By Nathan Sykes, Writer and Editor for Finding an Outlet
Financing a data center is particularly difficult and requires both flexibility and perseverance. Why? Because it’s almost impossible to predict how much capacity and bandwidth you’ll need overall and how that will change over the course of time. As your business grows and your customer base expands, you’ll need more — but just how much more is up for debate.
Customer expectations and consumer demand are in flux, and modern technology is constantly evolving. As more platforms and technologies are adopted by your company and customers, the requirements for your network will change as well. Ultimately, this shift puts the defined amount of how much all this actually costs into question. And how can you pursue financing in any capacity, be it from a business loan or even from investors, without knowing how much you’re going to need?
Fortunately, you can take some steps to better prepare your data center financing strategies.
1. Consider Leasing Opportunities
Data centers make use of resource-intensive and costly equipment, but you don’t necessarily have to purchase it all up front. You can buy new or used, but you can also lease what you need. Even just leasing some equipment can help considerably.
The advantage of leasing is that it helps you avoid obsolescence problems because you can trade in equipment and hardware when you’re ready for new gear. This process is absolutely vital to dealing with modern technologies, which change rapidly.
It also helps with financial management, because you’re balancing monthly costs as opposed to spending incredibly large sums of money. To some, this strategy might seem like more hassle, especially when working with a tight budget. However, it also contributes to your business’ capital and lines of credit. Business credit naturally improves, and the line stays free in case of emergencies. You could use it to deal with unexpected overhead costs, for example.
It’s important to remember that you don’t have to lease everything. You can strike a balance between the equipment you own and that which you lease.
2. Identifying Financial Support
Securing a financial loan through a bank is, of course, one of the most common ways to finance a data center. Business loans and open lines of credit can certainly help considering data centers are constantly growing, but you’ll likely need additional funding as well.
There are state and local programs designed to assist with data center transactions and operations. There are also both public and private partnership opportunities worth considering. Sales tax benefits might help with the overall cost of equipment — cutting down on excess expenses — whereas real estate tax breaks can help with the acquisition and maintenance of a property. Some states will even offer utility incentives to building owners, which can certainly help mitigate ongoing data center costs.
Take your time to identify the financial support options available to you. Exploring more options might mean getting in touch with a proper representative or legal team to help you identify other avenues fully.
3. Choose the Right Equipment
Nearly 40 percent of a data center’s total operational costs come from the energy supply used to power and cool equipment. This statistic shows just how important it is to keep your equipment well-maintained. By keeping server cooling technologies up-to-date and functioning at their prime, you can cut down on costs and increase operational efficiency.
Regarding equipment and hardware, you’ll need to take time to choose the appropriate tools and systems that will serve as the foundation for your business. Network storage solutions, like multiple server racks, can offer considerable benefits over traditional server setups. They tend to have longer lifespans and hold much less risk in regard to obsolescence, if only because you can swap out components.
It’s up to you as the business facilitator to understand and identify what works best.
4. Avoid Overlooking Security
Cybersecurity and data privacy issues can wreak havoc on a business new or old. This issue is even more impactful with a technology- and data-driven company. Given the increasing number of high-profile data breaches and cyber attacks in today’s landscape, this requirement shouldn’t come as a shock. But what may be alarming is the fact that staying up-to-date with both hardware and software solutions can decrease risks considerably.
Incorporate the proper security solutions — including a firewall, traffic monitoring system and backup storage solutions — but also ensure your systems and technologies are as up-to-date and current as possible. This plan should include either hiring an in-house security team or outsourcing the duties to an experienced provider.
Flexibility Is Crucial
The solutions discussed here will certainly help you secure financing for your data center and equipment needs. In the end, however, it’s the overall flexibility of your business and operations that will have the biggest impact on success. This fact explains why many turn to cloud and colocation opportunities to handle modern data needs. The remote location and expertise mean that businesses benefit from an already established partner, with the appropriate tools and systems to scale up — or down — based on performance.
Even though colocation data center facilities and solutions do offer considerable flexibility and cost reduction benefits, the setup may not be ideal for every business operation. It’s all about flexibility and choosing the appropriate configuration for your business.
About the Author:
Nathan Sykes writes about business technologies on his blog, Finding an Outlet. To read his latest articles, follow him @nathansykestech.