Many organisations are working this out and coming to an unexpected conclusion. After analysing the costs they are finding that it’s cheaper over time to house your own servers rather than pay rent to have someone else do it. The return on investment if you build your own data centre can be surprisingly short.
With typical costs of renting a 4kw rack in a hosted data centre starting at about £750 per month it is possible to build your own for less. With many Co-Lo’s adopting a budget airline approach to pricing these costs can quickly rise. There are many variables and there is no universal answer to the question of which method offers best value for money, but the build your own option should not be discounted. As an example a 40 rack tier 3 data centre with a 200 kW IT load capacity can be built for about £1m. Assuming a conservative PUE of 1.4, sensible maintenance costs and an energy cost of 10p per kWh this equates to less than £700 per rack per month over a 10 year period.
Making the Numbers Work
Of course borrowing costs and a lack of Capex make the build your own option less attractive for some but the numbers can be made to work. A lack of knowledge or in-house expertise shouldn’t be an excuse, there are many innovative companies that can design and build small private data centres which also tie in improved security into the equation. Just last year a company based in the Shard decided to bring their data centre in-house, demonstrating how a private data centre can be built almost anywhere!
The government appears very keen to stop public sector agencies going down the build your own route. They don’t trust them to do a good job. Their strategy is to encourage use of the Cloud and where this isn’t possible to use Co-Location hosted services. So keen are they to promote hosted data centres that they have entered into a joint venture with Ark Data Centres to deliver subsidised Crown Commercial Hosting services that undercuts the market. The service will be 25% government owned while Ark, with two ex heads of MI6 in non-executive directorship roles, will retain 75%! With that amount of lobbying power it will be hard for public sector organisations to resist the push to use these services, regardless of the economics. While it may deliver savings in many instances it won’t in every case deliver better value for money than upgrading existing public sector server rooms.
Even the Clouds greatest protagonists recognise that it isn’t always going to be fit for purpose or able to deliver savings. Maintaining security and data protection compliancy in a public cloud is very difficult. For very dynamic workloads the Cloud can make sense but for predictable low intensity processing the benefits over an on premise data centre are less clear. Transferring applications to the Cloud isn’t as easy as some would have you believe and the huge cost, and delay, of provisioning extra bandwidth to connect your users to Cloud application can dwarf efficiency savings in the data centre.
Hybrid could be Best
For most organisations the hybrid approach of adopting Cloud, Hosted and your own data centre services will probably prove to be the best fit for the foreseeable future. There are many variables and it pays to cost the options. Don’t assume that the Cloud or Hosting is always more efficient. With the right advice and support building your own data centre remains a viable option for organisations of all sizes.