Data Center Build vs Buy

colocation data center

IT industry analyst firm IDC reports that the digital universe is doubling in size every two years and that by 2020 the data we all produce and copy will reach 44 zettabytes, or 44 trillion gigabytes.

With this explosive growth, the need for additional storage space is always present. Companies are considering how to grow beyond the simple server closet and whether the best solution would be to build their own data center facility or outsource their equipment and data to a third-party colocation data center.

Although money is an important component in this decision, it is only one component along with reliability, scalability, security and others.

Initial Considerations

Even before you consider the benefits of building a single-tenant data storage facility vs moving to a multi-tenant, colocation data center, take these questions into consideration.

  • Are you willing and able to do what it takes to achieve 100% uptime?
    Do you understand the full spectrum of resources, expertise, capabilities, and money needed to maintain a 100% uptime? Any downtime can mean lost revenue, productivity and potential future business. In some cases, it can even cause businesses to go out of business.
  • What is the real cost of hiring additional employees?
    In addition to their basic salary, did you add benefits, vacation time, health insurance, ongoing education and other items into the cost of each new hire? Remember, you will need a team on staff 24/7 to ensure everything is running properly. And, in addition to technical experts to service your network infrastructure, you will also need staff to maintain the HVAC and security systems as well.
  • Are you required to comply with industry regulations?
    If your business is in healthcare, legal, financial services or other regulated industries, be sure to fully understand how your technology must be managed and maintained and how client data must be transmitted, stored and secured.
  • What is your time frame?
    When do you need the additional space, whether that is your own facility or a third-party data center, to be up and running? Is it one month from now, a year from now or five years from now? Consider that it typically takes 1-2 years to plan and build a new single tenant facility. Can you wait that long? An existing third-party data center can modify their facility to your specific needs and have the space available for you to move in in weeks.
  • Do you know how much capacity you will need?
    Not a guesstimate of capacity for the next year but capacity for the next 5-10 years. If your guess is high but you only end up filling a quarter of the space, your per rack cost will be extremely high. But, if your guess is low and you quickly run out of space, any cost savings you may have achieved will be lost.
  • Can you bear the full cost on your own?
    Above and beyond the cost to hire additional personnel, do you have the funds to pay for a new facility, hardware, utilities, connectivity, security, certifications, equipment upgrades, facility improvements, and general maintenance? In a single tenant environment, the total cost will be carried by you. In a multi-tenant data center, expenses are shared across the companies included.

Building A Data Center

Whether you choose to add additional square feet of space to your existing corporate office or construct a standalone building, there are three primary benefits to developing your own single-tenant data center facility.

  • Complete Control:
    Building a data center at your company’s corporate office or nearby, gives your team complete control over the physical environment, the network infrastructure and all hardware and software. You can limit access to anyone you would like, maintain the facility at a temperature of your choosing and decide when and how to make enhancements, conduct maintenance or upgrade any resources.
  • Little Chance of a Lost Lease:
    Having ownership of the facility helps to protect you from the danger of being forced out, which is possible when leasing space from a third-party provider.
  • Multi-Use Space:
    When considering a company’s growth and expansion plans, larger corporate office space is often acquired with the intent of “growing into” the rest of the building. That unused space can be transformed into a data center by upgrading the power and cooling infrastructure. Alternatively, building a standalone structure also gives you the opportunity to add additional office space which will enable your IT team to work next to the data center floor, decreasing the time it takes to get to the facility in an emergency or to maintain and upgrade equipment. It also decreases travel expenses.

Data Center Outsourcing

Both smaller companies with limited IT resources and large enterprises that are looking for new ways to allocate and manage the technology they already have can benefit from outsourcing their computing resources and data to a third-party data center. Besides the immediate cost savings of not having to build out a new facility and the ability to expand into a new space right away, there are additional advantages to consider.

  • Pay Over Time vs Paying Up Front:  
    Unlike building a data center where a large amount of cash will be needed up front to begin construction, choosing to utilize a third-party data center won’t require a large initial capital outlay, only a small predictable monthly fee for space and usage.
  • Resource Allocation as Needed:  
    There is no need to predict your capacity requirements well in advance and possibly get it wrong. Capacity can be scaled up quickly as usage or space needs increase, allowing you to pay for only the resources required. If your technology needs change and the resources are no longer needed, the capacity can quickly decrease so you are not paying for services which are not in use.
  • Greater Influence Over Physical Space and Utility Expenses: 
    Economies of scale also come into play when you consider the cost of the physical space, electricity, air conditioning and other infrastructure resources. A large data center provider with many corporate clients has significant leverage when it comes to negotiating additional savings on building materials and infrastructure expenses. These savings can be passed on to all the companies renting space.
  • Experienced IT Professionals: 
    A team of experienced IT professionals have been hired by the data center provider to monitor, maintain, secure and upgrade the facility, infrastructure, servers, cloud services and all other IT resources around the clock. This is not a side responsibility but their sole focus. They receive continuous education to ensure that they are up to date on the latest technology and that the facility is running at the highest level of efficiency.
  • Physical Security: 
    A standalone data center provides multiple layers of physical security, protecting the building and all contents around the clock. Biometric access not only at the building’s entrance but also to internal offices and cages ensures that only authorized personnel gain access to critical data. Video surveillance, redundant utilities, lack of windows, crash barriers at vehicle entry points, fire doors and secure air handing all help to ensure that client hardware and electronic data are stored in a facility where security is a top priority.
  • Carrier Neutral Providers:
    Some third-party data centers are carrier neutral – meaning that they welcome multiple providers of telecommunications and internet services. This enables their data center clients to select the service provider that meets their specific needs and budget. You can also change providers without needing to physically move servers to another facility.
  • Redundancy: 
    Data centers establish formal data redundancy plans where they manage their infrastructure, technology and carrier access to survive a variety of failure scenarios. Redundancy, or duplication of critical components like servers, network system components, and telecommunications links, ensures that a quick and smooth transition can be made to alternative resources should a failure occur.

As you can see, there are many factors to take into consideration when deciding whether building your own facility or leasing space with a data center provider is the right solution for you. Building your own data center is certainly not a quick and easy undertaking but it does give you total control. On the other hand, the ability to seamlessly scale as needed, maintain a continuous 100% uptime and simply move between data carriers as requirements change make a powerful case for selecting the third-party data center option.

Regardless of the size of your company, it is essential to do an in-depth analysis of both your current business and technology needs, your future goals and available resources to make a fully informed decision.