Archive for the ‘Colocation Pricing Model’ Category
Ted Ritter is a Principal Research Analyst with Nemertes Research.
Given all the time, investment and energy (literally) that enterprise organizations have been making in their data center facilities, you’d think that the availability of such facilities is a non-issue. You’d be wrong.
Nemertes Research predicts a shortage of colocation space in the U.S. beginning this year, growing to a $1.9 billion facilities gap by 2015.
How did we arrive at these conclusions? We looked at the data center market by independently assessing both supply (the current and predicted availability of commercial data center colocation facilities) and demand (the user need for such facilities). And we found that while supply is growing, demand is growing faster. This supply-demand imbalance creates what we’re calling “the colo crunch”.
Supply is Growing…
To assess supply, Nemertes relied on traditional primary and secondary market research techniques to determine the current market size and extrapolate growth rates. We arrived at an overall 2012 domestic market of roughly $18.5 billion in commercial data-center colocation facilities, growing to $31.2 billion in 2015.
More of the Data Center Knowledge article from Ted Ritter
Colocation or cloud computing? Which one is right for your critical computer systems?
In simple terms, colocation (also known as outsourced data center or wholesale colocation) is high-tech real estate. Companies use colocation to solve the problems of hardened data center buildings, power, cooling, telecommunications and security. Companies use colocation to solve these problems without losing any control of their IT infrastructure and systems. Colocation is about control of IT without the worry of building facilities.
Cloud computing comes in many forms. Companies use cloud computing to access applications and resources without owning hardware or maintaining an IT staff . Cloud computing is about applications and solutions without the worry of IT staff, IT infrastructure, and building facilities.
When comparing cloud computing providers, make sure you understand the incremental costs. Simpler pricing models are usually better. Understand the built-in backup systems and redundancies and how you can build in higher reliability if you need to.
When shopping amongst colocation providers, make sure you understand the incremental costs. Simpler data center pricing models are usually better. Keep costs low by choosing a provider with low power costs. Midwest colocation providers tend to have lower data center power costs than other areas of the United States. Affordable colocation is available in many regions of the country. Most companies today look for a minimum 99.995% uptime carrier neutral data centers with no cross connect fees.
Use colocation to maintain control of your applications and infrastructure without the worries of building facilities. Use cloud computing when you’re looking to solve application problems with a minimum of IT overhead.
Future data center expansion will be happening in developing markets like China, Brazil and Argentina, but such locations may not meet the requirements of data centers today and the requirements that will be necessary in the future. In fact, these five regions may not be the most obvious places to build a data center, but they might save your company a lot of expense.
Data center requirements have changed over the last 10-15 years. A decade or two ago, the two top criteria to consider when choosing a location were network accessibility and access to skilled talent. Fiber networks that connect data centers to the rest of the world were concentrated around metropolitan areas like New York City and San Francisco, but that is no longer the case. Sure, there will always be distance and latency concerns to consider, but the proliferation of high-speed network infrastructure means it is no longer the driving factor it once was. Additionally, data center talent was also limited to where the data centers were. That still holds true, except data centers have spread considerably and so has the skills base. In addition, remote monitoring and management solutions now make it possible for IT administrators to do most of their data center work remotely.
More of the GigaOM article from Jim Latimer
Is a simpler data center pricing model better? Is the data center pricing model itself a decision factor when companies are reviewing colocation? We believe the answer is yes. Let’s look at the history of outsource data centers, also known as colocation, for some perspective.
In the early days of colocation (the mid-1990s) many colocation providers grew out of the telecommunications space. A Director of Operations at a local telecom branch office probably looked at some empty space in his building. He then called the Sales Manager and asked if he could find a client who might be interested in renting the space. The Sales Manager found a client, so they had to come up with a pricing model. As many of us already know, telecom providers have some of the most complex and convoluted pricing models of any vendor. Many of the complexities of telecom pricing models came to the colocation world. Colocation seems to have been born with a complex pricing model.
How many line items are on the typical monthly colocation invoice? I’ve had clients who use other data centers tell me that they have 10 line items to rent a single cabinet and a little bandwidth.
But an outsource data center is really not that complex. All colocation facilities provide real estate, power, cooling, and access to bandwidth. Midwest colocation provides hardened data center facilities and F5 tornado resistant data centers. West coast colocation is often earthquake resistant. The offerings seem simple enough. Why should the colocation pricing models be complex?
Here are some features to look for in a pricing model:
How is real estate delivered? Many outsource computer room providers dictate the amount of floor space each rack is allocated. Some allow you to purchase extra space for a less dense footprint or for growth over time. Does the data center give you the flexibility you need to grow and change?
Is the power pricing based on actual draw? It is common for outsourced data center providers to bill based on a circuit size rather than the actual power used by a client. This circuit size billing method is inherently inequitable, because power needs shift over time, and circuit utilization is never more than 50% in a highly reliable data center. Look for pay-as-you-use-it power pricing.
How is the power for cooling calculated? Data center equipment (servers, network gear and storage) require about 1 kW of cooling for each 1 kW of power to operate the equipment. Does the pricing model charge you for the cooling power in a sensible manner?
How is the capital overhead of generators, UPS systems, HVAC charged? Every rack in every data center uses a portion of the power and cooling infrastructures, along with the staffing and the data center compliance overhead. Are you being charged fairly for your share of these complex and expensive infrastructures?
Does the colocation provider charge monthly cross-connect fees? Many data centers offer access to multiple carriers. But most charge you a monthly fee for the privilege of connecting to these carriers. A few data centers charge no cross connect fees. This can be a huge savings over time, especially when companies employ multiple carriers in a complex wide area network.
Use these features to compare data center outsource costs. A simple data center pricing model lets you understand what you’re spending, better forecast changes, and control the overall cost of operating your data center.
What are companies asking for when it comes to wholesale colocation facilities?
99.995% uptime or better – That’s 27 minutes of downtime per year or less. Uptime Institute tier IV data centers are certified to meet this level of data center uptime. Regardless of certification, uptime is the single most important reason that companies use outsource data centers. That means N+N data center redudancy, including redundant power feeds, generators and UPS systems. It also includes redundant data center cooling, and multiple telecom paths.
SAS 70 data center – Companies expect that their wholesale data center provider maintain a SAS 70 Type II data center certification. This colocation compliance certifies that the data center provider has written a list of controls for the business, the provider adheres to the controls, and that the provider has been audited by an third party.
Hardened data center – especially with Midwest colocation and Midwest data centers, F5 tornado resistant data center buildings are a must. Tornado is the highest risk in much of the Midwest.
Data center pricing model – Companies seem increasingly aggravated at the complexities of the pricing model for colocation facilities. Companies want affordable colocation facilities with room for growth in both floor space and power.
Data center power costs – What is the cost of power? Does the provider charge pay based on usage or on circuit size? How does the provider charge for air conditioning power?
Carrier diversity – What carriers do you have? Lifeline Data centers is a carrier neutral data center with no cross connect fees. More carriers are generally better. No cross-connect fees is always better.
There are dozens of other questions that we hear. Most companies are concerned with the highest level of uptime and carrier access at the lowest cost. Affordable colocation with no cross connect fees are available at Lifeline Data Centers, 317.423.2591.
Why are companies moving primary data centers to wholesale colocation facilities like Lifeline Data Centers? If data center power costs are high, selecting the right outsource data center can significantly reduce the long-term costs of power.
Are the data center power costs too high at the company’s primary data center? The cost of power per kilowatt hour can vary greatly from region to region.
Are the costs of data center power too high at the company’s disaster recovery center? You should evaluate the regional costs of power in all data center sites to make sure you that the long-term costs of power make sense. Chicago colocation power costs are some of the highest in the Midwest. Colocation facilities and the associated costs of power vary significantly from region to region.
What are the power costs at wholesale colocation facilities? Companies should clearly understand the wholesale data center provider’s cost of power from the utility and whether that cost varies based on usage.
How does the outsource colocation provider charge for power? This may be the most important question to ask. Many outsource data centers charge by the circuit size rather than by the actual power used. That means the company using the data center is always charged for more power than they actually consume. Companies should look for data centers that bill for power based on actual usage. Companies should also understand how the data center provider bills for the data center cooling power, along with the overhead costs of operating (not purchasing) generators, UPS systems and redundant HVAC systems.
Why are companies moving primary data centers to wholesale colocation facilities? Data center power costs are a significant part of the overall operating costs of a data center. The right outsource data center can reduce the company’s cost per kilowatt hour and bill for data center power as a company uses it.
In Part 8 of this series, we’ll address how wholesale colocation can help when a company is swapping primary data center and disaster recovery center sites.
Why are companies moving primary data centers to wholesale colocation facilities like Lifeline Data Centers? Many companies are consolidating data centers, and a wholesale colocation facility with great access to telecom can be an ideal place to consolidate.
Many enterprise data centers have reached power, cooling or floor space limits. Consolidating to the old, primary data center may not be possible. If a company is moving the primary data center, moving to a wholesale colocation facility can theoretically be the last data center move a company will need to perform. Some companies choose a primary data center move as the kickoff to a larger consolidation project.
If a company is considering building more data center to support a data center consolidation, it may make sense to consider wholesale data centers. Wholesale colocation is often cheaper to rent that it is to build. If you require 99.995% uptime or higher, the cost to build a true N+N data center redundancy that can actually deliver high uptime is almost always higher than the cost of wholesale colocation. Data center capital costs can be high. Do the math.
Access to telecommunications carriers can be a key component of choosing the right wholesale data center provider. Data center consolidations projects often require access to multiple telecommunications providers to consolidate and blend wide area networks. Carrier neutral data centers are an ideal fit. Data centers with no cross connect fees can greatly reduce the costs associated with telecommunications consolidation.
Data center pricing models can greatly help or hinder a data center consolidation effort. Are private cages available? Can you purchase additional contiguous space without paying for rack charges and the associated power until you add them? What is the potential for growth in the outsource data center? Will it support your merger, acquisition and organic data center growth?
Why are companies moving primary data centers to wholesale colocation facilities? If a company is consolidating data centers, wholesale colocation with high uptime and cheap access to multiple carriers is a nearly perfect destination. Companies that perform most of their own operations work can keep uptime high and data center operations costs low. Companies that that employ third party service providers can send them into the wholesale colocation facility with full confidence.
In Part 6 of this series, we’ll address how wholesale colocation is the destination when clients are moving headquarters or moving a data center.
The recession has been good for data center colocation providers. The perfect storm, if you will. A scarcity of capital, the rise in high-power-density computing and a need for high-quality redundant data centers have boosted demand for colocation space, according to data center experts.
“We have not seen a slowdown in interest and growth in colocation. If anything, the recession is driving CIOs to look more closely at colocation,” said Ted Ritter, senior research analyst at Mokena, Ill.-based The Nemertes Research Group Inc.
more of the SearchCIO article (registration required)
How do you pick the right wholesale colocation vendor?
First, consider your strengths as a business. In what markets do you operate? How have you been successful? Where is your talent? What products and services net you the most profit? How does the IT organization and the enterprise data center support these strengths, both directly and indirectly?
Second, consider the regulatory compliance that the government, your clients, and your vendors expect from your business. Are you or your clients regulated by HIPAA, FISMA, NIST, Sarbanes Oxley, or the FDA? Do your vendors or clients expect SAS 70 data center certifications and TIA 942 compliant data centers? Is there a likelihood that the markets in which you operate will be regulated in the future?
Third, consider your uptime requirements. Tier IV data center facilities offer 99.995% uptime or better. That’s 28 minutes of downtime per year or less. If you ask your clients, they probably think a zero downtime data center is what you should provide. What are your organizational expectations for downtime due to data center facilities?
Fourth, consider your telecommunications needs. Do you need multiple carriers? Does the outsource data center charge monthly cross connect fees? Is the provider carrier neutral?
Finally, evaluate alternative vendors.
If your IT organization is well-aligned with the business, wholesale colocation makes sense. If you plan to own hardware and employ IT staff or IT service providers that you trust, wholesale colocation is a perfect fit.
Data center compliance and data center certifications vary among outsource computer room providers. Compliance issues are driving more companies to wholesale colocation facilities with data center regulatory compliance. Providers who carry data center certifications can further reduce the costs of compliance .
Uptime is a major differentiator when it comes to vendors. Data center power redundancy varies among providers. Two of everything (N+N data center redundancy) is the exception, not the rule. Make sure you clearly understand the data center power redundancy, data center cooling redundancy , and telecom infrastructure. If it looks like a single point of failure, it probably is. Hardened data center facilities are just as important, depending on your region and the associated risks. F5 tornado resistant data centers are critical for Midwest colocation facilities.
Data center pricing models vary. Make sure you understand how power, cooling and space allotments are billed. Watch for add-on fees, port charges, and other monthly mystery fees. Affordable colocation exists, and colocation pricing models can greatly affect long-term costs.
Carrier neutral data centers offer the most telecom flexibility. Carrier neutral data centers with no cross connect fees can reduce costs.
Lifeline Data Centers provides 99.995% uptime wholesale data center facilities to companies who need high uptime, flexibility and options. Lifeline is a carrier neutral data center with 15 providers and no monthly cross connect fees. Call Lifeline at 317.423.2591 to learn more about Lifeline’s wholesale colocation and office space solutions.
Colocation and data center pricing models vary: caveat emptor (let the buyer beware). Whether you’re shopping for a cloud computing data center provider or wholesale colocation facilities, if you get three quotes, you’re likely to get three radically different pricing models. Not only is it difficult to compare the quotes apples-to-apples, it may also be difficult to forecast because of the hidden costs of growth and change.
Let’s look at the monthly cost components for a 99.995% uptime data center:
- Capital costs for two of everything: generators, power conditioning, and air conditioning systems
- Capital costs for the hardened data center building with dual telecom and power entrances
- Operating costs for the power systems, including labor and costs to operate and maintain generators and power conditioning
- Operating costs for the data center building facility including maintenance and staffing
- Operating costs to power the IT equipment
- Operating costs to power the air conditioning to cool the IT equipment
Watch for high costs of power on additional power per cabinet. Make sure you understand any power maximums per cabinet. Ask about add-on fees. Carrier neutral data centers with no monthly cross-connect fees offer the most choices for telecommunications.
Lifeline Data Centers offers affordable colocation with a simple data center pricing model that makes it easy to start small, forecast growth, and pay incrementally. Lifeline’s pricing model has three monthly cost components:
- Floor space
- Number of active cabinets
- kW of power utilization
With Lifeline’s data center pricing model, It is easy to determine monthly costs and to forecast growth over time. Are you looking for data center experts that offer lots of telecom choices, no monthly cross connect fees, and a simple pricing model? Call Lifeline Data Centers at 317.423.2591.
