Grow your data center with colocation

It's quicker and a lot less expensive than building your own

Brian Burch knew the moment had arrived. Two of his data center's key services -- availability and business continuity -- needed fast and dramatic improvement. Design and location limitations meant that his company's existing data center couldn't be upgraded to the levels necessary to provide the required function and performance gains.

So Burch, senior worldwide infrastructure director of Kemet, a capacitor manufacturer headquartered in Simpsonville, S.C., decided last year that it was time for his data center to split.

Even in today's challenging economy, enterprises are facing rising internal and external demands for IT services. When an existing data center can no longer shoulder an enterprise's IT burden alone, or when it becomes necessary to establish a secondary site to provide enhanced business continuity or regional network support, an important decision point has been reached.

For a number of enterprises, the obvious solution is to add another data center, and for many of those it means partnering with a colocation facility. (For a definition of "colocation," see the sidebar at right.)

If you're considering this option, it doesn't just pay to do your homework, experts say; it's essential.

"You absolutely need to do the buy-vs.-build analysis," says Jeff Paschke, senior analyst at Tier1 Research. That said, "I am a former enterprise data center manager, and from what I know now, more should be using [colo] than they do," he added.

The No. 1 reason to consider colocation comes down to financials. "Do you want to go to your board and ask for $50 million in capex [capital expenditures] for another data center?" Paschke asks. "The alternative is to go to a provider and use opex [operating expenses] and not have to spend money upfront," he says.

Given the massive costs and time demands required to build a traditional data center, "fewer organizations are deciding to build their own satellite data centers," says Lynda Stadtmueller, a data center analyst at technology research company Frost & Sullivan.

Especially for enterprises that have latency-sensitive applications that require local presence, there is a trend toward leasing space from a colo or hosting provider rather than building and managing their own data centers, she explains.

A Frost & Sullivan study conducted a year ago showed that total data center space used by enterprises will increase by almost 15% annually through 2013. Yet the percentage of that space that the enterprises own themselves -- versus leasing from another provider -- will decrease, from 70% to 64%, during that time. "A pretty hefty swing," Stadtmueller says.

Technology research firm Info-Tech Research Group backs that up. Some 64% of organizations engage in some form of data center colocation services, including hosting, but over 77% of them do not outsource the entire data center, according to a survey of 78 customers conducted in late 2010.

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