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Ten Cost-Saving Tips for Data Center Outsourcing

Outsource written on chalkboard
September 15, 2014

Saving money and boosting efficiency never go out of style.  So as budgeting season kicks into high gear, it’s time to review ways to cut costs while getting more from your data center operations.  The keys are colocation services and cloud services.

A widely adopted business best practice is to use expert services to handle functions that divert you from your core business.   Most mid-sized businesses really don’t need to specialize in the data center business any more than they need to be in the package delivery business.  Moving the right parts of your data center operations out of your building is a huge lever for cost control.  Here are how two essential data center outsourcing techniques can help.

Colocation Cost Savings

At its core, colocation is simply moving your own computing equipment to a facility optimized for this purpose.  Most customers also contract for some level of managed services to outsource additional functions from minor maintenance to wholesale operational management.

  1. Cost Transparency

    With an in-house data center, costs are usually divided among departments like general office costs. Departmental charges are only vaguely associated with the true costs of the actual services performed.

    When you partner with a colocation center, however, the picture becomes far clearer – something CFOs love.  Charges for specific services and service levels are predictable and fully itemized.  If a project requires a specific set of services, it’s far easier to identify and allocate the costs.

  2. Lower Upfront Capital

    Ordinarily, when you need to expand space, add equipment or enhance security, the project is front-loaded with capital spending.  Colocation, however, is currently treated as an operational expense, though that option may diminish in a few years.  This means you have much more flexibility in responding to needs for additional capacity, new facilities or new technological capabilities.

  3. Dodging High-Priced Locations

    Location is the fundamental benefit of colocation.  If you maintain or expand a data center at your corporate headquarters, you may not be utilizing the cheapest real estate.  When you colocate, however, your data center is situated completely independent of the corporate castle.  Colocation partners typically site their centers where high-reliability infrastructure intersects with optimal costs.  Since there’s considerable regional variability in real estate, labor, bandwidth and energy costs, your bottom line benefits.

  4. Purchasing Power

    Unless you operate a very large in-house data center, you can’t purchase computing goods and services in the volume that a specialized colocation center does.  Your colocation partner is experienced in buying power, contracting with building services and managing other infrastructure costs.  Plus, they likely have considerably more buying volume – and hence negotiating power – than you do.  The cost savings are yours.

  5. Grow Without Strain

    The story told by Data Ventures is instructive for the mid-sized business.  This thriving company required more data center capacity than their existing building could provide.  While some companies might choose to move, Data Ventures smartly went the colocation route. They partnered with Peak 10 to outsource data center functions to a nearby facility, employing managed services to satisfy the demand for additional IT capabilities.

    Colocation is just one way to trim costs and improve efficiency.  It’s a powerful tool in constructing a hybrid data center strategy, but it’s not the only option.  In some cases, you may prefer to host an application in the cloud to reap similar savings by different means.

Cloud Savings

When you host your applications in the cloud, access is no longer tied to a specific location.  At the same time, you release a degree of control over your physical access to equipment and proximity to your in-house compute resources.  For the right applications, the cloud’s gains can be significant.

  1. Predictable Operating Expense

    Like colocation, cloud computing replaces the capital outlay of an in-house data center with a predictable operational cost.  For the cloud, this benefit should persist even after a proposed accounting rules change in a few years.  If controlling CapEx is important, you can start with colocation today; just keep your eye on the accounting rules so that you can migrate to the cloud at the appropriate time.

  2. On-Demand Resourcing

    One of the best features of cloud computing is that you own no equipment.  That is scary to some, but it entails a huge cost savings for those whose business expands and contracts.  Rather than purchase enough physical servers and storage for your holiday rush, for example, you contract with your cloud service provider to add capacity when you need it, then simply scale back for the remainder of the year. And if your business takes off, there’s no faster way to add long-term capacity than cloud. It can be ready in days.

  3. Expert Operations

    No matter how good your internal IT team is, mid-sized businesses don’t routinely deal with the variety and volume of computing operations that a cloud provider handles.  You take advantage of your cloud partner’s full-time, high-volume expertise in equipment purchase, maintenance, software configuration and upgrades.  Not only can this increase your peace of mind, it can save you costly mistakes and wasted time.

    To see how this works, view a short video on how TexMac, Inc. improved customer experience without in-house IT resources simply by moving to the Peak 10 cloud.

  4. Focus on Business Growth

    The quickest way to save money is to eliminate distractions that keep your employees from focusing on building your business.  Outsourcing the IT data center to the cloud quickly eliminates a function that is – for most mid-sized businesses – outside of their corporate mission.  Once the cloud provider takes on these distracting or annoying functions, your internal IT team can focus on enhancing customer experience, implementing emerging technologies and streamlining internal efficiencies.

  5. Higher Standards

    Naturally, you want your applications – especially customer-facing apps – working at a high standard of uptime and performance.  To achieve this in-house is a mammoth undertaking, often requiring specialized equipment and arcane knowledge.

    The good news is that a cloud provider will offer service level agreements (SLAs) for uptime and problem response time.  Best of all, the cloud is ideal for disaster recovery, so your provider can guide you to a replication/recovery process with SLAs you couldn’t achieve any other way.

No matter how you design your data center, adding colocation and the cloud to the mix brings you the opportunity for significant savings.

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About Peak 10

"Our values are the foundation for everything we do at Peak 10, and are ultimately what enable us to earn our customers' business and their trust."
David H. Jones,
Board Member, Peak 10 + ViaWest