Advantages of server colocation over own server room

Outsourcing of IT infrastructure
Author: Atman

In the era of digital transformation and popularization of cloud computing and rising labor costs, building and/or developing its own server room is not justified neither operationally nor economically.

If we take into account the overall costs of the functioning of a data center (TCO – total cost of ownership), namely costs of the infrastructure and its modernization, maintenance, electricity and remuneration of employees, it will turn out that colocation/hoteling will always be a more effective solution.

This is well demonstrated by the analysis that we conducted together with Audytel. We analyzed two cases: in the first one, we determined that the company needs 100 sq m. server area, in the second one, we tried to calculate investment expenditure s and operating costs for a firm from the SME sector that needs three server racks. At the same time, we took into account four scenarios: the construction of our own data center, the construction of a server room in an office building, further operation of the existing server room and hoteling with an external data center operator. In each of the analyzed cases, colocation turned out to be a cheaper solution – regardless of what server area we are talking about. It is worth noting that the scale of savings generated due to the colocation is considerable.

Our calculations carried out in cooperation with Audytel show that server room outsourcing will be almost twice cheaper over the period of 20 years as compared to the investment in own data center with an area of 100 sq m. By resigning from building their own data center, large enterprise will save almost PLN 70 million. A similar amount will remain in the budget when the operation of the company server room is abandoned, and in the case of resignation from the idea of building a server room in an office building – PLN 57.2 million.

In the case of a firm from the SME sector, just over the period of 5 years outsourcing turned out to be significantly, i.e. by 70%, cheaper compared to investments in its own data center. Colocation turned out to be cheaper both when compared to the further operation of own server room, as well as the adaptation of the office building for the new server room. Savings in both cases are at the level of PLN 4.5 million. The savings are influenced by, among others, the fact that in the case of hoteling, we get access to modern infrastructure almost immediately. In addition, the costs of investment and staff maintenance are distributed to all data center clients. The purchase of electricity is also cheaper, because a large facility can negotiate prices due to the scale of its operations.

Theoretically, with a very long investment horizon and a large area, it may turn out that it will be cheaper to build own server room, but let’s not forget that the infrastructure gets torn and worn, which means expenses. In addition, in the case of renovation or regeneration of essential server components, it is worth asking some questions: What about redundancy? How much will it cost? Who will carry out the exchange?

Apart from the issue of costs, it is worth paying attention to the solutions and security measures applied. As a data center operator, we use infrastructural solutions dedicated to DCs, and in the case of on-premises server rooms, this is not always the case. In addition, the team of engineers responds to any incidents, and also supports clients in maintaining their IT equipment 24/7. In a situation of a shortage of specialists, maintaining such a level of services within own organization can be very difficult and expensive.

The first option is the basic colocation service. It is already a well-known product on the market, but in the case of a backup data center, it is often enriched with dedicated links between the core and backup centers. In this configuration, the distance between the two data centers is really important. If the solution is to provide failover in the active-active mode, then the most common optical distance cannot exceed 30 km. Colocation is a solution chosen by clients who want to rely on dedicated equipment and – at least for now – exclude the option of using backup center solutions in the public cloud computing. Sectors such as banking and finance, insurance or state administration are particularly vulnerable to these issues.

The second option is to build a backup data center using a public or private cloud. This solution is intended for companies looking for redundancy with the least operational involvement. There is no need to communicate data processing centers using dedicated telecommunications links or employ specialists maintaining IT infrastructure. The solution has a low entry barrier and the ability to run virtually overnight. Its disadvantage is that not all redundancy scenarios are possible to be implemented, while with more complex systems (especially legacy) architecture is to be reengineered. It may also turn out that in this way we will be able to secure only part of the data processing processes. In most cases, the public cloud is a good choice, and for backup of important data, probably there is no better solution, if we take into account the flexibility and financial expenditure that must be incurred in order to use it.

Those clients who expect a more individual approach are more likely to choose a private cloud, which is a tailor-made solution, prepared to meet very specific requirements. For such clients, the lease of dedicated servers is also a good solution.

The third option is a hybrid solution, which also assumes the support of the organization at the operational level. Regardless of the selected backup data center architecture (colocation, public cloud, dedicated hosting, private cloud or mixed model), the client also gets access to backup offices. This is an extremely important service, taking into account the need to maintain business continuity. In practice, even the best technical solutions are unhelpful if a person is excluded from activities. The need for access to such back-up offices results not only from the need of protection in the event of a natural disaster (fire, flood) or a terrorist threat. The inability to carry out tasks often results from more prosaic reasons, such as heating failures in the winter season or interruptions in access to electricity. This is well illustrated by the research we carried out two years ago. It turned out that more than half of the companies surveyed by us experienced problems with access to the Internet or electricity. As a result, 41% of them had to put on hold or seriously reduce their activity. Interestingly, most often they were not short-term incidents. Only in 6% of cases the failure lasted less than an hour. In 30% of cases, it lasted from 1 to 2 days, and in 10% of cases even longer. It is not difficult to count losses in such a situation.

The synergy resulting from having both a backup data center and backup offices at one provider means similar procedures. It is also often one logistic place, easily accessible, where we can recover our key business processes.