How Colocation Supports Cost Savings

Sept. 5, 2016
In this week’s Voices of the Industry, Josh Moody, Senior Vice President of Sales and Marketing at FORTRUST, discusses how data center colocation supports cost savings and reduces complexity.

In this week’s Voices of the Industry, Josh Moody, Senior Vice President of Sales and Marketing at FORTRUST, discusses how colocation supports cost savings.

As more businesses invest in colocation services, the market continues to grow. According to the most recent findings from 451 Research, the global colocation market is on track to surpass $33 billion within the next two years.

Josh Moody, SVP Sales FORTRUST

While colocation services surely represent an investment on the part of enterprises, these solutions can also support an array of cost savings that extend to nearly every business department.

“Cost reduction often begins with IT,” Accenture Strategy pointed out. “By taking advantage of new technologies, CIOs are better positioned to launch the next wave of cost reduction.”

Colocation services are uniquely positioned to support businesses in this way. Let’s take a look at all the ways companies can save costs by leveraging the expert services of a colocation provider:

Leasing instead of buying
For many businesses that find themselves in need of added computing support not dependent on cloud, options often boil down to two choices: Leasing space in a colocation facility, or constructing a data center for the sole use of the company. While having a dedicated computing facility may seem like an attractive advantage, the price of establishing a new data center is often incredibly cost prohibitive. According to OnlineTech, expenditures involved here can include:
1.Upfront investments:As much as 25 percent of the cost of a new data center comes from spending associated with preliminary planning, designing and commissioning.
2.Permits and taxes:Before construction can even begin, businesses must ensure that they have the right permissions in place and local taxes are paid. These costs can quickly add up, translating to as much as $70 per every square foot the planned facility will span.
3.Building costs:Forrester researchers found that today’s companies must plan on investing $200 for every square foot in order to build the shell of the facility and implement the necessary physical security.
4.Computing infrastructure:Enterprises must also factor in the cost of the equipment, systems and configurations required to support computing processes. Infrastructure costs can range from $7,000 to $20,000 per kilowatt of IT load, depending on the company’s needs.

And this only scratches the surface of the investments needed for new data center construction. Spending on power utilities can account for as much as 80 percent of operational costs, and maintenance can contribute to 5 percent of total initial costs.

Many businesses simply don’t have the necessary financial resources or a flexibe time-to-market strategy to support the construction of a new data center. In this way, it’s more cost effective and budget friendly to work with a colocation provider that has the facility, utilities, systems and computing equipment already in place to support enterprise needs.

Built-in scalability
In addition to eliminating the need for the construction of a new data center, colocation can also save companies money when it comes to scalable computing resources. Thanks to the inherent flexibility of colocation services, businesses can always scale their environment up or down to match their current needs. In this way, companies never pay for more resources than they need, and resources can be added in the most cost-effective way possible as demands grow.

Reducing on-site complexity
Other cost savings result from reducing the number of complex systems at the business’s main headquarters and branch offices. With colocation support in place, the company’s internal IT team can rest easy knowing that their critical computing environment is in the hands of experts. At the same time, colocation also enables IT admins to have total visibility into their environment and activity. This means that while equipment and assets are stored off-site, these essential assets are never truly out of the company’s hands.

Reducing complexity in this way results in a range of tangible advantages. Colocation means that the internal IT team has more time to focus on other mission-critical initiatives.

“Reductions in operational expenditure and the ability to focus your IT team on your core business means that data centers offer organizations the ability to maximize the potential within their businesses,” Data Center Knowledge contributor Rowland Kinch wrote. “For financial directors and IT directors, colocation provides the perfect win-win scenario, providing cost savings and delivering state-of-the-art infrastructure.”
Colocation services are considerably more cost effective than building a dedicated data center.

Reliability to prevent downtime costs
By now, it’s no secret that downtime can be costly for enterprises, especially when it comes to their critical applications. The most recent research on this topic from IDC and AppDynamics found:

  • Unplanned application downtime costs Fortune 1000 companies $1.25 billion to $2.5 billion each year.
  • Critical application failure costs $500,000 to $1 million each hour on average.
  • Infrastructure failure can cost as much as $100,000 each hour systems are unavailable.

Thankfully, the robust redundancy and expert staff at colocation facilities can help prevent these staggering downtime costs. FORTRUST is a leader in the industry when it comes to reliability, recently celebrating 14 years of continuous critical systems uptime.

What’s more, colocation services can help support additional levels of redundancy by providing companies with a secondary location. In this way, even if a company’s main data center is unavailable due to severe weather or other issues, employees can still access critical data and applications via the secondary colocated environment.

Submitted by Josh Moody. Colocation can offer numerous other opportunities for cost savings, especially when companies select an industry leader like FORTRUST. In addition to our impeccable critical systems uptime record, our clients also have access to COLOVIEW to ensure visibility into their environment. To find out more, contact us for a tour of our Denver data center today.

Josh joined FORTRUST in 2008. As Senior Vice President of Sales and Marketing, he is responsible for developing, managing and executing the overall sales strategy for FORTRUST. Josh brings more than 18 years of experience in the information technology field, including developing and executing strategic planning, management, customer relations, and vendor/partner relationships. Colorado Business Magazine identified Josh as one of the top 25 Most Powerful Sales Reps in Colorado in 2010.

About the Author

Voices of the Industry

Our Voice of the Industry feature showcases guest articles on thought leadership from sponsors of Data Center Frontier. For more information, see our Voices of the Industry description and guidelines.

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