Improve Data Center Management with Transparency of Total Cost of Ownership

Combating Rising Costs with Strategic Colocation & Workload Placement Strategies

October 11, 2023

IT leaders are encountering financial hurdles in constructing and operating their on-premises facilities. According to a recent survey conducted by the Uptime Institute, the past two years have seen data center costs steeply rise due to supply chain struggles and increasing labor, power, hardware, and capital costs—and they’re not slowing down anytime soon.

All the while, data centers play a more important role than ever in everyday business operations due to the growing importance of data management, security, and storage. To combat the challenges faced by data center operators, colocation providers such as Evocative offer a comprehensive approach to managing these costs, while improving operations, governance, and security.

Let’s explore the Uptime Institute survey and ways colocation providers can help address rising costs in this blog.

Facilities Costs

The process of building—and even upgrading—data centers involves more barriers to entry than ever before. Uptime cites “long waiting times for some significant components (such as certain engine generators and centralized UPS systems)” as key factors driving up costs.

According to Uptime's calculations, by 2022, the expenses for Tier III specifications had escalated by $1 million to $2 million per MW. The lead times can now extend to or surpass 12 months, causing delays in capacity expansion and renovation projects. This can sometimes hinder operators from generating income from almost finished facilities.

New sustainability and regulatory requirements are also coming at a cost, with engineering fees, structural changes, and different cooling systems lifting the barriers to entry.

While businesses can deploy various strategies and technologies — such as automation, energy efficiency and tactical migration to the cloud — to reduce operational costs, these are likely to entail capital investment, new skills and technical complexity.

- Uptime Institute

Working with a colocation provider can help offset these costs. With available capacity in a state-of-the-art data center, built-in redundancy, optimized power and cooling, and an abundance of interconnection options, you can have all the critical building blocks necessary to future-proof your IT. Colocation facilities also adhere to the latest compliance regulations by design, so you can easily run workloads in a purpose-built environment without incurring unexpected costs.

Staffing Costs

Personnel expenses will also significantly contribute to the rising operational costs of data centers and are expected to continue influencing the sector beyond 2023.

Numerous businesses report that they are investing more in employee expenses in an effort to keep their existing workforce. This poses an additional difficulty for those companies that cannot compete with the wage proposals put forth by some of the flourishing tech behemoths. Companies can also encounter risks associated with skill and knowledge deficiencies due to elevated personnel costs.

Colocation can help companies address these staffing gaps by providing access to expertise and other resources that may not be available to recruit, train, and retain in-house. Colocation providers often have a team of skilled technicians and engineers who are trained to handle a wide range of IT requirements and can help businesses quickly and efficiently address any changes or updates that need to be made.

Leveraging colocation to address rising staff costs also can bypass the process of hiring and training new staff for each new IT requirement that arises. And because colocation providers are focused on maintaining and managing their data centers, they often have access to a wider range of resources and expertise than a typical business would, which is often beneficial in addressing more complex IT needs.

What About the Public Cloud?

Is the public cloud also a solution to rising data center costs? It depends on your workloads.

The public cloud offers fast speeds and data access, but with data loads increasing in size, the public cloud does have limitations. Costs associated with outbound data transfer and broadening security and governance concerns have spurred on the move to a hybrid cloud model. The Uptime Institute acknowledges that in light of rising data center costs, “an immediate rush to the public cloud is unlikely since this strategy, too, has non-trivial (and often high) costs.” Migration costs and application refactoring costs are also high.

An experienced colocation provider can help your enterprise to construct a workload placement strategy that helps to reduce your Total Cost of Ownership (TCO). TCO considers the complete cost associated with the deployment, including infrastructure cost and maintenance, staffing, power, connectivity, and security to ensure that costs become predictable and stable, saving organizations time and money.

How Developing a Workload Placement Strategy Can Help

By assessing each individual workload in your organization and placing it in the environment it’s best suited for, companies can realize significant savings, while improving operations, governance, and security.

At Evocative, we provide the facilities, infrastructure, and experienced staff that can help you avoid the financial burdens associated with building and staffing your own data center. All the while, we can evaluate your needs and priorities to create the ideal combination of colocation and cloud infrastructure to make your workloads more predictable.

Ready to learn more about how to maximize your TCO with Colocation? Register for a free Workload Placement Whiteboard session.

Improve Data Center Management with Transparency of Total Cost of Ownership

Facilities Costs

Staffing Costs

What About the Public Cloud?

How Developing a Workload Placement Strategy Can Help

The Evocative Team