Data Center Costs: Should You Build or Lease Data Management?

Just how much does it cost to manage data, all in? Fundamental question, especially if you are crunching the budget numbers to determine whether your enterprise should build a data center or engage with a colocation provider. You need to account for buying real estate, permitting, walls, racks, servers, wires, wire management, HVAC and energy – that’s just the start of the capital expenses supporting a DIY project, with recurring OPEX to follow.

Colocation Pricing Tips and Tools

But as you expect, there’s even more to the decision. In our post, 7 Tips for Choosing the Right Data Center Company or Colocation Provider, we discussed some of the criteria that you should factor into your decision, which includes evaluating a few things you might not think of, for example “The Lemming Effect.” When many providers build facilities in the same area, it’s a very good indication that the area is geographically hospitable, has good network connectivity, and has reliable utility services to provide power and water. Providers gravitate to that region like lemmings to the sea. Our 7 Tips post isn’t intended to be a comprehensive list, but will serve well as a starting point for an RFP and steering committee discussion.

Also, we recently developed a Colocation Calculator that provides a measure of clarity into the build vs. lease comparison, based on a 10-year evaluation. It gives you apples-to-apples estimates for construction vs. rent, your IT load (specifically, the amount of energy consumed), monthly costs for cloud connections, staffing and even potential financial impact of downtime vs. an SLA guarantee. Again, while we don’t think it’s the only tool you need to make a decision, it’s a good way to ballpark the savings of switching to colocation.

One Potential Exception

Every business will benefit from colocation, right? Maybe not. For example, if you have a robust in-house IT team, a low cost of capital, predictable capacity requirements and applications that are not latency sensitive, the business case for moving to colocation may not show a positive ROI for making the transition, at least not now.

Ready to Go All-In?

Aside from the rare exception, odds are favorable that you’ll be swept along by the digital transformation tsunami. Successfully riding that wave can happen in a variety of ways, and with careful planning, thorough vetting, and honest self-assessment, you’ll be able to fully leverage the advantages colocation offers and determine the best way for you to minimize the cost of managing your data.