08, 2014
Buy, Build or Lease
OK, it's been determined that your company has outgrown its data processing capacity and you've been tasked with creating additional data center space and physical infrastructure. Performing an evaluation and selecting among the various leasing and ownership options will require expertise in finance, real estate, facilities, and information technology. While capital costs are always a concern, ongoing operational expenses are gaining equal consideration. The right team - consisting of real estate, design, and construction experts - whether in house or contracted, will ensure you are empowered to make the best choices in delivering a solution to meet your information technology business continuity needs.
Creating a master plan including the overall goals and requirements of the project is an essential starting point for a successful data center. The master plan for a company with no disaster recovery facility should look very different than a plan utilizing disaster recovery space. A complete master plan addresses not only the performance requirements of the data center, but also the operational and staffing characteristics. Master planning helps avoid the tendency to lose sight of business objectives during design phases of a project and will ensure the completed project meets the overall business needs of your organization. Facilities and information technology staff should combine forces to thoroughly develop, and address, mutually understood goals. This is an ideal time to bring in real estate, design and construction professionals to lend their expertise.
Build, Own, and Operate
Creating new data center space that is owned and operated, typically takes one of several forms: green field construction, expansions of existing data center space, or repurposing an existing or new facility. Economic and spending constraints often drive businesses to repurpose and consume existing building space for use as a data center. Conducting an architectural and engineering feasibility analysis of the space will provide a true understanding of the project scope, particularly related to the cost, duration and risks of the project. A design and construction team with experience working in live production environments will mitigate associated risks and ensure a smooth project.
For those choosing to lease data center space, a number of attractive options exist. In traditional build-to-suit data center development, the tenant can lease a facility built to their exact specifications. Real estate investment companies often view data centers - particularly those with longer duration leases - as attractive investment properties, making this option readily accessible in many instances. This option provides the tenant most of the operational benefits of ownership, without the financial commitment.
Colocation is the general term used to describe "ready for lease" or "rack ready" data center space, complete with power, cooling, connectivity, bandwidth and security. In retail colocation, server space can be leased in as small an increment as a partial rack, or in increments of one or more server racks. For companies highly dependent upon data availability as a business function, leasing space in such a facility is an attractive option, particularly where speed of deployment is a required. Data centers typically demand ten times the amount of power per square foot and twice the floor loading capacity of commercial office space - often limiting factors of repurposing commercial office space. Given the costs required to make these types of space improvements, it's arguable that for smaller data center requirements the economies of scale tip in favor of a retail colocation environment - provided of course that this delivery method meets the other business requirements you've identified during master planning.
Similarly, wholesale colocation, is tailored toward tenants whose needs are much larger than what is typically served in a retail environment. Wholesale data center providers physically divide facilities into pods of typically 5,000 square feet or more. In most types of pod architecture, tenants benefit from their own dedicated power distribution, cooling, carrier services, and physical security. While some wholesale colocation providers build on a platform of "you can have it your way", others capitalize on the benefits of standardization by building each pod identically. Both strategies have their merit and serve specific client needs.
Data center outsourcing is a growing trend, as many companies are recognizing benefits like speed of deployment and avoiding stranding capital in property ownership. Planning, designing and building a data center can take up to 18 months, by comparison to outsourcing, which may be a three to six month process, to define the need, solicit proposals and make a selection. Whether owning or leasing, economies of scale make building and operating one large data center far less expensive than the combined cost of building and operating ten smaller ones.
Article originally appeared in Colorado Real Estate Journal