Data Centers: Outsource or Own? Presented by: Rachel Dines, Forrester Research, Inc. Christopher Nicolini, Windstream Hosted Solutions

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1 Data Centers: Outsource or Own? Presented by: Rachel Dines, Forrester Research, Inc. Christopher Nicolini, Windstream Hosted Solutions Nov. 17, 2011

2 Introduction Today s Presenters: Rachel Dines, Research Analyst Forrester Research, Inc. Chris Nicolini, Data Center Operations Director Windstream Hosted Solutions 2

3 Data center facilities are the most expensive investment in infrastructure before making this big decision, make sure you have explored all the options! 3

4 Agenda Current trends in data center facilities Key factors to consider when sourcing your facility Best practices for data center site selection Recommendations 4

5 More than a quarter expect to increase spend on data center and IT facilities How do you expect your firm s spending on data center and IT facilities to change over the next 12 months? 49% On average, companies devote 19.3% of their hardware/infrastructure IT budget to data center and IT facilities 26% 3% 9% 8% 5% Decrease more than 10% Decrease 5%-10% Stay about the same Increase 5%-10% Increase more than 10% Don t know 5 Base: 2100 IT decision-makers at enterprises and SMBs worldwide Source: Forrsights Hardware Survey, Q3 2011

6 Overall trends! Interest in data center outsourcing is increasing due to: Lower initial cost. Improved speed to market. Consolidation of smaller computer rooms and facilities. Expansion as older data centers run out of capacity. Business continuity requirements.! Still, there are valid reasons to build your own data center 6

7 The use of colocation and managed services for provisioning recovery sites is on the rise How do you provision your recovery site? We own the site 46% Shared fixed-site IT infrastructure at a service provider 31% Colocation site Multi-tenancy managed hosting Dedicated fixed-site IT infrastructure at a service provider Dedicated managed hosting Cloud-based Other 17% 13% 9% 7% 4% 4% Base: 180 disaster recovery decision-makers and influencers at business globally with a recovery site (multiple responses accepted) 7 Source: Forrester/Disaster Recovery Journal November 2010 Global Disaster Recovery Preparedness Online Surveys

8 Agenda Current trends in data center facilities Key factors to consider when sourcing your facility Best practices for data center site selection Recommendations 8

9 The spectrum of data center sourcing options In-house Outsourced Own and operate data center Infrastructure outsourcing/ managed services/ hosting Colocate data center IaaS/Cloud or strategic rightsourcing Less managed More managed 9

10 Key considerations: power Build! Power is limited by what the utility company can deliver to your location.! Power costs will be at the local commercial rate. Outsource! Better access to power! More competitive rates on power! Wholesalers: actual power costs at industrial or lower negotiated rate! Retailers: flat rate for a fixed capacity circuit, which includes markup 10

11 Key considerations: cost model Build! Costs are high upfront, then continued maintenance, power, and security costs are ongoing.! Costs can be unpredictable due to break/fix and maintenance. Outsource! Costs are low or nonexistent upfront (usually equivalent to first month s rent).! Ongoing costs are for rent and power and are much more predictable.! Costs are predominantly operational expenditure.! Infrastructure and power costs will be higher due to less purchasing power.! Costs are predominantly capital expenditure. 11

12 Key considerations: flexibility and control Build! Slower to accommodate changes in IT/business requirements (power, space, etc.)! Time-to-market for initial build can take years for a traditional facility.! More control over operating environment (maintenance windows, temperature, access control, cooling systems, infrastructure, etc.) Outsource! Changes in requirements can be accommodated very quickly as colocation providers are constantly building out additional space.! Construction is often modular, easy, and quick to expand.! Time-to-market is measured in weeks.! Less control over the facility 12

13 Other key points to consider Build! It s hard to plan for a life span of 20-plus years.! Building out too much space can be costly, as it is inefficient to run an empty site.! Most companies don t have the expertise on staff to design and build a facility.! Bringing multiple network providers to your facility will be costly. 13 Outsource! Outsourced data centers are run by professionals with extensive experience running mission- critical facilities.! Outsourced facilities house an ecosystem of potential partners (network providers, trading platforms, hosting providers, cloud providers, etc.).! Outsourcing commodity services can allow you to concentrate on more strategic ones

14 Agenda Current trends in data center facilities Key factors to consider when sourcing your facility Best practices for data center site selection Recommendations 14

15 Where in the world should you put your data center?! Most companies prefer to keep their data centers close to their corporate headquarters, however consider the following Companies with headquarters in expensive (real estate and power costs) or risky regions should consider locating their data centers elsewhere The majority of IT systems today can be managed remotely For tasks that require a physical presence (i.e., racking and stacking, swapping tapes, etc) consider using a data center provider s remote hands 15

16 Checklist data center site selection " Cost of labor, real estate, utilities, and taxes " Natural and manmade threats " Economic and political risk " Availability, stability, and reliability of power and space " Telecommunications availability " Accessibility of the location " Ability to utilize green technologies " Availability of local talent 16

17 Fewer companies locate the recovery site beyond 1000 miles What is the distance between your primary data center and your furthest backup data center, in miles? Greater than % miles 13% 500 to less than % miles 17% 250 miles to less than 13% 500 miles 14% 100 to less than (n=238) 6% miles 11% 2010 (n=180) 50 miles to less than 10% 100 miles 11% 25 miles to less than 15% 50 miles 15% Less than 25 miles 22% 21% 17 Base: Disaster recovery decision makers and influencers at businesses globally with a recovery site (percentages may not total 100 due to rounding)

18 Agenda Current trends in data center facilities Key factors to consider when sourcing your facility Best practices for data center site selection Recommendations 18

19 Recommendations for getting started Define business requirements Before you begin, make sure you know the business requirements for your facility: Availability and resiliency (Tier III or Tier IV?) Future growth (ability to accommodate acquisitions or new products, etc.). Speed to market (how quickly do you need to be able to provision new capacity?) Start capacity planning However you provision your data center, knowing your current and future capacity is key to achieving ROI. Plan for future flexibility Even if you plan today for future IT growth, business requirements are constantly changing. Plan with your data center provider or architect your facility for flexibility. 19

20 Operational Insights Chris Nicolini, Director of Data Center Operations for Windstream Hosted Solutions 20

21 Windstream Corp. Snapshot" S&P 500 company with full suite of IP-based voice and data services, MPLS networking, data center and managed hosting services and communication systems to businesses and government agencies $4 billion in annual revenues 10,000 employees 29 states and District of Columbia Data centers: 13 60,000 route miles of local and long-haul fiber network 21"

22 Presence 22

23 Trusted by Top Brands Biotech/Healthcare Retail/Consumer Technology Banking/Finance Digital Media 23

24 Data Center Overview! Tier II and III, SAS 70 Type II compliant data centers! System + System uninterruptible power supply ( UPS ) systems, and carrier neutral network connections! Heating, ventilation and air conditioning ( HVAC ) systems to maintain temperature and humidity within strict tolerances! Hardened facilities with automated facility management tools! Fire control with early warning smoke detection, clean agent suppression and/ or dry-pipe sprinkler system! 24 x 365 NOC & facilities staff provide for high security externally and internally! Service Level Agreement ( SLA ) backed guarantee of 100% power availability! Modular builds - most expansions are less than four years old (10k sf or larger)! in raised floor no open systems or racks 24

25 Build vs. Buy Costs of building Data Center Space Redundant Internet $ $2000 / sqft Initial Cost 1000 sqft data center = $1.25 -$2.0 Million in CAPEX *Maintenance & Repair = $150K - $250K / year Human Capital = $150K - $400K / year Utility Power Cost = $300K-600K / year * Does not include maintenance on IT / Network Equipment - All costs except utility power are fixed in the short term 25

26 Distractions from your core competency! Facility Infrastructure Maintenance! Capacity Management! Physical Security 26

27 Infrastructure Maintenance! Facility Maintenance is a full time function! Generator (M, Q, A)! ATS (A & 5yr)! Switchgear (A & 5 yr)! UPS (Q and A)! Batteries (Q, A, and 5 yr)! PDU (Annual)! HVAC (Q)! Fire (S & A) M = Monthly, Q = Quarterly, S = Semi-Annual, A = Annual, and 5 yr = 5 year 27

28 Capacity Management Areas often overlooked: Power! Redundancy at the Panel, PDU, UPS, Gen, and Utility! Seasonality - 35% swing causes overages Internet Capacity! Circuits sized for average speeds are overwhelmed by seasonal traffic or single upstream provider outage HVAC! Power Density growth 28

29 Physical Security! 24/7 staffing for security takes a lot of effort Redundant Internet Redundant Internet! Complete Physical Security is hard to achieve! Camera system storage is time consuming and expensive! Card and Biometric systems require constant monitoring / maintenance! Documentation for Receiving / Shipping of packages and critical media is difficult! Compliance Concerns! SSAE 16 Standards are very high! Compliance standards are Order Qualifiers for hosting providers 29

30 Summary Q&A 30

31 31

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