Hardware Today: When Growth and Outsourcing Go Hand in Hand

by Carl Weinschenk

It's inevitable. As your business grows, so too do your server needs. We discuss when it makes sense to build a data center and when it makes sense to move to a hosted environment and outsource your hardware.

Every enterprise, regardless of size, at some point or another evaluates its data center arrangements and faces important decisions on how to move forward. The crux of the decision is often whether to build a data center or move into a hosted environment, followed by what, if any, level of outsourcing is best for the organization.

Outsourcing and collocation, although different in many respects, both involve ceding control to an outsider. This runs against the grain of IT professionals, whose fate -- or, at least, employment status -- rests on data operations running smoothly.

It boils down to being primarily a psychological issue. "The real battle I have as a salesperson when I'm talking to a potential customer is the person who wants to have the `kingdom in his shop,' " says Dennis Corley, the CEO of Digital Crossing Networks, a data center provider in Knoxville, Tenn. "If I'm the CIO, it's my job and I want to have it on site. There's that emotional issue. It's a very real barrier to some people."

In reality, only the largest organizations seriously consider building their own data center. The list of required elements for building such a facility is intimidating. In addition to the real estate itself, a myriad of equipment, often specialized, and human capital with particular skill sets are required. Needless to say, this can be very expensive.

These include power supplies (e.g., the presence of underground utilities, and redundant "clean" AC and DC power), comprehensive security (which can include biometrics, digital video surveillance and other elements) and full control of the overall environment (e.g., industrial grade heating, cooling and humidity control, static and lightening protection, and fire suppression), as advocated by Digital Crossing Networks.

As long as the list is, however, the purely physical elements of a data center are just one cost component. Just like living at a co-op has some "advantages of community" over living in a single family home, being in a collocated environment provides some options not available in an enterprise-specific data center. The first is that telecommunications providers will be there as well. "That might mean that there are 15 different providers available in the data center," says Rick Bader, the president Easy Street, a hosting facility in Portland, OR. "You can pick and choose who you can connect to."

Another advantage of using a collocation facility over building a data center is the availability of help. Collocation facilities have personnel on hand to handle tasks the enterprise is willing to hand over. Maintenance of non-mission-critical servers can cut staffing requirements and reduce overtime pay. "It's expensive to have network administrators to take care of routine infrastructure, security patches, and all of that," Bader said.

Still another advantage of outsourcing is flexibility. For an enterprise who's business is primarily seasonal, an outsourced solution enables the correct level of personnel to be dedicated to a job without the organization having to worry about being caught short. "An outsourcer can help you deal with the ebb and flow," said John Lambert, CEO of Moonlight, a company that makes server management software.

It is not an all or nothing proposition, however. Lambert noted that some organizations opt for a hybrid approach, whereby mission-critical tasks are kept in-house, and more mundane operations are farmed out. "I think there is a spectrum here," Lambert said. "Rarely is the situation all at one end of the continuum. The struggle is to understand what it makes sense to outsource and what is so strategic that you must keep in house, and how to optimize the two [approaches]."

Bader said that the ability to keep some functions on the enterprise LAN and outsource or use a collocation facility for others is made easier by the increase in fast wide- and metropolitan-area network (WAN and MAN) access speeds service providers are offering. "Now in Portland you can get 100 Gigabit (per second) Ethernet connection from your place to the data center for $1,500 per month," he says. "The data center will look like it right on the LAN. Now we are starting to see folks taking advantage of that."

Lambert sounded a final note of caution, however. Outsourcing will not work if the enterprise can't envision precisely what it wants in its data management. "You don't take a problem you don't understand and think you can deal with that by outsourcing," he said.

This article was originally published on Tuesday Nov 18th 2003
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