Panelists at Data Center World 2014 agreed that data center leadership and C-suite need to find a common language to align strategies better. (Photo: Bri Pennington)

Wag The Dog: Aligning Business and Data Center

Dear C-Suite,

We need to talk. We don’t know how much our data center is worth to the organization and cannot calculate return on investment. We not only have to align facilities and IT, but align the data center with business objectives. Communication is key, yet we speak different languages.

Thanks,

Your data center

Tuesday, day 2 of Data Center World in Orlando, saw a heated panel discussion on the role a data center plays in the overall business. “They’re the modern equivalent of railroad infrastructure,” said Compass Datacenters CEO Chris Crosby. “Data centers are the layer necessary for business today. It has moved from the basement to the boardroom.”

“There is a deep connection,” said Dennis Wenk, principal analyst at Symantec. “It is the foundation of the business service arm. If anything is interrupted, loses occur.”

C-suite doesn’t speak data center

In most instances, however, communication between the data center and the C-suite is inadequate, so business and data center strategies are not aligned. Panelists agreed that CIOs and CFOs don’t necessarily understand the data center, and vice versa.

“Just because you think you have a data center strategy in place doesn’t mean they do,” said Jake Sherrill, founder and CEO at Tier4Advisors. “The truth is the majority of strategies are poor. Pitfalls we see is the business expects IT to have the right strategy but doesn’t give IT visibility. IT is expected to reinvent the wheel on penny and nickel budgets. The biggest pitfall is poor communication.”

“Financial communication especially,” added Crosby. “Not many know the preferred method of communication with the C-suite.”

It is important to understand how communication goes with the CIO in particular. Do they want to see the data center in terms of capital payback? Return on investment? Net present value? Can an asset be written off? How about a tech refresh? There are many different variables.

“The tail doesn’t wag the dog,” said Derek Odegard, president and founder of CentricsIT. “It’s about the business driving the data center, not the data center driving the business. The chief financial officer does not understand the data center. It is not his or her job. The CFO says it’s the CIO’s job.”

Long-term data center planning futile

The data center is left to gauge the direction of the business in order to make its decisions (Will they acquire another company? Will they move into new services?). The way a business will go is often unpredictable, while technology changes at lightning speeds. The panel was in agreement that 15-year data center strategies were impossible in this climate.

“Capacity in small chunks is better,” Crosby said. “People talk of 15-year strategies, when we can’t see 6 months ahead.”

Financial concerns slow tech refreshes down

Capacity planning gets more complicated when tech refreshes are taken into consideration, themselves expensive and complicated projects. “Refresh schedules are rusted,” said Wenk. “We’re growing too quickly with no headroom.”

“People try to refresh every 3.5 years, but they always fall behind and employ an ‘if it ain’t broke, don’t fix it’ strategy,” said Odegard.

This can be dangerous, because downtime is costly, given the integral role of the data center. So you are playing a dangerous game if you are trying to maximize return on investment without crossing the line when old hardware finally fails.

But the technology moves so quickly, it’s often impossible to demonstrate that an asset has been fully depreciated, which makes it difficult to convince the C-suite to sign off on a refresh.

We’re in an age of just-in-time capacity, hybrid infrastructure and cloud. However, this has added complexity into the mix. It’s no longer about build vs. colo, but a discussion of aligning applications with infrastructure and aligning infrastructure with the business. The data center is the keystone of the service-enabled business. It is no longer in the basement, but now that everyone is in the same room, it’s time to have a discussion in a language everyone can speak.

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About the Author

Jason Verge is an Editor/Industry Analyst on the Data Center Knowledge team with a strong background in the data center and Web hosting industries. In the past he’s covered all things Internet Infrastructure, including cloud (IaaS, PaaS and SaaS), mass market hosting, managed hosting, enterprise IT spending trends and M&A. He writes about a range of topics at DCK, with an emphasis on cloud hosting.

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2 Comments

  1. The underlying root problem, imo, is that the data is not readily available at all times that illuminates infrastructure utilization as it relates to revenue - put another way, the iCOGS (infrastructure Cost of Goods Sold) is a KPI that one can measure if all the points of your infrastructure are enabled to be measured - conceptually, in practice this requires a pretty robust DCIM + understanding of how you actually derive revenue (site visits, clicks, time on site, etc)...I'd say that there are folks who very much have made the connections between infrastructure and business, they just didn't seem to be referenced here in this article

  2. Great write up Jason. You've managed to articulately cover all the points discussed and raised. Particularly like the 'heated discussion' comment!