This content is part of the Essential Guide: Manage colocation costs to avoid billing surprises

Budgets prompt data center vs. colocation discussion

Rather than spending another budget cycle struggling to fund the data center, start outsourcing selectively -- and improve at the same time.

For many IT teams, now is the time when the budget spreadsheet comes out, along with pleas for more money to be spent on data center investments through 2016.

Last year's spreadsheet will come out, and that sinking feeling of "we can't ask for this again" will face many as they realize that the same problems seem to recur time and time again.

This time around, the data center budgeting exercise can and should be different. There are many areas related to the data center facility and operations that should no longer be on your list. And a data center versus colocation discussion should start.

Cooling is a data center facility cost to cut this year. Anyone who is still looking at putting computer room air conditioning units in their data center needs their head examined. If your existing systems are up for review, be grateful. Look at running the data center warmer; look to adiabatic or free air cooling systems, such as those by Coolerado, Munters and Airedale. While still an expense, it is a true investment that will keep paying back to the business in lower energy bills, and in most cases lower maintenance costs as well.

Forget expansion. For anyone who has yet to realize, virtualization and cloud computing have arrived. Not just for proof of concept or nonmission-critical systems, but for mainstream production usage. The days of running one application per physical server or cluster are disappearing. Stop running systems at 5%-10% server and 30% storage utilization rates. Moving to a flexible, elastic multi-workload private cloud platform should drive server utilization rates up to a minimum of 60%. Consider OpenStack-based for future workload portability capabilities).

You now only need one sixth of your existing hardware -- why try to expand?

If you don't need more hardware, more cooling systems and more room, do you actually need a data center at all?

Data center vs. colocation

That facility that you cling to is a very expensive item. It is built on land that has a real estate value. It has highly specialized needs in everything from power delivery and distribution to redundancy. Specialized skills are required to maintain the peripheral areas around the all-important IT equipment. And it is pretty difficult to shrink a facility when you move to a more efficient cloud-based architecture.

Look at moving to a colocation facility instead, such as Equinix, CenturyLink and Datum. You retain full ownership and responsibility for the IT equipment, but the facility owner takes responsibility for all that grunt work -- they look after power to your equipment, ensure that there is enough cooling and maintain connectivity to the outside world. It is also far more likely that the facility owner will provide advanced physical security to the site and to your equipment. As they are sharing these costs across all those using the facility, they can afford to do a better job in colocation versus in an individual data center.

By moving to a colocation facility, you also gain the flexibility to grow or shrink as you need. Some facility owners are better than others in this. Look for a provider that will plan ahead with you to ensure sufficient space is allocated for extra racks, rows or hyper-converged systems if and as required. Some colocation providers only offer new space requiring multiple cages or the movement of all existing equipment from one area of the facility to another.

Drop the whole idea of trying to be world leaders in data center design, building, maintenance and running. Indeed, drop the whole idea of being at the forefront of IT equipment acquisition, provisioning and running. Instead, strive to be a leader in identifying where functions are best sourced, how they need to be pulled together, and how to monitor and maintain the best end-user experience.

Frugal -- as a service

But the data center vs. colocation decision is not the end of this journey. Look to a future of a highly heterogeneous environment of loosely coupled, functional components outsourced on specialists' platforms that will provide far more value to the business.

The public cloud is becoming more important, and organizations should be looking to the public cloud as to what functions are better sourced as software as a service. Consider investing in products that cover large overall functions, such as Salesforce, SAP Concur and ServiceNow, as well as targeted offerings such as Workday and Transversal. These companies take overall responsibility for the total platform, removing more risk and ongoing running costs from the IT organization's budget.

This can be extended to areas such as managed security, such as SecureWorks, Fortinet and Trustwave, and DDoS mitigation through ManageEngine, Neustar or Akamai, for example.

Even with development and test, there is less need now for investment in your own data center. Amazon Web Services provides a good development and test platform; IBM has come to market with its BlueMix and SoftLayer platforms; Microsoft is making its Azure platform far more developer friendly. It makes more sense to use these fully-managed platforms, rather than to own your own.

Indeed, even if you want to run your own software -- perhaps it is homegrown and can't be easily replaced -- platform or infrastructure as a service could make more sense than owning your own environment. IBM is a good bet for this, along with the likes of Rackspace and Interoute.

Indeed, this year's data center investment spreadsheet should be looking to the future where there is no private data center. Look to investments that make it easier for you to move from that owned facility to platforms that provide greater business flexibility and longer-term strategic value.

Invest in IT tools that enable greater workload portability; in systems that enable "what if?" scenario planning around end-to-end performance management in real time.

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