Data Center Strategies: Translating Teamwork into TCO

The economics of operating a data center are comprised of many items that factor into the total cost of ownership. This article is part of the Data Center Knowledge Guide to Data Center Strategies.

John Rath

July 28, 2011

4 Min Read
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Action -->  Engage all stakeholders and apply appropriate cost modeling

The data center is a complex ecosystem of many different functions coexisting under one roof.  As such, there are many important inputs to make a holistic data center strategy.  Information Technology is the primary input and reason for the data center to exist. Its needs are aggregated and IT strategy and forecasts are studied for how to best accommodate its needs. Other areas to seek perspectives from include finance, infrastructure operations, facilities, support, real estate, security, GRC (governance, risk and compliance) and many others.

Total Cost of Ownership

Costs for operating the data center can be spread across many departments or divisions at a company , which reinforces the need for a data center strategy to include all of these areas. Numerous surveys have shown that managers responsible for the data center either did not have an understanding of the data center power bill, or the bill was sent to a different department.

Aside from ensuring that all costs are known, the TCO (Total Cost of Ownership) analysis must be a comprehensive look at all elements of operating a data center. While the best data center is the one that doesn’t have to be built, maintaining the one that does means it should be economically efficient.

TCO can be influenced by energy trends and prices, technology trends, the impact of efficiency gains in all parts of the data center, direct, indirect and overhead costs, use of renewable energy, and the cost of compliance with government regulations or other industry standards.

The Economics of Data Center Operations

The economics of operating a data center are comprised of many items that factor into the total cost of ownership:

  • Resiliency: Whether building a data center or evaluating provider facilities, cost is derived from the level of redundant infrastructure built into it. The Uptime Institute data center tiers describe criteria to differentiate four classifications of site infrastructure topology based on increasing levels of redundant capacity components and distribution paths.

  • Downtime: The cost of downtime is drastically different among the different types of businesses and the facility design considerations should reflect as much.  The amount of risk a business is willing to assume in maintaining the uptime of their IT has a large impact on the cost of a data center.

  • Staffing is an often overlooked or underestimated factor in determining the cost of data center operations.  In addition to IT staff, facilities staff ensure data center reliability and provision and maintain electrical and mechanical systems.  Security staff requirements will vary depending on the size of the data center and individual needs of the business, but often require on-site personnel 24 hours a day and 365 days a year.

  • Financial Considerations: Investigate the financial aspects of site selection, cost segregation, the capital recovery factor and internal rate of return.

  • Timing: Consider the economics of technological obsolescence if building a data center. Weigh the costs of alignment with business and IT strategies against the risk of obtaining additional funding to increase power and cooling capacity to accommodate higher IT densities down the road.

  • Vertical Scalability: Scale is top of mind throughout most aspects of IT. The significance of scalability in the data center carries a different connotation and has a higher price tag if not considered properly. Vertical scalability means cloud computing-like elasticity capabilities incorporated into data center infrastructure and available floor space. It means turning up the dial on power and cooling densities without disrupting the business. The gains of turning up that dial equate to agility in operations, adaptability to changing business needs and future cost avoidance in provisioning additional power and cooling to match increased requirements of IT.

An implicit value is derived from a data center strategy that is the coalescence of internal and financial perspectives. The misconception that going high-density in the rack equates to a higher cost is usually not founded with the realities of what efficient infrastructure is capable of.  The new data center is equipped to handle and scale with high density servers and will ultimately save money through the power and cooling efficiencies gained. Examine all aspects of the economics of data center operations in order to understand the implications of risk assumption and true costs involved.

The entire Data Center Strategies white paper can be downloaded here.

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