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Premise-Built Data Center Vs. Colocation Data Center 

data center co-lo winter

By Peter Sacco

Are company owned-computer room build-outs escalating?

Like many other market sectors, the data center space ebbs and flows. The latest trend and forecast is that cloud computing and colocation are continuing to grow in popularity and one day, due to cloud’s promise of ubiquitous computer platforms, could nullify the need for company premise-built data centers or computer rooms. That said, this promise has lingered for some time now without being realized. In fact, at PTS Data Center Solutions, based in Franklin Lakes, N.J., we see a different, more recent trend.

For example, in the last several years, the Northeastern United States has experienced substantial utility outages due to inclement weather (Hurricanes Irene in 2011 and Sandy in 2012). Given these extended outages, for over a year now, PTS has been called upon to engineer and install more whole-facility backup power generation systems than ever before. Further, and in keeping with Steven D. Levitt and Stephen J. Dubner’s position in their book Freakonomics, that there is a hidden side to everything — so it seems to be the case with this whole building generator boom.

For small and mid-size companies, installing a generator is the single highest capital expenditure (CAPEX) obstacle to realizing a corporate computer room (what PTS refers to as a tenant-space computer room). However, it’s those very companies that have realized their operations (much less their computer rooms) cannot go without power for an extended period of time and as a result are installing whole-facility backup power systems. What was once the largest financial impediment to computer room ownership is now gone. Along with this is the promise of eliminating the ever increasing operational expenditure (OPEX) of an outsourced IT model.

At the same time, given IT’s ability to deliver operational resiliency, CIOs and CFOs alike are realizing not every data center facility needs to operate as a Tier IV bunker. It’s even more premature to state that cloud computing is taking over. Leveraging cloud computing resources allows a company to eliminate all CAPEX expenses related to facility supporting infrastructure but at increased OPEX expenditures. While maintaining your own computer room or data center facility requires substantial CAPEX and ongoing expenditures for maintenance and upkeep, PTS is actually experiencing a resurgence in company-built and operated data centers and computer rooms. As such, you can almost hear Yogi Berra’s immortal words, “It ain’t over ’til it’s over.”

PTS Data Center Solutions installs a new generator at its headquarters.

PTS Data Center Solutions installs a new generator at its headquarters.

It is likely the industry will hit a stasis point between insourced and outsourced data center facility and IT operations. Many enterprises already have (or will have) a hybrid model whereby some applications are cloud based (i.e., Salesforce.com); while others are housed in company owned and operated data centers. In addition, the cloud based solutions may be further segmented into one of three cloud categories (public, private or hybrid).

If you are considering expanding your data center or adding a generator to improve expected uptime, it is prudent to work with a professional data center design and engineering team to discuss your requirements, options and costs. Also, there are a variety of issues that should be discussed prior to considering a generator deployment for any enterprise.

A good strategy prior to expanding your existing facility or moving forward with colocation research is to:

  • Consider developing a detailed Business Impact Study
  • Followed by a contingency plan based on a company’s information management strategic (IMS) plan

Once it is determined your company is better off expanding or building a new data center or computer room, look to a professional design firm for conceptual design services to define the requirements, plans, and early budgets for such an endeavor.

If the planning activities result in a colocation verdict, your next step is most likely to consider developing or working with an external consultant to develop a Request for Information and/or Request for Proposal and submitting to colocation vendors who meet your criteria in terms of location; service offerings (beyond just power, space and cooling); price points; redundancy requirements; etc.

PROS/CONS: Premise-Built Data Center vs. Cloud/Colocation Data Center





Cost Model

§  Higher CAPEX, Lower OPEX

§  Requires up-front capital or financing

§  Requires on-site or sub-contracted expertise for maintenance of facility and IT assets

§  Lower OPEX, Higher CAPEX

§  Monthly operational expenses for facility leasing

§  Predictable expenditures that increase consistently over time as size of requirements increase


§  Full control over all assets, personnel, and priorities

§  Ability to leverage and share existing space

§  Limited control, may not get priority over other tenants in colocation facility

§  Public cloud solutions limit ability to deploy custom applications and software


§  If space allows, easy to add incrementally to IT or facility infrastructure

§  IT and/or facility expansion requires CAPEX

§  Typically available but depends upon growth within the colocation facility

§  No wasted capacity waiting for future use


§  Acquisition of additional racks, PDUs, power, network can take time weeks to months when needed

§  Assuming the colocation provider has space and resources available, they can expand rapidly within your rack, cage or facility

Start-up Time

§  Six to 24 months depending on size, availability, and IT deployment density

§  On demand, usually within a few weeks to months up to the operator’s size, availability, and density constraints


§  Need to train staff on facility supporting infrastructure, as well as IT, in terms of operations and emergency support

§  Can focus on IT training, but dependent on colocation facility expertise for facility training and management, as well as emergency response


§  Dependent on a combination of in-house, consultants, and vendors for certain ongoing facility-related support

§  Dependent on colocations providers capabilities such that client can focus expertise on core IT infrastructure support


§  Physical and network security implementation and management can be custom tailored using in-house or via outside vendors

§  Physical security owned by colocation provider; however, element of risk caused by other users of data center facility

§  Network security ownership depends upon public versus private cloud structure


§  Ownership falls to data center owner for all aspects of redundancy (IT and facility)

§  Ownership only for IT redundancy

§  Facility infrastructure redundancy managed up to the limits of the operator

Network Choices

§  Depends upon vendors servicing the physical location

§  Typically more choices for network connectivity as many vendors want access to large cadre of tenants


Peter Sacco is the founder and president of PTS Data Center Solutions Inc. Sacco has been involved in the data center/computer room industry as a consultant and engineer for more than 15 years. PTS specializes in the business strategy, planning, designing, engineering, constructing, commissioning, implementing, maintaining, and managing of data center and computer room environments from both the facility and IT perspectives. Learn more by visiting www.PTSdcs.com.

 Illustration by ddpavumba at Free Digital Photo.net

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