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

Data Center Building vs. Outsourcing: What’s Best For Your Business

When businesses are on the fast track and experiencing growth, they often find themselves needing additional storage space for their data center, writes Ernest Sampera of vXchnge. When this happens, they must decide whether to lease data center space or build an in-house storage infrastructure.

Industry Perspectives

February 11, 2015

5 Min Read
Data Center Building vs. Outsourcing: What’s Best For Your Business

Ernest Sampera is the Chief Marketing Officer of vXchnge, a carrier-neutral colocation services provider that helps improve the business performance of its customers.

When businesses are on the fast track and experiencing growth, they often find themselves in need of additional storage space for their data. Whether it’s adding additional applications for email, streaming or other critical resource-intensive applications, businesses must make the decision to lease data center space or build an in-house storage infrastructure.

Whether looking to support critical applications or simply manage day-to-day operations, the IT needs of every company vary. Eventually, the right decision comes down to what offers the best advantages and which strategy maximizes the organization’s data storage total-cost-of-ownership (TCO).

There are a number of factors to consider when making the decision of whether to own or outsource a data center, including virtualization issues, different cloud computing environments and simply, the way companies handle different IT issues. It is important to analyze all options in order to make the most appropriate decision that best suits a business’ needs.

Building Your Own Data Center

If building out an existing property, the estimated cost is around $200 per square foot to build a data center, according to Forrester. Additionally, to have fiber installed on the site can cost over $10,000 per mile to simply reach your location. Larger companies have extensive financial resources to cover all construction and fiber costs and are able to handle an influx of staffing and IT needs including infrastructure maintenance, around-the-cloud monitoring and the additional cooling that may be required. This means that building an in-house data center may make the most sense in the long term for a larger company with expansive amounts of data.

After a company builds their own data center, businesses benefit from having total control over their data, security needs, operations and environment, often creating a sense of security. Organizations will have complete control of access to the entire premise, space, power and temperature. After building a data center, they also have the ability to leverage the existing space to build additional cabinets. On the flip side, and an important financial factor to consider, after building and implementing a data center within a company, the space cannot expand or scale without purchasing and installing additional infrastructure.

Outsourcing to a Reliable Data Center Provider

Smaller companies, including those with cloud compute solutions, require a certain amount of data storage space in order to grow its business. A startup may require only a small amount of cabinets, three or four, for example, yet complete dependency for connectivity is required. In this case, due to the cost, it is prohibitive for a small company to build its own data center infrastructure.

Besides the expenditure of building a data center, there are multiple additional costs that are substantial. Outsourcing to a dedicated provider delivers many advantages for those companies who cannot afford to spend a large chunk of their overhead on building such a facility.

Carrier-neutral connectivity: Certain data centers providers offer carrier-neutral connectivity. By outsourcing, the companies within the data center environment have the ability to choose the carrier service provider that best fits their business and financial needs.

Maximized total cost of ownership (TCO): Leasing in a facility offers a substantially lower up front cost. Additionally, with the ability to choose from a number of carriers, without a need to staff a data center, or constantly pay for equipment upkeep, businesses are left with a significantly lower TCO.

Scalability: As previously mentioned, when building a data center, additional purchases and installations are necessary when it comes time to scale out your cabinets. When outsourcing, data center providers are equipped with the ability to seamlessly allow companies to scale out additional cabinets to quickly and easily handle growing storage needs.

Reliability: With an expert team working around the clock and carrier services having a network presence located within the data center, data is processed with great efficiency, resulting in an ultra-reliable performance.

Reach and redundancy: When outsourcing with multiple connectivity options, the potential for carrier failure is reduced, protecting critical applications and infrastructure performance. The option also provides different fiber or copper routes in order to deliver dependable services to different locations, extending reach and reducing latency.

Security: Dedicated data center providers supply 24/7 security detail along with biometric logins at all access points that provides customers a peace of mind that their data is protected with highly advanced technology. Additionally, the multiple layers of physical security around interconnect sites and cabinets protect the transfer of data.

What Works Best for Your Company?

For companies in need of a large deployment of cabinets, with the resources easily available and, according to Schneider Electric, a data center life expectancy of more than five years, it may make sense in the long term to build an in-house data center. For smaller to midsize companies and startups, the evidence points toward outsourcing data center needs.

The bottom line is that no matter the size of a company, it is no longer viable to ignore the importance of having a reliable data center. So whether it is a large company with extensive financial resources or a smaller company, let the numbers and evidence guide the decision to determine whether to build or lease a data center.

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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