Amazon’s data center guru James Hamilton is pretty clear that he sees no reason for most companies to keep constructing new data centers from scratch, but if they have a huge compute load and really have to, they should build way more capacity than they need and sell off the excess a la Amazon itself.

While Hamilton has a vested interest in people moving their compute loads to Amazon’s infrastructure, his build big or don’t build at all mantra resonates with several other IT experts. The consensus: It makes sense for most companies to trust their data center needs to the real experts in data centers — the companies that build and run data centers as a business. More companies will start moving more of their new compute loads — maybe not necessarily all the mission critical stuff — to the big cloud operators. That roster includes the aforementioned players as well as Google, Microsoft, IBM, Hewlett-Packard, Oracle and others that are building out more of their own data center capacity for use by customers.

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The IT outsourcing market saw its first substantial decline in twelve months during the third quarter of this year. Transaction volumes fell for both the IT and business process outsourcing (BPO) markets, by seven percent and 12 percent respectively, according to the outsourcing consultancy Everest Group’s quarterly report on the global services industry. The average contract value of BPO transactions plummeted by 50 percent, while the average contract value for IT contracts increased by 14 percent, thanks largely to three billion-dollar plus deals signed during the quarter.

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Most companies who need new high uptime data center space compare the costs of building their own primary data center in a company building versus using wholesale colocation facilities, aka outsource data centers.

So what does high uptime mean? Uptime is the measured value in minutes of a company’s computer systems reliability. 99.995% uptime means 28 minutes of downtime per year or less. Companies who value uptime know that downtime causes lost sales, lost profits, and lost clients. These companies haveoften learned about the costs of data center downtime the hard way. Some unlikely circumstance caused an outage that was painful enough for leadership to reevaluate the importance of the server room to the success of the company.

But the cost of uptime is high. A small in-house data center with 99.995% uptime can easily reach $1 million in capital costs, and tens of thousands in staffing, yearly maintenance, SAS 70 and SSAE 16 data center certifications.

What does affordable mean? Here are three characteristics:

Simple data center pricing model – Can you understand how the pricing works? Are there multiple add-on charges and mysterious extra monthly fees?

Predictable – Predictable pricing models make it easy to forecast growth and change. How complex is a three year analysis of your costs? Are there multiple variable costs?

Incremental- Incremental means pay as you use it. Can you grow the number of racks and pay accordingly? Do you pay for electricity as you use it, or based on the circuit size?

The good news: you can have your cake and eat it too. You can meet tier IV data center uptime requirements and still keep data center outsource costs low. The bad news: there are only a few Midwest colocation facilities that offer high data center uptime at affordable pricing. Do your homework and you’ll find flexible affordable colocation with high data center uptime.

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IBM, HP, and other established vendors entering cloud computing are often already outsourcing partners to the firms that are now frequently looking for an infrastructure service provider. But that doesn’t mean they have an inside track on the business. They do not.

Established vendors are going to face stiff competition for outsourcing business from the new infrastructure providers: Amazon, Rackspace, and others, according to a report by Pricewaterhouse Coopers.

“Service providers in the IT outsourcing space have, after all, profited handsomely by taking on their customers’ highly complex, one-off collections of IT assets and finding ways to manage them more efficiently than their customers are able to,” states the Pricewaterhouse report.

“But the essence of cloud computing is a move towards highly standardized racks of commodity servers,” with software that manages the racks and allows customers to run applications on them through self-service. “Where’s the IT outsourcing opportunity in that?” said the report, sponsored by Mike Pearl, partner and cloud computing leader at PriceWaterhouse.

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Best Buy is hiring some 200 IT professionals as part of this effort, and expects its IT department to increase to as many as 350 employees once this round of hiring is completed.

The electronics retailer, which saw its online revenues grow 13% in the last quarter, is putting IT at the heart of a strategy to respond to the expanding e-commerce market.

“IT is becoming a focal point for Best Buy to compete in the marketplace,” said Scott Heise, vice president of application maintenance and development at Best Buy. “A key component of that is us retaking control of IT.”

The strategy is illustrated by the people the company intends to hire.

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These surveys are providing a picture of strains facing the facilities that cradle the digital economy, as well as the pressure data center and IT managers are under to keep up with demand.

The Uptime Institute, for the first time, recently surveyed 525 data center operators and owners, 71% of whom are in North America. Of respondents, 36% said they will run out of power, cooling and space through 2012.

To meet the need, 40% of the respondents plan to build a new a new data center, and 29% said they would lease additional space in a colocation center. Another 20% said they would move IT workloads to cloud providers.

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Data centres are one of life’s necessities. But as global demand for compute power continues to rise exponentially, driven as much (or more) by cloud and web-based applications as the traditional needs for secure data storage, many data centres, even comparatively new ones of less than 10 years, are struggling to keep up. The sheer scale of the secure physical spaces required, let alone the growing power and energy implications, are presenting data centre users and professionals with unprecedented challenges.

Jones Lang LaSalle’s last Data Centre Barometer survey among European stakeholders, including corporate users, carriers/integrators/web hosters and colocation operators and investors, found a significant swing towards outsourced solutions with around 75 percent in favor compared to just 50 percent 18 months earlier. These findings, among others, combined with the continuing solid performance and growth of local and global independent operators, show the market for outsourcing some or all of the data centre estate to third parties to be in good health.

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2. Choose a State-of –the-Art Class A Colocation Facility – A facility that has highly scalable and super fast connections to the top Internet backbones, redundant UPS and Prime Source type of generator backed electrical power, redundant A/C systems, 24/7 on-site technical support and physical security.

3. Does the Colocation Provider Include Remote Hands for Free or for a Fee? – Ideally, you want to find a provider that does not charge for remote hands service because it can be very costly. There is no need to pay a fee when there are state-of-the-art providers that offer it for free. These colocation providers who include remote hands service for free often have faster, more responsive and experienced technical service personnel who will be there around the clock, when you need them most.

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It’s an expensive proposition. You might want to investigate your options, including infrastructure as a service (IaaS) , and outsource data center facilities, also known as colocation.

IaaS give you the ability to get out of the computer hardware business. You can move your server images to a shared, virtualized environment and run your servers from the cloud. This is very attractive to many businesses, because of low capital costs and low internal employee requirements.

Colocation, also known as outsource data center, provides hardened data center buildings, reliable power, cooling and access to telecommunications. Many companies move their primary data centers to colocation facilities. These companies reap many benefits from colocation:

99.995% uptime, if the facility meets Tier IV data center uptime standards
Fully redundant data center power and cooling for minimal downtime
Data center security including multiple factor authentication, background checks and physical access control
Access to multiple telecommunications providers

A few outsource data centers offer additional benefits:
Private cages for workspace and growth
Pay-as-you-grow pricing
Carrier neutral data centers with many telecom providers and competitive pricing
No monthly cross connect fees, so telecom pricing is reduced even further
Private office space for business continuity or primary offices

Moving your data center to an affordable colocation facility can be the last data center move you need to make. For many businesses, it makes financial sense to de-couple the data center location from the location of the business headquarters.

Want to learn more? Call Midwest data center facilities provider Lifeline Data Centers at 317.423.2591.

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Checklist for 99.995% uptime

Choose a hardened data center facility
Data centers should be designed to protect against the most common risks of the region. With Midwest colocation providers, F5 tornado resistant data centers are important.

Understand the data center power infrastructure
Power is the most common cause of downtime for both in-house and outsourced data centers. Study how the data center has designed the power system. Look for two power feeds, two generators, 2 UPS systems, and at least two outlets per rack. Power should be totally separate for each power feed to the rack.

Understand the data center cooling redundancy model
For data center uptime, cooling is a slightly lower risk than electrical power, but equally important. Without cooling, servers and network equipment will shut off or fail in just a few minutes. Cooling systems should not only be duplicated, they should be designed to be concurrently maintainable.

Understand the telecommunications paths and redundancies
Telecommunications circuits are critical components of uptime. Two or more entrances for telecommunications circuits allows you to build diverse path communications into your data center. Does the data center have two entrances?

Look at the data center downtime track record
Forget the design for a moment. What is the actual downtime track record of the data center? Single power feed failures should be designed to be a non-issue. Is that what has happened in actual practice?

Checklist for affordable colocation

Look for a simple data center pricing model
Colocation pricing models are often complex. Variable charges, too many line items, and overages can make costs variable and unpredictable. Look for providers with a simple data center pricing model. Floor space, active racks, and power usage should be the building blocks of the data center pricing. Watch out for telecommunications monthly cross-connect fees, along with other monthly add-on fees.

Pay for power as you use it
Any other power pricing model is likely to be in the provider’s favor.

Find a facility in a region with low data center power costs
Midwest colocation has some of the lowest power in the nation. You must clearly understand how power is measured and billed.

Find a carrier neutral data center
Access to more telecom carriers is better. Carrier neutral data centers offer multiple providers with no favoritism.

Find a data center with no cross connect fees
A few wholesale data centers provide access to telecom carriers with no monthly add-on fees. If your wide area network is complex, savings in cross-connect fees can pay for your colocation costs.

The real benefit comes when you find an wholesale colocation facility with both high data center uptime and affordable pricing. These data centers are rare. In the Midwest colocation market, Lifeline Data Centers fills the need. Interested in learning more? 317.423.2591.

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