OUTSOURCE or INSOURCE A Datacentre Buy or Build Guide

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1 White Paper OUTSOURCE or INSOURCE A Datacentre Buy or Build Guide Yidan Wang V1.1 Oct 2013 A MATHEMATICAL APPROACH [ F - ( R + M + T )] x C = S

2 Executive Summary The datacentre industry, which is a component of the wider outsourcing industry, continues to fare comparably well to the economic instability of recent years. This is corroborated by two key factors: the first being the ubiquitous use of Information Technology in all aspects of personal life and in the corporate arena which requires ever expanding data storage and processing infrastructure and secondly, leasing colocation space can be anticipated to be adopted as a far more financially feasible alternative to building and operating a private datacentre. This is particularly pertinent in the prevailing economic climate where cost control and cost-cutting are on-trend buzzwords. It is the very versatility of leasing colocation space that lends itself as a prudent cost-cutting strategy in terms of datacentres, although the analysis and decision should be studied way beyond the cost factor. Highlights Science believes every problem can be solved with a mathematical equation so we have attempted our own universal solution: [ F - ( R + M + T )] x C = S F: Facility R: Risks M: Money S: selecting the right provider T: Time C: Control & Security 2 of 8

3 Risks Big Data has been the topic of the town for quite a while now. Indeed we are moving into the age of Big Data and in this new reality, fewer and fewer organizations will be able to justify the cost and effort involved in delivering their own private datacentre. Much less making sense to do so. Scarcity of highly skilled and experienced personnel, quality site locations, as well as smart and more sophisticated designs, are just a few of the major issues that impact the cost and value of a datacentre. Finding the site, the people to deliver a quality solution on time, and the budget, is a significant risk, especially in today s unstable economic climate. Even if the money to build a shining new datacentre is available there today, with the true value of datacentres being best-in-breed efficiency, it is hard to compete with professional providers in terms of datacentre best practice. Initial build-out no longer guarantees functions throughout, facilities need to have well thought capacity planning before construction and be updated regularly to stay at the top of the game. And how do you attract multiple telecom providers to a private datacentre? R Time Speed to market defines the datacentre. T As a typical datacentre requires months or longer to be built, colocation may be the most viable option when you have clients requiring datacentre space in a shorter timeframe. 3 of 8

4 Money Total Cost of Ownership (TCO), which includes Capex and Opex costs, needs to be considered over a six to eight year period. M CAPEX COSTS From site selection, to design and construction, to network and utility installation, Capex costs, or front end costs are extremely high. The capital-intensive process requires solid investments in real estate, equipment, technology and manpower, whilst the benefits usually take a long time to materialise. This is a business with long sales cycles, with the threshold of Return of Investment (ROI) sometimes to be met only after five or six years. Site and building costs together with IT infrastructure costs need to be funded well in advance of any operational benefits. OPEX COSTS Operational and maintenance costs, on the other hand, can be too variable to accurately forecast and budget. Power: Cooling & PUE Power costs are the largest element in any large-scale datacentre, making up around 70% of Opex costs. Thus, energy and operational efficiencies are the keys in reducing power consumption costs. Studies, however, show that power costs are still not considered a priority in the majority of organizations. A large portion of the power cost is coming from cooling. The focus should be on efficiency, from the very beginning when considering a location, whether it has free air cooling which will drive down PUE, to the design stage, i.e. design to cool servers rather than rooms to save money, to selecting equipment, i.e., choose the most modern and energy efficient units. Some may argue that PUE is about efficiency but not performance or cost. On the other hand, a paper recently published by Cable & Wireless has stated that a 0.1 point drop in PUE at today s prices is equivalent to a headcount reduction of full time staff for a large datacentre. This is a rather significant reduction on Opex over the lifecycle of a datacentre operation. Colocation is a much more cost efficient route. First of all, it is built for multi-tenants, and thus, the fixed costs of management, security and premium-quality infrastructure are shared amongst clients, leading to economics of scale. On top of competitive pricing, leasing from a colocation provider also sees the advantage of building redundancy into networked architecture without the capital expense required to bring fiber directly to the client s location. Secondly, monthly costs related to leasing data center space from a third party are consistent, predictable and economical as they are based on actual needs and usage. Whilst a self-built datacenter requires an expected long life cycle, colocation contracts are typically shortterm from 3 to 5 years. There is also no need to focus on changes and upgrades related to power and cooling infrastructure. Technology Changes and Infrastructure Upgrades Computing equipment changes constantly and rapidly, which impacts the supporting infrastructure equipment. The IT upgrades / replacements create additional costs, on top of overbuilds which may result in expensive empty space. 4 of 8

5 F Facility LOCATION A fully executed site evaluation determines a location s suitability for a new datacentre. Important factors include power availability and stability (to meet both immediate and future growth requirements), reliable and efficient renewable energy options, fiber network connectivity, land and economic incentives, transportation, construction and permitting costs, topographic and geologic conditions, etc. Identifying risk factors is a must, such as environmental exposure to natural disasters (eg seismic or flood zones), and adjacencies to potential hazards (eg airports). All these require a highly knowledgeable and experienced team. Strategic siting is integral to TCO, as well as the life span of a datacentre. Site selection is especially challenging when entering a foreign market. It is not just the availability and accessibility of the land, but it is also critical to understand the stability and/or volatility of the local utility market, as well as the mix of generation options. It is certainly a big bonus when a colocation provider brings both local know-how knowledge and Western retail data centre building and operational experience with high ethical standards. HR: RESOURCES & SKILLS The datacentre sector requires specialized industry knowledge on power, cooling, fire suppression, security, network systems, etc. Datacentre providers are the experts who look after your IT and data, from facility / infrastructure design, construction, operations to maintenance of all critical always on systems that support today s complex IT environment. POWER Managing power is the key differentiating factor between different datacentre players -- from a client perspective this would mean that if datacentre A manages their power and cooling environment such that for the same given kw you require less cooling and general non-it power than in data centre B, then the client will opt for datacentre A. The key measure for this is PUE so the design should ensure that it s kept as low as possible. A well thought through capacity planning keeps PUE down right from day 1. 5 of 8 CONNECTIVITY A highly connected site does not only mean choice and competitive pricing for clients on connectivity, but also better service quality and reliability. A carrier-neutral data centre will connect you to a variety of network service providers, just like the main international airport in any country connects multiple airlines.

6 F Facility (con d) SCALABILITY, RESILIENCE AND REDUNDANCY Traditionally a datacentre has an expected life span of years. The fairly rigid and unchanged image of a datacentre for decades however is no longer valid, along together with the static model and thinking. A datacentre is of course still a long-term business, but the success lies in extensive long-term capacity modeling, well planned in conjunction with phased build-outs. Datacentre new builds experience failure sooner than expected may be because of less experienced human resources on the industry, or in some cases, they are forced to compromise the better long-term design to meet short-term requirements. The capability to respond to changing requirements, adding space and power density efficiently is essential as is an ondemand model with a sound commercial proposition and clear ROI. A colocation provider will have a N+1 design at least, to provide redundancy in power, cooling and network infrastructure. Separate diverse routes for power and networking tend to be more expensive to get right, but the costs and expertise are shared and with Opex options at a multitenant datacentre. That said, it is important to understand the design and SLAs offered in order to recognize the benefits offered by a service provider. Control & Security Concerns over complete control is the main reason you may choose to build your own, instead of leasing from a colocation provider. It is a valid issue especially to organizations that face regulatory compliance requiring ultimate controls and the ability to audit those controls. However, the market landscape is changing. Nowadays, security options offered by a colocation provider can vary from shared server environments to complete secure and dedicated environments meeting the highest government security standards such as PCI compliance and SAS 70. A larger and more experienced provider is not only able to assist and provide assurance through forming an integral part of the clients security reviews, providing the foundations for compliance such as ISO9000, PCI, SAS70 etc, maintaining industry best practices, but also can draw upon a bigger pool of skilled support should an emergency occur, and at the same time saving you ongoing costs and responsibility of maintaining all the properly trained facilities personnel required to support all the various critical systems on a 24x7 basis. Having in mind that the datacentre becomes essentially an extension of the tenants infrastructure, a quality colocation provider positions itself to meet the ever changing regulatory requirements. It goes back to allowing you to focus on your core competency while letting experts take care of your IT needs. 6 of 8 C

7 Selecting the right providers It is sufficient to say that given the critical role that data, Big Data in many cases, plays in any organization that selecting the right colocation provider must be approached with caution. Depends on an organization s own needs, each of these categories provide different advantages but the trend in the industry has shown that many believe carrier-neutral datacentres is the way forward. We prefer our carrier-neutral model at IXcellerate as it offers focus, flexibility and choice. A carrier-neutral datacentre such as IXcellerate, is normally the most well connected site in its respective market, with unbeatable scalability that grows with market demand. Carrier neutral datacentres play a similar role to major airport hubs. In the same way as multiple airlines interconnect and offer access to any destination, the carrier neutral datacentre acts as a hub for many carriers and service providers, providing choice and resilience. Such colocation providers can satisfy the needs of a client from a single rack to large requirements, taking prime locations where power is available in abundance both now and in future to offer tailor-made datacentre halls accordingly while offering security and low latency links to and from other global markets. Working in extreme temperatures such as Moscow s brings its own challenges from fuel polishing to variable winterization control for environmental systems. The professional team such as the one behind IXcellerate Moscow 1 Datacentre has decades of combined experience in datacenter design and operation including almost 25 years of technical operations in the Russian market. There are four categories of colocation providers: Carrier-Neutral datacentre providers Hosting providers System integrators & IT companies Telecom service providers There are more barriers than one can imagine while trying to enter a completely new and highly complex market such as Russia. Risks are mitigated partnering with a management team comprised of telecoms and datacentre veterans bringing Western retail datacentre operation experience to open the door to such an enormous Internet market under high ethical standards. 7 of 8

8 Conclusion In conclusion, with the increased availability of quality colocation providers and the complexities and cost of building and operating a datacentre, leasing colocation space rather than a private build-out has become the norm in many of the world s most advanced markets. The advantages are obvious, just as seen in this mathematical equation: [ F ( R + M + T )] x C = S When considering colocation, each element in this equation should be looked carefully and thoroughly and selecting the right provider is crucial. To finish here are two essential questions you should ask: 1. How feasible is it to build your own private datacentre? What are your immediate and future needs and requirements? What are the reasons to own your own data centre? With those factors in mind, however, does leasing still make a compelling case? 2. What differentiates your colocation provider in a competitive market on the following key factors: management experience (in both local and global markets), financial stability, connectivity and scalability, customer-focus, location, technology expertise, facility design and power, control and security? HOW IXCELLERATE COULD HELP Help to DECIDE. With experience in the datacentre market since 1998, our management team can help you review your choices and provide a solution that really fits your needs. Contact us today to learn more about IXcellerate Свяжитесь с нами сейчас, чтобы узнать больше о компании IXcellerate IXcellerate.com MOSCOW ONE DATACENTRE 8 of 8

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