In our last post, we discussed the critical importance of digital transformation in today’s hyper-competitive environment. Digital transformation enables organizations to take full advantage of the latest technologies for optimizing business processes. Getting there isn’t easy, however. Most organizations still dedicate the majority of their IT resources to the maintenance of legacy systems and infrastructure. Aging data centers — many of which are more than a decade old — simply cannot support today’s dynamic, high-density environments.
Of course, data center modernization is a difficult undertaking. Few organizations have the budget, skill sets and resources to design and implement an efficient data center infrastructure. This has led many organizations to outsource their data centers to hosting providers and colocation facilities. According to 451 Research, 51 percent of North American data center space is now outsourced, and outsourcing arrangements are seeing a compound annual growth rate of more than 16 percent.
There are certainly many benefits to “buying” versus “building” data center infrastructure. Outsourcing minimizes upfront investments, relieves staffing challenges and enables faster deployment. However, there are also good and valid reasons for choosing to keep a data center in-house. Here are some factors to consider:
- Cost. The cost analysis depends upon the size of the data center. According to a Forrester Research study, the “build” option is most cost-effective for data centers greater than 10MW while outsourcing is better for those less than 5MW. However, the cost calculation can be more nuanced, given increasing data center densities. You should project growth in demand for data center resources to determine how much hardware, power and cooling will be needed over the course of five years.
- Flexibility. How rapidly is your data center growing? Do you need the ability to roll out new services quickly, or scale up or down to meet seasonable demand? Do you need temporary space for short-term projects, labs or testing? A highly dynamic environment tends to favor outsourcing but flexible data center infrastructure solutions make it possible to deploy a new environment quickly in virtually any space.
- Efficiency. Hosting and colocation facilities typically are highly efficient in terms of power, cooling and operational processes. These efficiencies keep the service provider’s costs in check, and create economies of scale for their customers. With proper design, and investments in monitoring and management tools, you can achieve comparable results in-house.
- Risk. Many organizations choose to build because they want to maintain control of their IT assets. However, modern monitoring technologies allow you to keep a close watch on your environment and perform most maintenance tasks remotely. Given that most hosting and colocation facilities offer greater redundancy than in-house data centers, the control factor may be offset by greater resilience.
- Expertise. Do you have the resources in-house to build and operate a data center? Or does it make more sense to have your team focused on business-enabling initiatives. If you have a small team or lack in-house expertise, it may make sense to outsource. Or consider partnering with a data center specialist such as Rahi Systems.
The build versus buy question defies easy answers, particularly given the flexible and cost-efficient data center infrastructure options that are available today. If you’re considering a data center expansion or modernization project, we invite you to give us a call. Our consultants can share what they’ve seen in the field, discuss best practices, and help you determine the best path forward for your organization.