Transcript Document
ITM 6.1: To Colocate or
Not Colocate
Presented by: Steve
Miano, Managing Principal,
PlanNet; and
Gary Davis, Principal, Data Center Services,
PlanNet
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ITM 6.1: To Colocate or Not Colocate
This session will cover the analysis, criteria and decision
making process to determine whether Colocation is the right
solution for your enterprise. Real-life case studies will be
presented on companies who elected to Colocate their data
centers, and on those who determined that building and
operating their own data center(s) was the better option, and
how they came to those conclusions.
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Agenda
Why Firms are Interested in Colocation
Colocation Myths and Misnomers
Primary Colocation Markets
Various Scenarios and Use Cases Incorporating Colocation
Process of Vetting and Selecting a Colocation Facility
Colocation Pricing Models (Making Sense)
Case Studies
Summary
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Examples of Colocation Types
This is for illustrative purposes based on our experience and is meant to show the differences in
wholesale and retail Colocation with 10 being the lowest cost/KW, most control and highest level
of security, and 1 being the opposite. Fortune and Global Enterprises are shown in BLUE while
smallest organizations are shown in YELLOW.
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10
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Single Tenant, Co-Lo
Managed Infra
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Multi-Tenant, Dedicated
Suite
Multi-Tenant, Caged
Envirnment
4
Multi-Tenant, Dedicated
Racks (Retail)
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0
Security
Cost/KW
Control of Services
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Colocation Defined
“A Colocation (Colo) is a data center facility in which a business can rent space for servers
and other computing hardware. Typically, a Colo provides the building, cooling, power,
bandwidth and physical security while the customer provides servers and storage.”
From Whatis.com
Can be an entire building dedicated to a single tenant where a Colocation company
provides managed facility and other services
Can be a demised suite within a building where the tenant occupies the space
exclusively (shared or dedicated infrastructure) with tenants in other suites within the
building
Can be a fenced off cage within a larger space occupied by other tenants
Can be one or more lockable racks within a multi-tenant space
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Why are Firms interested in Colocation?
Want to lower cost of ownership, risk and time associated with new construction
Avoid large capital expenditures and move funding to operational model
Achieve a data center reliability that may be difficult to maintain in a client-built and
managed facility
Unplanned growth demand taxing existing infrastructure
Operate in a lower-risk location
Improve facilities operation (outsource facility management)
Leverage robust network capabilities
Improve access to managed services and private cloud capabilities
Opportunity to improve IT operational processes, controls and documentation
Real estate driven imperatives (e.g., lease expiration, building sale)
Outsource of data center function to a deep-skilled, capable provider
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Colocation Myths and Misnomers
I will save costs by moving the data center to a Colo
May not the lowest cost option over time
Conduct a data center strategy with a TCO assessment of alternatives
Colo’s are too expensive!
Colocation can be cost-effective and in some cases, much lower cost than the client-managed facility
Assume you can’t move because of significantly higher network costs
We will achieve lower power costs than in our current site
The Colo power efficiencies may not represent lower cost to its tenants
The Colocation data center is advertised as a Tier 4 and I won’t experience any downtime and/or I
won’t require a DR site
Very few data centers would meet TIA standards for Tier 4 including premium Colo sites
Many outages are due to operational errors
Don’t assume additional space/power/cooling will be available
Multi-tenant Colocation data center are not as secure
Most best-practice Colocation providers achieve superior security compared to many client-managed facilities
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Colocation Myths and Misnomers
I trust my Colo partner, therefore SLAs are not that important
SLA’s are critical to protect the client’s interest
I can try Colocation for a few years before long-term commitment
The cost of migrating a data center is extensive (multi-million dollars) and very disruptive.
Recommend a 5- or 10-year agreement with options
Don’t assume additional space/power/cooling will be available
I’ll let Real-Estate determine my needs and find the best option
Real Estate professionals or brokers must have fundamental understanding of IT Infrastructure and
applications to provide proper guidance
Often, data center initiatives to evaluate Colocation or build opportunities with Real Estate a key
stakeholder
Selecting a Colo is not only a Real-Estate transaction, it’s also and IT Infrastructure transaction
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Bandwidth Price/Performance Ratio
Representative Private Line/MPLS pricing
(monthly)
$25,000
Cost per Mbps for data center
circuits has been dropping,
enabling larger workloads to
be geographically separated
from end users (LAN to WAN
$20,000
$15,000
$10,000
access use cases)
$5,000
$2008
2010
155 Mb
2012
2014
1 Gb
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Bandwidth Price/Performance Ratio
con’t
Internet Transit Prices (1998-2014) U.S. Internet Region
Year
Price per
% Decline
Mbps
1998
$1200
1999
$800
33%
2000
$675
16%
2001
$400
40%
2002
$200
50%
2003
$120
40%
2004
$90
25%
2005
$75
17%
2006
$50
33%
2007
$25
50%
2008
$12
52%
2009
$9.00
25%
2010
$5.00
44%
2011
$3.25
35%
2012
$2.34
28%
2013
$1.57
33%
2014
$0.94
40%
2015
$0.63
33%
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Primary Colocation Markets
Regional metropolitan areas that meet the following criteria are
desirable locales
Low to no geographical risk (earthquake, hurricanes)
Cool climates (even desert climates offer more free cooling days than might be
thought)
Low, sustainable and stable power costs (previously made renewable energy
investments by the Utility) will help ensure power costs will stay relatively stable
Access to Tier 1 Telecommunications provider infrastructure
Market has ample IT and MEP support vendors
Door-to-door time to get from main IT presence to Colo (4 hours)
Site with robust utility infrastructure (sub-station, water, entitlements)
Tax incentives (Enterprise Zone Tax break, Tax Abatements)
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Qualitative Evaluation
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Vetting and Selecting a Colocation Facility
Develop a strategy with key stakeholders active participation
Developing a multi-year demand forecast is vital
Determine best-case scenarios including combinations of Colo, build, uplift,
etc.
Determine the best metro-regions and for your Colocation data center
Within metro-regions, ascertain qualified Colo providers
Prepare a bid specification (RFx) stipulating your requirements
Limit the RFx to 4 or 5 Colocation providers (usually across multiple markets)
Vet pricing by having the providers fill out a common bid form to normalize
pricing
Short-list providers based upon their bid response
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Vetting and Selecting a Colocation Facility cont’d
Conduct provider and site due-diligence
Have a professionally qualified engineer to evaluate:
Data Center operations, controls & security
Network infrastructure
Power and utility provisioning
Data Center services
Outage history
quantity, quality, & redundancy of MEP:
specific location risks
review SOPs and MOPs,
identify gaps and deficiencies,
have Colo’s respond to identified concerns
Ensure Colo responses mitigate issues to your satisfaction
Ask for best and final pricing
Negotiate terms of 5- to 10-years (including options) with clauses based on SLA’s
Utilize an attorney with experience negotiating Colo leases
Appoint an owner’s rep to oversee any improvements and make-ready state
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Colocation Pricing Models
Many Colocation providers may have different pricing models
May make normalizing pricing and TCO difficult to ascertain
Metered Power – You pay for the power you actually use plus a factor for cooling
and overhead
Circuits Provisioning – You pay for circuits to your racks whether they are primary
or redundant
Telecom Cross Connects – Colo’s usually charge a monthly fee for network cross
connects from the Meet Me Room
Racks – You pay for the number of racks you install whether used or not, plus
power charges
Growth – You pay for expansion space whether it’s used or not
Wholesale – You’re given your own suite similar with a Metered Power option
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Data Center Scenarios and Use Cases
Move Primary Data Center to Colo and provision existing DC repurposed to DR
Owned Data Center is Primary Production and Colo is DR/Sub prod
Three DC configuration with split loads using one, two or three Colo’s with
geographical disbursement
Colocation is determined as a strategy by the organization
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Case Studies
Global Engineering Company
Key Driver – Had 40+ global data centers & wanted to
study consolidation strategies to lower cost and
complexity of management
Evaluate Colocation vs. building and operating
their own data centers
Recommendation was to build two geo-regional
data centers in Ireland and Pacific Northwest
Affinity to campus engineering applications
Existing business operations with significant tax
abatement
Colocation was not feasible in US location and
was not cost-effective in EMEA location
Colo No-Go
Developed internal cloud to provide services to
divisions worldwide
Completed both data centers in 2013 with
expected results
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Case Studies
Global Entertainment Company
Project 1 – Study Division of Parent Co.
Key Driver – Move storage to lowest-cost of
operation in a Colo
Evaluated Colo’s in low cost of energy &
operations regions
Client had spent significant capital on existing
DC, it was recommended to defer to 2015
Project 2 – Study Parent Co. and all Divisions
Key Driver – Consolidate and Lower Cost
Affinity to existing DC and Broadcast facilities
Colocation & existing DCs being evaluated in
N.A. expanding to AMEA
Colo TBD
Consolidate a dozen data centers
Early in study but Colo may be part of the
strategy
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Case Studies
Regional Bank
Key Driver – Mitigate outages, DR site lease
expiry and improve reliability of applications
History of outages and poor MEP design
Evaluated Colo’s in prime regions
Recommended Colo for primary
production
Recommended existing owned DC be
uplifted to Tier 2 +
Use of Cloud SaaS services
Real-Estate driven initiative with strong
support from CxOs
Colo a Go
Project successfully completed in 2013
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Case Studies
Global Airline
Key Driver – Primary DC in a leased facility with expiration in
2017
Before move new customer-facing apps to local Colo,
CEO initiated a comprehensive study
Data Center was sub Tier 2 with multiple SPOCs
History of outages due to poor MEP design (no
redundancy in power infrastructure)
Evaluated Colo’s in prime regions and locations with
affiinity to existing operations
Existing DC in a low-risk zone with low Cost of
Operation
Colo a Go
Recommended uplifting existing DC and moving DR to
Colo in prime metro region
Migration costs made it cost prohibitive compared to
other scenarios
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Case Studies
Large Regional Utility
Key Driver – Multiple outages, most caused by
human error and poor documentation
Two primary data centers with some
Active-Active for Tier 1 applications
Main (larger) DC has strong operations
history and moderate operational costs
Secondary DC (some production and DR)
history of outages
Evaluated Colo’s in prime regions and
locations with affinity to existing
operations or other Utilities (shared DC)
Existing DC in a high-risk zone with
average Cost of Operation
Outcome likely to move the Secondary to
Colo in low-cost region
Colo is a Go Slow
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Summary
Each company has different issues and cannot use other studies as their own
You must evaluate the cost, benefit and risk of Colocation vs. building or uplifting your
own DC
Your executives will expect to see a Total Cost of Ownership financial model, cash-flow
(capital and operational expense) and qualitative data that went into your
recommendation
Engage key stakeholders such as Real Estate, IT, Finance, Application Teams, Network
Team, Operations, etc.
No project will get green-lighted without strong executive sponsorship
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Thank you for your time!
Steve Miano
Principal
PlanNet Consulting
714.982.5820
[email protected]
Gary Davis
Principal
PlanNet Consulting
714.982.5886
[email protected]
www.PlanNet.com
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