Weighing up the cost

Published on 3rd January 2013 by Edward Jones

As with most key business decisions, expense will usually play a large role in a company’s data centre strategy. While basing any IT strategy on cost alone is a mistake, companies must also avoid overspending and leaving themselves financially vulnerable.

When it comes to investing in a data centre solution, the flexibility of a third party colocation centre provides an obvious answer to that problem. Nevertheless, Gartner’s vice president of research Rakesh Kumar stated at 2011’s Gartner Data Center & IT Operations Summit they had witnessed a steep increase in new data centres as companies decided to foot the bill for their own facilities.

He also suggested that it was beginning to be more cost effective for a company to build its own centre than to rent space, and a new facility could pay for itself within four years. This is a surprising claim, considering that a new fully equipped centre in Europe can cost more than 20 million euros to construct, before even approaching the cost of staffing and maintaining the facility.

Ownership is also a much riskier strategy that leaves far less flexibility and room for error. A company building a smaller and more affordable centre might find their demand outstripping it before long, while a large and expensive facility could become a costly white elephant if demand and growth don’t live up to expectations.

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Edward Jones is CEO of commercial property investment group PMB Holdings. The group has substantial investments in real estate and leisure across the UK and Europe. More recently PMB Holdings entered the data centre sector with a £35 million investment into the MK DataVault, currently und ... More