Are data centres financially affordable?

Are data centres financially affordable?

Resilience, reliability and scalability are important considerations.

Written by Phil Alsop, Editor, DCS Europe Published Wednesday, 01 January 2020 23:28

There are plenty of in-house versus colocation data centre cost comparison calculators and examples available via a quick internet search. While plenty of them may well be unsurprisingly positive towards the type of services offered by their creators, there seems little doubt that building, owning and operating your own data centre facility comes at a premium cost (at least in the short to mid-term) when compared to using a colocation data centre.

That’s not to say that choosing the in-house option is unaffordable. Far from it. Obviously, the definition of a data centre can vary dramatically. At one end of the scale, a cupboard in the office basement, big enough to house the required servers and storage, and connected to the outside world, hopefully with a UPS and some kind of air conditioning/cooling, can answer to the name of ‘data centre’. And it won’t break the bank – we’re talking tens of thousands here at the very most.

At the other end of the scale, a large, ‘all singing, all dancing’, multi-tiered data centre facility is going to cost many, many millions (probably hundreds of them) to build.

The massive price differential between the two is made up of not just the huge difference in size, but also the quantity and quality of the data centre facility components, as well as outside connectivity options and the power supply. Resilience, reliability and scalability are important considerations when it comes to the build. And then there’s the location to consider as well.

There is one silver lining when it comes to building big. The larger the data centre, the larger the economy of scale, in terms of the cost of providing 1kw of IT capacity.

Of course, once you’ve paid out the necessary capital to build your own data centre, there are the ongoing running costs – people and power in the main – and, don’t forget, the need to upgrade the facility along the way. Always assuming you can locate the right individual(s), with the right skills to keep the data centre operating efficiently, let alone carrying out upgrade projects.

Spend a half hour trawling data centre build costs on the internet and you can be bamboozled by all manner of cost models and things to think about. What all of them demonstrate is that owning and operating your own data centre, let alone keeping it modernised, is not an inexpensive exercise. Affordable – possibly? But is there a better way of spending the money, than on bricks, mortar, cabinets, racks, UPS, cooling, cabling, raised floors, monitoring equipment, fire suppression, physical security, personnel and much, much more?

Almost certainly.

When it comes to car ownership, more and more individuals are choosing not to purchase a brand new vehicle, but rather pay a small deposit, and then a fixed monthly fee for, typically, three years’ access to such a car, and then hand it back and, using the same method, acquire another brand new means of transport. So, every three years, you’ll have the very latest technology available to you. Okay, over the long term, you might end up paying more for the three year leases than you would to buy one car, but set that against the absence of any servicing costs – especially as the vehicle starts to age – and that technology access.

Furthermore, thanks to the monthly payment option, plenty of folks are able to afford a make and model of car which would be well out of their price range, were they required to pay the full purchase price up front.

Right now, a similar change is taking place when it comes to the decision to own or ‘rent’ data centre space, and IT infrastructure and applications. Colocation, cloud and managed services all offer the attraction of low to zero capital investment, a fixed monthly cost, and access to the very latest technology – technology which, for many, would be unaffordable if they had to purchase it outright on day one.

And it is this last benefit that is, perhaps, the most attractive. How many times do employees think of a ‘nice to do’ project which barely gets beyond the drawing board or brainstorming session, as the reality of the data centre and IT infrastructure cost required to make it happen becomes an unsurmountable obstacle?

Similarly, how many projects fail, or don’t even start, because of the time taken to provision the required data centre and IT infrastructure, regardless of the cost? Weeks and then months go by, and when the infrastructure is nearly ready, the business opportunity has disappeared – maybe a competitor got there first?

The traditional way of accessing a data centre – building or buying, then owning and maintaining a suitable facility – could well be affordable to many a business. Less likely if you’re in start-up mode, with backers reluctant to make such a large capital investment against an uncertain return.

Happy to report, a modern, digital data centre is almost certainly affordable for any business, via colocation, cloud and managed services providers. What’s more, this affordability comes with the added benefits of scalability, reliability, agility and, hopefully this makes sense, absolute modernity. The providers of these services are in a highly competitive market, so they’re committed to a programme of continuous facility/service improvement.

In ending, we must acknowledge that in-house data centres, colocation facilities, cloud and managed services is a very much like the world of, not just automobiles, but planes and trains as well. End users need to understand what each offers and then choose the most appropriate solution for any given situation. In the same way that travel has become seriously democratised (whatever the impact on the planet – a discussion for another day?!), data centres have never been more affordable than right now. Whether you need to own your own? Well that’s the million dollar (maybe more, maybe less!) question!