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

Choosing Colocation, Expansion or New Build for Increasing Data Center Assets

As organizations require more and more from their data centers, physical space is becoming a rare commodity. So, what's your best option ... colocation, expansion or a new build out?

4 Min Read
Choosing Colocation, Expansion or New Build for Increasing Data Center Assets

Anthony Walker is with TE Connectivity's Business Development and Strategy Department.

Data centers are no longer just a tool for doing business – they are now aligned with the critical path that drives an organization’s objectives, growth and success. As data rates and usage continue to skyrocket with no foreseeable end in sight, many data centers are facing the challenging issue of providing advanced services while being constrained by physical space, costly equipment upgrades and a need to connect between longer distances.

Operators must weigh their options to build new facilities, expand current infrastructure, seek colocation, or a combination of these options. The best upgrade solution for a business will typically be a balance of requirements versus time and cost.

For some, it’s a financial decision – such as whether to invest $100 million in a new manufacturing plant or building a new data center. Which is the immediate need, and which will generate a faster return on investment? Also, how long can the current infrastructure hold up? A new data center could take many months to become operational. If the business has reached a point where its infrastructure is so stretched that it demands an immediate solution, investing in a colocation facility might be the best move. A colocation provider can also make additional servers available much easier than an organization can build new facilities.

Another consideration is the organization’s core business. Is it in the “data business” where revenue is generated by managing huge amounts of data? Or does data play a critical role in the operation of the business? If data is your business, owning your data center assets is important. Building a new data center or expanding existing facilities is only a matter of affordability. However, if data is simply a critical aspect of your core business, then colocation might be a faster, less costly option.

Some businesses use a combination of corporate-owned data centers and colocation services to meet their data needs. For example, a large financial institution may use a colocation facility for its non-secure or non-strategic information, but still manage a very robust network of global data centers for its core business. Because data is so essential to its operation, the organization must control its own primary and disaster recovery facilities.

There are several vertical markets – healthcare, hospitals, banking, government and federal agencies – whose data must adhere to strict regulations. In these organizations, colocation may not be an option. If data is sensitive by nature and must be protected, such as in military operations, a cloud-based solution does not offer the necessary security. Many government agencies must manage and control their own data for security reasons.

For those who must own their own data center assets, is it best to expand current infrastructure or build new facilities? Typically, an organization’s first inclination is to expand its current footprint if possible, and that is likely the less costly option. However, there may be considerations and circumstances that may lead to building new facilities from the ground up.

Power consumption is increasingly becoming an issue for data centers. Some are said to consume enough power to light up a small town. So ensuring sufficient power will be available to an expansion is important. In fact, if your data center has been operating efficiently and the expansion plan will not jeopardize that operational efficiency, then expansion is the correct solution.

Do you have enough physical space available to expand your data center infrastructure? If not, then you may have to change data center strategy or consider a building a new data center. Are there sufficient fiber assets to deliver the speeds and capacities your business requires? Is the environment conducive to expansion?

Expansion is a workable solution for the majority of businesses who must control their own data center assets. Most of the issues involved in a data center expansion are easily navigated. However, it’s worth mentioning that there are a few external factors that may also weigh in on the decision. For instance, are there rebate programs or local tax exemption agreements that would bring the expense down for building new data facilities?

These and other factors may change the entire financial equation for expansion versus new data center. But life in the data center world is about saving time and becoming operational as quickly as possible so, again, expanding current infrastructure is typically the better option. Regardless, of which solution you choose – colocation, expansion or new build – it’s important to ensure your business and technology objectives are aligned for successfully moving your organization into the future.

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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