Darren Watkins, Managing Director, VIRTUS Data Centers
The challenge of digital transformation is that it is not a finite state, so it can never be ticked off as complete. It is the ever-evolving transformation of business activities, processes, competencies and models. Today, the influence of cloud, mobile, analytics and social media are having the most impact, but they will surely be superseded by new technologies on the horizon.
Research conducted by Fujitsu found that aging technology is a major barrier to digital transformation, and 57 percent of the businesses surveyed admitted that technology is struggling to keep up with the demands of digitization. So how can organizations keep pace, let alone stay ahead of the technology needed to cope with constant change and the ever-increasing speed of doing business?
The conundrum leads to the classic “build versus buy” question that raises its head whenever it’s time to provision for additional capacity, IT infrastructure and operations. Does it make more sense to build a (new) data center, or buy, lease, or outsource IT needs to a colocation provider?
The most sensible and cost-effective solution is to outsource what you can. Because of cloud, mobile, analytics and social media, as companies grow and scale, it is a foregone conclusion that they will need more infrastructure capacity. Businesses going through digital transformation across a variety of industries, from healthcare, to financial services, to retail, and everything in between, are all amassing large quantities of data and evolving capabilities that need rich computing power, robust infrastructure and resilient connectivity.
The IT industry is one of the most rapidly evolving sectors in the world, and the data center colocation market needs to emulate this, as it provides the foundation to all things digital. Data center providers commit huge resources to R&D to ensure that their facilities are built to the highest level of efficiency. This is an advantage for organizations that buy outsourced colocation space, which ensures that not only are the space and power they purchase today future-proofed for technology and efficiency for several years into the future, but also that their interests are being looked after by experienced, certified professionals. This alleviates the headache and expense of the necessary regular infrastructure upgrades.
Let’s explore the pros and cons of build versus buy.
The main benefit of owning a data center is control, including access, maintenance and future improvements. But it can also be a drawback; hardware refreshes are required every three to five years and data center operation may not be a primary competency of the IT department, therefore requiring additional staff or at least additional OpEx.
Should an organization choose to build its own data center, one apparent advantage is that they can do so to their exact specification and potentially in their ideal location. However, many data center providers now build their data centers in a modular fashion, and most are in highly optimized locations. The modular approach allows customers to be involved in the design specification and provisioning of their space. This level of customer input enables a bought colocation data center to be flexibly customized almost to the same level as building their own environment, whilst harnessing the expertise of the operator.
Financial flexibility is an extremely important consideration for any data center deployment, whether it is an internal corporate investment, or outsourced to a third-party provider. Setting up data centers is hugely capital-intensive and demanding on CapEx. But there are other, often overlooked costs that add up quickly, such as fire suppression and detection and facility staffing. Beyond this, building out the facility will often necessitate a provision for growth which in the short-term will make the facility inefficient — and sometimes this leads to investing money in space which may never be used.
When buying colocation space, most providers will give their customers flexible contracts, with terms that allow for the amount of space contracted to shrink or grow depending upon your actual requirements over time; the amount of time the contract runs for, providing ramp up periods for installation, without having to pay full rent until everything is successfully deployed; and the amount of power consumed, billing only for power used on a ‘pay as you go’ plan, which maximizes budget during times of low or peak usage. These things all help to develop a more predictable expenditure model with costs that increase consistently over the life of the data center.
Five to ten years ago, it could certainly have been argued that building an owned data center was more secure, but physical, cloud and cyber security have evolved to the point where providers typically have far greater resources to invest in security than an individual company.
More and more enterprises are now adopting a hybrid cloud model for their IT infrastructure, and being able to easily reach cloud services is essential. By choosing to colocate in a third-party data center, customers are in an environment with an abundance of other customers, many of whom will be offering cloud platforms and applications. This creates a natural ecosystem where customers can benefit from the services that other customers supply. Cloud solutions from providers like Google Cloud, Microsoft or AWS may be just a cross-connect away within a premium data center that provides a cloud access solution, and this ease of access to public cloud platforms makes for a very reliable environment.
To support this, most data centers have a good selection of carriers within their facilities who have provisioned extremely dense high quality fiber networks, giving customers a wide choice of connections to cloud platforms and beyond. These connections are often 100 percent reliable, as fail-safe options can be aligned to avoid any potential outages. For an organization’s own data center, this option is generally considered too costly and so they are often made to work with one or two service providers only, limiting their reliability and potentially increasing the risk should an issue arise.
The debate about building versus buying has raged for years, but it is returning to front of mind as organizations are spurred on by the government to go digital. The continual hunger for new and improved ways of doing business brings with it the unrelenting need for additional space and power, which means modern, efficient infrastructure.
Building an in-house data center is resource-intensive and requires experience. Once a data center is built, it also has to be managed, updated and administered — all of which can be incredibly complicated throughout its life. The “buy” option provides the best protection against increasing data center complexity, cost and risk, and eliminates the need to worry about uptime, technology obsolescence and future requirements. It also preserves valuable capital that can be invested in core business initiatives.
About the Author
Darren Watkins began his career as a graduate Military Officer in the RAF before moving into the commercial sector. He brings over 20 years of experience in telecommunications and managed services gained at BT, MFS Worldcom, Level 3 Communications, Attenda and COLT. He joins the VIRTUS team from euNetworks where he was Head of Sales for the UK, leading market-changing deals with a number of large financial institutions and media agencies, and growing the company’s expertise in low-latency trading.