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Buy vs Build Considerations in Today's Data Center Marketplace

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This presentation was given during the Spring 2012 Data Center World conference by Jerry Gallagher and Jeff Robinson from Mission Critical. Learn more about Data Center World at …

This presentation was given during the Spring 2012 Data Center World conference by Jerry Gallagher and Jeff Robinson from Mission Critical. Learn more about Data Center World at www.datacenterworld.com.

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  • 1. • Interested in data center build and design? Learn about specific sessions on build and design at the upcoming Fall 2012 Data Center World Conference at: www.datacenterworld.com.This presentation was given during the Spring, 2012 Data Center World Conference andExpo. Contents contained are owned by AFCOM and Data Center World and can only bereused with the express permission of ACOM. Questions or for permission contact:jater@afcom.com.
  • 2. “Buy vs. Build”Considerations in Today’sData Center MarketplacePresenters:Jerry Gallagher, CEO & PresidentJeff Robinson, Vice President
  • 3. The Situation Today • In t o d a y ’ s d y n a m ic D a t a C e n t e r m a r k e t , f ir m s n e e d in g IT s p a c e a r e f a c e d w it h t h e c h o ic e o f B u y v s . B u ild • B o t h s id e s h a v e t h e ir b a c k e r s • B u t w h ic h f a c t o r s & t o o ls s h o u ld d r iv e t h e d e c is io n ? • T h is s e s s io n p r o v id e s a h ig h - le v e l  o v e r v ie w f r o m s e v e r a l p e r s p e c t iv e s : – F in a n c ia l – O p e r a t io n a l – T e c h n ic a l
  • 4. Today’s Learning Objectives • F o llo w in g t o d a y ’ s p r e s e n t a t io n , y o u s h o u ld b e a b le t o : – Id e n t if y f a c t o r s & d if f e r e n c e s t o e v a lu a t e c o -lo c a t io n a n d b u ild -o u t s o lu t io n s – D e t e r m in e s it u a t io n s w h e r e b o t h o p t io n s m ig h t b e c o n s id e r e d v ia b le s o lu t io n s – C o n d u c t a C o m p a r a t iv e A n a ly s is o f t h e o p t io n s t o d e m o n s t r a t e t h e b e s t c h o ic e
  • 5. Distinguishing Buy & Build • B uy – O u t s o u r c e d W h o le s a le – C o lo – M a n a g e d H o s t in g – C lo u d ( S a a S ) • B u ild – T r a d it io n a l C o n s t r u c t io n o f a D a t a C e n t e r F a c ilit y – M a y b e e it h e r : • U s e r -O w n e d • U s e r -L e a s e d
  • 6. What We Won’t Be Talking About • S t r a t e g ic P la n n in g : W id e r V a r ie t y o f O p t io n s – C o n s o lid a t io n s – P la t f o r m M ig r a t io n s – O p e r a t io n a l R e c o n f ig u r a t io n s • H y b r id F a c ilit ie s – C o m b in e d O f f ic e & D a t a C e n t e r S pac e • R e v e r s e C o lo O p t io n s – O v e r b u ild in g , t h e n r e n t in g t o o t h e r s u b -t e n a n t s
  • 7. Today’s Situational Examples • S c e n a r io A – M a jo r In s u r a n c e F ir m – O u t g r o w in g t h e C u r r e n t F a c ilit y • S c e n a r io B – F o r t u n e 5 0 0 S e r v ic e s P r o v id e r – N e e d s a D is a s t e r R e c o v e r y E n v ir o n m e n t • S c e n a r io C – N o t -f o r -P r o f it G o ve rnme nta l C o ntra c to r – C u r r e n t F a c ilit y is R e a c h in g E n d -o f - L e a s e ( o r E n d -o f -L if e c y c le )
  • 8. Factors to Consider • T e c h n o lo g ic a l • F u n c t io n a l • O p e r a t io n a l • F in a n c ia l • O the r
  • 9. Factors: Technological • M ix o f Yo u r E q u ip m e n t – S e rve rs – S to ra g e – N e tw o rk • P r o je c t e d G r o w t h & P r e d ic t a b le E x p a n s io n s • P r o je c t e d C o n t r a c t io n s – V ir t u a liz a t io n – C o n s o lid a t io n s • P la t f o r m s D e p lo y e d & E v o lu t io n s • S p a t ia l, E le c t r ic a l a n d C o o lin g D e n s it ie s
  • 10. Factors: Functional • In f r a s t r u c t u r e R e lia b ilit y ( T ie r in g ) • U n c e r t a in t y in t h e G r o w t h P r o f ile • N e c e s s a r y P r o x im it ie s & A d ja c e n c ie s • B u s in e s s C o n t in u it y P la n s
  • 11. Factors: Operational • S t a f f R e q u ir e m e n t s • S LAs • S e c u r it y • L i m i t a t i o n s w /D a t a C e n t e r S upport • N O C R e q u ir e m e n t s • P ow e r Ma na g e me nt • T e le c o m m u n ic a t io n s • C o r p o r a t e C u lt u r e
  • 12. Factors:Other Advantages/Disadvantages • S to ra g e S p a c e • D is t a n c e & P r o x im it y t o H Q a n d S ta ff • “ C o r e B u s in e s s ” C o n c e p t s • T h e Neighbors
  • 13. Big Question:C a n t h e F a c t o r s Yo u ’ r eC o n s id e r in g( T e c h n o lo g ic a l,F u n c t io n a l, O p e r a t io n a l,O the r) b e R e d uc e d toF in a n c ia l T e r m s ?I f n o t , t h e n y o u ’l l n e e d t od e v e l o p a F a c t o r W e ig h t in ga p p r o a c h t h a t h e l p s we e d o u t
  • 14. Applying the Factors • In it ia l “ M a n d a t o r y F e a t u r e s ” C h e c k lis t • N a r r o w O p t io n s t o 5 o r 6 C h o ic e s • S o lic it L e a s e P r ic in g • D e v e lo p C o n s t r u c t io n E s t im a t e s • P r e -W e ig h t Im p o r t a n c e o f N o n - F in a n c ia l F a c t o r s • J u d g e C h o ic e s B a s e d o n F a c t o r s
  • 15. Financial: Checking the Numbers • C o s t C o m p a r is o n s T y p ic a lly In c lu d e : – C o n s t r u c t io n C o s t s v s . – H o s t Ve nd o r L e a s e C o s ts
  • 16. Financial: Checking the Numbers • B u t D o n ’ t F o r g e t t o C o n s id e r : • S h e ll L e a s e C o s t s • L a n d /B u i l d i n g P u r c h a s e O p t i o n s • E ne rg y C o s ts • F a c ilit y M a n a g e m e n t • F a c ilit y M a in t e n a n c e • S e c u r it y S e r v ic e s • S t a f f in g D if f e r e n t ia ls • T e le c o m m u n ic a t io n s • Ta x C o n s e q u e n c e s • In c e n t iv e s
  • 17. Financial: Checking the NumbersColo/Host Vendor Pricing • T r u e le a s e c o s t b o t t o m lin e m a y b e d is g u is e d – O f t e n u n t il a f t e r y o u ’ v e d e t e r m in e d t o g o c o lo • P r ic in g T o m f o o le r y – N o F in a l P r ic e Q u o t e s n o t u n t il n e a r - t im e c o n t r a c t s ig n a t u r e – T r a n s l a t i n g $ /k W v s . $ /s f v s . $ /R a c k – A d d e d C o s t “ O p t io n s ” : • C r o s s -c o n n e c t s • M a n a g e m e n t fe e s • P o w e r w h ip s a n d e le c t r ic it y c h a r g e - bac ks • A llo c a t e d v s . A c t u a l P o w e r D r a w
  • 18. Financial: Checking the NumbersConstruction Pricing • P r ic e E s t im a t e s m a y b e a ll o v e r the ma p – U p t im e In s t it u t e h a s a s y s t e m t h a t t e n d s t o le a n u p w a r d – N a t u r a l in c lin a t io n f o r in t e r n a l e s t im a t e s : T o o lo w – In e x p e r ie n c e d A M E P s t e n d t o f o r g e t R e lia b ilit y E s t im a t e s • C o n s t r u c t io n O p t io n s & V a r ia t io n s – N o F in a l P r ic e Q u o t e s n o t u n t il n e a r - t im e c o n t r a c t s ig n a t u r e – T r a n s l a t i n g $ /k W v s . $ /s f v s . $ /R a c k – A d d e d C o s t “ O p t io n s ”
  • 19. Best Practices: Cost EstimatingTricks • A p p ly R u le s f o r t h e T im e V a lu e o f Mone y – A llo w s f o r a F a ir C o m p a r is o n f o r T r a d in g O f f L o n g -T e r m O p e r a t io n a l C o s t s v s . C a p it a l C o s t s • S o m e C o s t E s t im a t in g R u le s -o f - thu mb
  • 20. The Final Comparisons B e s t S e r v e d w it h : • S t r u c t u r e d E v a lu a t io n P r o c e s s • S t a b le W e ig h t in g F a c t o r s • C o m p a r is o n U n d e r s t a n d a b le b y B o th: – Uppe r Ma na g e me nt & – Us e rs • E v a l T e m p la t e P r e p a r e d & A g r e e d o n in A d v a n c e
  • 21. Co-location May Not Fit When • 10 +- Y e a r U s a g e H o r i z o n – C o lo C o s t S a v in g s d o n ’ t m a t c h O w n e r - C o ns tru c te d – T C O b a s is : C o n s t r u c t io n c o s t p a y -b a c k is t y p ic a lly 7 t o 8 y e a r s • C o n t r o l O v e r F a c ilit y O p e r a t io n s R e q u ir e d • T i g h t D a t a C e n t e r C o l o /H o s t i n g M a rk e ts
  • 22. Purpose-Built May Not Fit When • R a is e d F lo o r < 2 , 5 0 0 s f • N e e d f o r E n v ir o n m e n t a l & O p e r a t io n a l C o n t r o l • A f f o r d a b ilit y D e p e n d s o n R e v e r s e C o lo O p t io n
  • 23. Take-Away’s • T a k e I n d u s t r y W h i t e P a p e r s w /a g r a in o f s a lt • N o “ O n e -S iz e -F it s -A ll” A n s w e r • R e a l D a t a C e n t e r c o n s t r u c t io n c o s ts o fte n – G r e a t e r t h a n in t e r n a l e s t im a t e s – L e s s t h a n in d u s t r y s t a n d a r d e s t im a t e s • w /M o s t D a t a C e n t e r c o s t c o m p a r is o n s , it ’ s v e r y c o m m o n t o f o r g e t a n e x p e n s iv e e le m e n t
  • 24. Q&A
  • 25. “Buy vs. Build”Considerations in Today’sData Center MarketplacePresenters:Jerry Gallagher, CEO & PresidentJeff Robinson, Vice President
  • 26. • Interested in data center build and design? Learn about specific sessions on build and design at the upcoming Fall 2012 Data Center World Conference at: www.datacenterworld.com.This presentation was given during the Spring, 2012 Data Center World Conference andExpo. Contents contained are owned by AFCOM and Data Center World and can only bereused with the express permission of ACOM. Questions or for permission contact:jater@afcom.com.