Insight and analysis on the data center space from industry thought leaders.

Data Centers – Build or Outsource?

Careful consideration to core value should drive the decision when determining whether to build or outsource your data center, writes Nitin Mishra of NetMagic. Many enterprises have realized that outsourcing their data centers is the best way to align IT and business in the most cost-effective manner.

Industry Perspectives

February 10, 2012

3 Min Read
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Nitin Mishra, VP, Product Management & Solutions Engineering, Netmagic Solutions Pvt. Ltd.




The data center is a critical facility that houses computer systems and associated components, including backup power, redundant data communications connections, environmental controls and security devices. Heating, Ventilating and Air Conditioning (HVAC) and fire protection systems become critical to system maintenance and recovery.

What Are Your Core Value Activities?

Any build versus outsource decision could be viewed through the prism of core competence - increasing performance and organizational delivery through a focus on its core value activities.

Unfortunately, in the past, multiple extraneous factors often muddied the perspective. The key difference is that when an activity is core and business critical, it will receive top-level attention and focus. An IT team’s time should be dedicated to the activities that provide strategic advantage to the enterprise and allow resources to be focused only on those key areas.

The decision to outsource a data center requires careful examination of options at a strategic level from a business vision perspective and a thorough tactical evaluation on an operating plane involving asset inventories, facility requirement estimations, and budgetary considerations.

Outsourcing v. Building a Data Center


Advantages of Outsourcing your Data Center

Many organizations - whether small, medium and large companies across various industry verticals - have realized that outsourcing their data centers is the best way to align IT and business in the most cost-effective manner. There are many important business benefits associated with outsourcing: organizations can gain higher operational and financial efficiencies, enjoy proactive monitoring and management of their hosted IT infrastructure, and increase customer satisfaction, while businesses can stay focused on their core business areas.

Benefits not only include protection of IT infrastructure from technology obsolescence, but also allow maximum freedom and flexibility in daily IT operations, while simultaneously lowering their financial and operational overheads.

Benefits include:

  • Align to changing business needs

  • Compliance with corporate governance

  • Cost advantage

  • Customized solutions

  • Scalable IT operations to meet growing business demand

  • Access to latest technology

  • Business continuity

  • Accountability through SLAs

  • Access to skilled expertise

  • Energy efficient data centers

  • High Availability and reliability

  • Leverage the true potential of IT; not just managing costs

What is Getting Outsourced?

Typical areas delegated to managed and outsourced data center providers include:

  • Trouble ticketing and help desk

  • End-user support and infrastructure operations

  • Hardware maintenance and network operations

  • Monitoring and management (server, systems, etc.)

  • Security

  • HVAC

  • Disaster recovery, storage management and backup (power, data)

  • Full functionality and support of all elements within their data centers

The TCO Advantage

Predicting and measuring Total Cost of Ownership (TCO) for the physical infrastructure for network rooms and data centers is required for Return-on-investment (ROI) analysis and other business decision processes. In addition, an understanding of the cost drivers of TCO provides insight into opportunities to control costs.

Organizations, today will need to assess the benefits of a build or buy decision based on the impact IT enablement, business continuity, process excellence, privacy and compliance requirements – in line with Board vision and cost compulsions. And as businesses look further afield at outsourcing or out locating their data centers, they need to carefully evaluate the providers in various geographies. The spectrum of decision factors will range from management mandates to energy efficiency.

Industry Perspectives is a content channel at Data Center Knowledge highlighting thought leadership in the data center arena. See our guidelines and submission process for information on participating. View previously published Industry Perspectives in our Knowledge Library.

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