Data centre: build or buy?

Demand for data centre capacity is growing rapidly in the region, but there are different approaches to meeting that demand that require decisions at a highly strategic level, and which can have a fundamental impact on the organisation.

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Data centre: build or buy? Organisations have a choice between building their own data centres, buying capacity in a hosted model, or a hybrid approach.
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By  Keri Allan Published  August 18, 2013

IT organisations in the region are increasing in complexity and maturity, and that growth is driving demand for data centre facilities. Catering to these data centre capacity requirements however is a challenge for enterprise and public sector organisations alike, as they have to choose between a large investment in building their own data centres, versus using a hosting provider or co-location deal.

“With data growing in the enterprise sector at between 40-60% per year, infrastructure has no choice but to grow with it. [It] is one of the most critical decisions the executive team will make when it comes to not just its IT strategy, but corporate strategy as a whole,” notes Richard Jenkins, VP, Marketing and Strategic Partnerships at RF Code.

A recent report by Data Center Knowledge highlights that the build vs. buy discussion is sometimes driven by hard number-crunching business analytics and other times by human emotion, ego or habit. It also highlights how some issues can be clearly defined in the discussion — such as cost and time to market, but other factors such as perceived business strength and reputation are more blurred. So how do you decide what’s the best path of action for your organisation?

Firstly it is important to consider all your options and to evaluate what will be best for both the company’s short and long-term goals.

“There are certainly situations in which building one’s own data centre is preferable. When there is a long-term commitment to managing and utilising the data centre infrastructure — typically upwards of seven to ten years — then the build option can in fact be more cost effective,” highlights Sudheer Subramanian, senior solutions IT manager, Huawei Enteprise, Middle East.

“Having total and independent control of facilities is also one of the most compelling reasons to build a private data centre. How the data centre is powered, what are the innovative cooling technologies used to reduce the Power Usage Effectiveness (PUE) and its capacity to scale over the years are all decisions that the enterprise can determine for themselves; designing what they believe is the most reliable and effective facilities and infrastructure for their business.

“The decision to buy space through a service provider also presents unique value to the end user,” he continues. “One of the most apparent benefits is that the upfront costs to acquire the space is significantly lower than if you were going to build your own data centre. For those with limited budgets or unsure of their long-term data requirements, it can also be ideal as contracts can be ended with very short notice periods, and funds then moved to another part of the business as seen fit.

“Furthermore, enterprises working with a service provider can easily scale as the space and facilities are readily available through the provider. Such a model can also present enterprises with greater flexibility in amplifying or reducing their data requirements at any given time, in turn keeping tight control of their operational expenditure.”

There are also ‘middle ground’ options available. For example HP offers the HP POD, a ‘data centre in a box’, which can be set up in just a few months. Then Jenkins recommends businesses go for a mix of build and buy.

“Industries such as financial services, healthcare and those managing large amounts of personal customer data will need a higher percentage of owner-operated infrastructure. The cost of this is higher and there is the management requirement, however owner-operated does provide the organisation with the ability to become more efficient than service providers are able to offer,” he notes.

“Outsourcing to co-location facilities, hosting and cloud service providers is also an essential element of any successful, technology-dependent organisation,” he adds.

“This mixed model enables a company to focus on the processes and data most important to the success of its strategy, accurately plan investment in new infrastructure and technology, and implement the specific solutions required to acquire the data to achieve optimal regulatory, financial and operational performance.”

For those that choose build over buy, there are certain factors to keep in mind.

“Things to keep an eye on [include] projected cost for real estate, running costs and energy consumption as well as long-term manageability,” says Karam Jabi, Industry Standard Servers business unit manager, HP Middle East.

Indeed staff experience and commitment is key. It’s important to hire and retain skilled staff to manage the data centre as it is not simply a build, switch on and forget infrastructure.

“[Data centres] need to be monitored 24x7, equipment maintained as per manufacturer specifications, constantly checked for contamination and security to be tight all the time.  Companies need to build in house capabilities to operate and maintain these infrastructure nerve centres,” notes Mahesh Jaishankar, VP, datamena.
But that’s an issue for after the build — first companies need to make sure they have or bring in the right people to get the project off the ground, as Ahmed Tawfiq, Data Centre executive manager at Injazat Data Systems highlights.

“Data centre design, construction and operation are different than for other buildings and require unique levels of expertise and experience,” Tawfiq comments. “Even experienced data centre providers may not have the design and build resources necessary to undertake a major construction project, as constructing a sophisticated data centre facility can sometimes be compared to other types of specialised facilities such as an oil refinery or a chemical plant which require highly specialised skills and experience.”

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