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

Refining Your Criteria for Data Center Site Selection

Building a data center is an important and crucial decision for a company. With site selection factors and process in place, it will lay a strong foundation for a company to succeed. Consider these factors as you look for a place to locate a new data center.

4 Min Read
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Prashant Baweja is working as a senior associate consultant with Infosys Ltd. in infrastructure domain and has a total experience of about six years.




Determining the location of a data center is one of the crucial decisions for a company as it is based on strategy and goals of a company. In any discussions related to data center sites, few factors come up frequently like power, telecommunication, data center tiers, clean power, site selection and so on. Management looks for Total Cost of Ownership (TCO) and makes decisions based on their long-term and short-term goals.

Site selection plays an important role for the same as it will have direct impact on cost and TCO. In below sections, we will discuss more about factors affecting site selection and a high level process/methodology for the same.

Factors Affecting Site Selection

There are many factors which affect site selection. All these factors should be looked from strategic perspective as nowadays an industry changes its focus every 3 to 5 years and transforms/adopts new technology every 7 to 10 years. Below diagram depicts various factors affecting site selection for a data center:

  • Geographic location – First and foremost factor is the geographical location of the site. This has to be thought out at the outset. Few things which needs to be looked are: Natural disasters (Flood, Hurricane, Tornado etc.) – probability and frequency of occurrence at the said location; Environmental hazards – Impact and degree of affect; and Climate – Climates which support free cooling (outside air cooling) will be an added advantage.

  • Electricity – Electricity or power is important factor as it is one of the chief constituent to operating cost of a facility. we need to understand. Factors include: Availability – While looking at availability of electricity, we need to weigh options like access to more than one grid, maturity of grid, various generation options, power transmission mechanism, etc.; Cost – Need to compare cost of electricity across various options. i.e. it should have low cost/tariff per KWh; and Alternative source of power – Management can look into renewable energy options like solar, wind, air etc. which will help company to become greener.

  • Telecommunication Infrastructure – Telecommunication is one of the most important components for a datacenter. While selecting a site for datacenter, various factors need to be considered with respect to telecommunication infrastructure perspective. Following list will help in this regard: Fibre backbone route and its proximity – How near a fibre backbone to the selected site. It will help to gauge addition investments required from backbone route to the exact data center location; Type of fibre – Will affect speed and transmission; Carrier type and support – What all carriers are present in the vicinity and their support & service model in place; and Latency – Transaction time/latency will be an important factor

  • Tax Rates – Another important aspect is tax rates prevalent at a particular location. Following needs to be considered: Property tax; Corporate tax; and Sales tax.

  • Construction – While building a data center at any particular location, construction cost and options play a major role. Following aspects should be considered for making a decision: Construction industry maturity, experience, process in place and technology availability at the considered site; and Labour - Availability and cost of labour at the considered place.

  • Transportation – Availability and proximity of various modes of transportation affects site selection for a data center, as equipment must be delivered and workers must commute to the location and vendors must visit it.

  • Cost of living – Presence of various day to day requirements and cost of living is an important factor which has to be though/analyzed while selecting a site by a company.

Process for site selection

Methodology/process for a site selection needs to customize as per company’s requirement. Below process will provide a high level approach to start and detailed as required:

1. Scope and requirement – In this stage, company management with various stakeholders decide about scope and what is the requirement from the project in relation to site selection.

2. Location vetting – Based on requirement, team vets various locations based on high level requirements.

3. Site visits and meetings – In this phase team of experts will visit the site, meet with various government agencies, various service providers and do detailed analysis.

4. Site short listing – Post visits and analysis, top 3-4 sites are shortlisted. One of the options to do the same is to use weighted score method for various factors.

5. Detailed investigation – Once few sites are shortlisted based on initial investigation, it’s time to do detailed analysis. It will include having detailed discussions with various stakeholders, look for actual data like geo-technical studies etc., discuss about construction options and cost, negotiating on best prices etc.

6. Analysis, recommendation and approval – Post detailed investigation, it’s time to analyze the data, make recommendation and present the options to management for their feedback and approvals.

Building a data center is an important and crucial decision for a company. With site selection factors and process in place, it will lay a strong foundation for a company to succeed.


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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