The following presentation was given during the Spring 2012 Data Center World conference in Las Vegas, NV by Kirk Killian. Learn more about Data Center World at www.datacenterworld.com.
This presentation was given during the Spring, 2012 Data Center World Conference and Expo. Contents contained are owned by AFCOM and Data Center World and can only be reused with the express permission of ACOM. Questions or for permission contact: [email protected]. Interested in data center management? Learn about the data center management sessions offered at the upcoming Fall 2012 Data Center World Conference at: www.datacenterworld.com .
Transcript
This presentation was given during the Spring, 2012 Data Center World Conference and Expo. Contents contained are owned by AFCOM and Data Center World and can only be reused with the express permission of ACOM. Questions or for permission contact: [email protected].
Interested in data center management?
Learn about the data center management sessions offered at the upcoming Fall 2012 Data Center World Conference at:
www.datacenterworld.com.
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Understanding & Evaluating Colocation Data Centers
Kirk A. Killian, Executive Vice President214/365-2050 (direct)214/244-1111 (mobile)E-Mail: [email protected]
10000 N. Central Expressway, Suite 1001Dallas, TX 75231
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Classifications: Enterprise Colo,Individual Cabinets & Web Hosting
Enterprise Colo: Suites/Cages with some non-shared infrastructure (PDU’s, CRACs, UPS, generators, electrical switchgears, chiller plants) and non-shared telecom circuits
Colo Cabinets/Racks: Lease of one or a group of cabinets or racks with fully shared critical systems infrastructure
Web Hosting: Provider owns servers and all critical systems infrastructures and user uploads applications and data
This presentation focuses on Enterprise Colo.
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Key Colo Terminology
Provider – the company operating the colocation facility Pod – a phase or major section of a data center, usually with self-
contained critical systems components Suite – the premises occupied solely by one customer, often with
hard walls and non-shared infrastructure components Cage – same space as “Suite” occupied by an enterprise
customer, but less likely to have dedicated (non-shared) PDUs, CRACs and UPS modules.
Critical Load – the IT equipment load, typically backed up by UPS and generator.
Modular – design with critical systems components manufactured off site and assembled at the data center.
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More Colo Terminology
Managed Services – services often provided by a colo company in addition to the basics of space, power and telecom circuits; May include server re-boots, rack and stack, server builds, tape changes, tape shipping/receiving, SAN/NAS usage, firewall, load balancing, and intrusion detection.
Carrier Neutral – colo customer selects whichever 3rd party telecom carriers it chooses to serve its suite.
Home Run Circuit, in telecom, a circuit provided directly by a telecom company to an end-user, usually through or around a colo facility “Meet Me” Room.
Meet Me Room – room within a colo facility where telecom providers install their circuits into the facility, from which user circuits are provisioned to colo customers via cross connects.
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History – Colocation’s Early Days
Rapid growth in 1998 – 2000 Mostly TUI Tier 1 & Tier 2 Facilities; A Few Tier 3 Mostly 50-100 watts/SF and 12 – 24” raised floor Large open data halls w/ cages & cabinets for lessees Limited acceptance by traditional corporate IT departments Ready acceptance by internet companies, where speed to
market has been paramount and few internet companies had a deep bench of legacy data center facility expertise.
Industry shakeout in 2001 – 2004 with bankruptcies, consolidations and closures: The “Dot Bomb” era.
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Modern Colo:2006 to Present
Steady, strong growth since 2006 Newer facilities with higher reliability - mostly TUI Tier 3 and
“almost Tier 3” infrastructures with substantial concurrent maintainability
Higher densities, mostly 100 – 300 watts/SF; some much higher More experienced providers More sophisticated providers, many with SAS70/SSAE16 audits,
PCI compliance, and professional operations and reporting Financially stronger providers, including publicly-traded choices Cost reductions per kW of Critical Load More dedicated (non-shared) infrastructure than in earlier era
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Modern Colo:Dedicated Infrastructure
“Pod” data center deployments with less infrastructure sharing: Key concept for some corporate customers as suites for 300 – 2,000 kW critical loads not likely to share PDUs, CRACs, UPS modules, perhaps even chiller plants, primary switchgears or generators with other customers (“data center within a data center” concept.)
Example: Colo suite provides 400 kW Critical Load to (1) customer. Dual-feed PDUs and CRACs non-shared within suite. N+1 UPS modules (3 x 300 kVa) non-shared serving just this
suite. Primary switchgear, generators, chiller plant shared with (2)
other corporate users in this data center pod.
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Modern Colo: GradualCorporate IT Acceptance
Changes in colo industry have resulted in increased corporate acceptance of Enterprise Colo model since 2006.
Example Corporate Commentary:
1999: “I don’t do colo.”
2003: “My company’s not ready for colo yet.”
2007: “I might do colo; but not on this project.”
2010: “How quickly and cheaply can I be live? Mytimeline is short and my CapEx budget was cut.”
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Types of Colo Providers
Large National/International Provider Regional Provider Local “Mom and Pop” Provider Wholesale Only
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Large National/International Providers
Many data center sites, offering potential for geographic dispersion
Full suite of optional managed services Experienced team with deep bench for problem solving Financial strength, ability to back up SLAs Capital markets access for future infrastructure expansion
funding Less flexible rules & policies than smaller, entrepreneurial
providers Less responsive than smaller, entrepreneurial providers More expensive than other options, some much more
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Regional Providers
Many benefits of national/international providers More flexible & responsive than largest providers Less geographic reach than largest providers, but great local
expertise Less financial transparency than largest providers Mix of older legacy facilities and new state-of-the-art data
centers Usually less financial strength than largest providers, but still
stable, dependable entities
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Local “Mom and Pop”Providers
Entrepreneurial, nimble, very responsive Passionate about providing great customer service Customer is “Big Fish/Small Pond” Operations team may be inexperienced Shallow labor bench for problem solving Minimal financial strength for expansions or backing up SLAs May have renovated and expanded an older data center on a
shoestring Unlikely to have SAS70 Type II certification, PCI compliance, and
sophisticated operations & maintenance procedures including audit trails
Being purchased and merged into larger companies rapidly Poor corporate acceptance into this segment
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Wholesale Providers
Pre-designed “Pods” and critical systems infrastructure, increasingly designed with better power scalability
Lowest cost/kW, but inflexible pricing for growth Limited managed services Longer lease commitments required (6-15 years) Newer facilities (<= 5 years old) with reliable infrastructure May not have SAS70/SSAE16 certification, but very experienced
working with outside auditors in getting one Strong financial condition and financial capacity to construct
expansion space for growth Wholesale providers can build a suite to your specifications, but
this requires design, permitting, construction & commissioning, typically requiring 5-8 months.
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Colo Trend #1:Higher Electrical Densities
New colo facilities have electrical densities of 100 – 300 watts/SF.
Some new colo facilities have initial electrical densities of 100-175 watts/SF, but are designed for future increases to 200-300 watts/SF.
Some facilities claim ability to cool 1,500 watts/SF, using full hot or cold aisle containment, ultra-sophisticated and expensive multi-path cooling systems, with 300 watts/SF becoming readily attainable w/o containment systems.
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Colo Trend #2:Modular Designs
Several colo providers are offering modular designs, where they offer “data center in a box” solutions, allowing the customer to custom design and implement new data center pods as needed.
Shipping containers with cabinets, “power packs” and cooling. Offers advantage of paying for some capacity only when needed,
saving both CapEx and OpEx. Offers perceived advantage of less critical systems sharing.
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Colo Trend #3:Cloud Services
Colo providers are offering an ever wider array of optional “cloud” services, including SAN/NAS, “burst capacity” servers, network services, security services, applications management, etc.
Optional managed services allow the small user to elevate their game without ramping up staff.
Many services offered 100% ala carte, separate from other colo contract requirements, valuable as the customer gets to know the provider better over time.
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Example Enterprise Colo Pricing Models
Most common pricing models are:
A. Cost/kW of Capacity + Metered Power
B. Cost/SF + Electrical Circuits
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A. $/kW of Capacity + Metered Power
This pricing model includes: 1) monthly cost/kW of installed capacity (not actual usage) 2) metered power, plus 3) 20-70% uplift on metered power for HVAC & common area
electricity loads
Customer pays a one-time charge (“NRC”) for electrical circuit installation, usually without provider markup (negotiable)
If you use significantly less power than your required capacity you’re overpaying for the provider’s infrastructure
Very efficient if you can predict actual usage accurately Great pricing model if provider can add critical systems
components over your contract term to increase your capacity as needed.
Some providers charging on actual usage instead of capacity.
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B. $/SF +Electrical Circuit Charges
This pricing model includes: 1) monthly cost/SF for your suite space, plus 2) monthly charge for specific electrical circuits installed; actual
electricity usage is usually included in the circuit charge
Individual electrical circuits are expensive but “pay as you go”, so you can have them installed as needed, provided you’ve reserved the capacity from your provider.
Can be cost effective if growth is non-linear and unpredictable. Be sure to reserve growth capacity, or provider will sell your
future growth power/cooling to other customers – ouch! Reserve “B” – backup circuits (for dual corded servers) often
priced at 50% of “A” - active circuits.
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Is Enterprise ColoRight For You?
Good Fit: Low Capital Expenditure Budget Immediate Need Short-Term Need Physical Need for IT Equipment in a Non-Core Geography 3rd Party Managed Services Need Power/Space Quantities Well Defined for 3-5 Years Huge Carrier Diversity Needed
Poor Fit: Lowest Long-Term Occupancy Costs Required Maximum Flexibility Required in Changing Critical Systems
Infrastructure Maximum Control Over Critical Systems Operations Required
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The Baker’s Dozen: Tips forEvaluating & Selecting a Colo Provider
(13) Recommendations in colo evaluation and selection
Carefully define your colo criteria at the project outset: Geography Systemic Redundancy/Reliability Minimum Space Required Power Requirements By Year (Define Early in Project!) Growth in Power (tough to estimate accurately – see next slide) Telecom Facility Hazard/Risk Tolerance Desired Managed Services Required Financial Strength/History of Provider Project Timing Project Budget
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2. Estimate Growth in Power & Cooling
Define anticipated power needs by year (not easy; especially after year 3)
Verify each provider’s systemic ability to provide additional power/cooling, including physical placement of additional infrastructure.
If growth is sought in power, verify the provider’s ability to remove the additional heat (It’s generally easier to increase power than cooling.)
Get a mechanical engineer’s opinion of future cooling design if you’re doubtful (i.e. 200 watts/SF using 12” raised floor).
Ask about highest density area in facility and talk to that customer about hotspots & provider responsiveness.
Request a CFD analysis to prove cooling capabilities.
Structuring the colo contract to accommodate uncertain growth but not overpay for that growth is the key challenge.
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3. Seek Carrier Neutrality
“Carrier Neutrality” means the colo provider lets you select your telecom providers without provider surcharges, offering:
More lit carriers (typically) Lower pricing by encouraging competitive pricing among carriers Higher likelihood of getting truly redundant fiber networks A dark fiber option, which is great if you are operating
active/active mirrored or DR data centers.
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4. Prepare RFP to GetCompetitive Proposals
Prepare Requests For Proposal to get competitive proposals. Send RFPs to 4-8 wisely selected providers; research candidates
best suited to meet your needs and be respectful of providers’ proposal prep time.
Be realistic about quantity of information sought in proposals. RFPs encourage providers to submit competitive proposals. RFP should clearly communicate your project needs,
expectations and timing. An outside advisor/consultant can assist with the RFP process if
you’re not experienced in colo RFPs.
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5. Analyze Proposals and Negotiate Contract Terms
Input your space/power growth needs into each provider’s pricing model.
Compare proposals under multiple growth scenarios (anticipated, high-growth, low-growth, etc.).
Pricing comparison will help match provider’s infrastructure scalability against your growth needs.
Seek line item pricing, and compare pricing elements across providers.
Many elements of provider proposals are negotiable. Include telecom costs in pricing comparison; may vary among
providers, especially if they have discount carrier options.
8-40% savings are typical from well-written & strategically executed RFP and proposal negotiation process.
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6. Evaluate Providers’Financial Strength
Some providers are publicly-traded; some have S&P/Moody’s credit ratings.
Get audited financial statements (after executing Non-Disclosure Agreement).
Get financing reference if future construction is required. Get assistance from your CFO’s office if available. Bankruptcy or closure of a colo provider you’re under contract
with can be disastrous, so do your homework. This is very rare!
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7. Get Customer References
For your colo provider finalists, get customer references, not just from the providers’ 1-2 favorite customers (the easy ones), but from their 3 largest and a few smaller ones. (Not always easy to identify and interview.)
Ask references not only about the provider’s actual performance and uptime, but also their responsiveness to that customer’s evolving needs.
Ask the customer if they would structure their colo contract differently if they could repeat the process and why.
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8. Set Realistic Uptime Expectations
Be realistic in uptime expectations: compare uptime targets against basic systemic redundancies.
Compare SLA terms early in your proposal review. SLA credits are usually weak compared with customers’ costs. Providers work very hard to protect their uptime reputations. Uptime is generally very good for newer facilities with well
executed maintenance and operations processes. Biggest downtime problems are in older facilities that have been
inexpensively and quickly expanded and poorly maintained. Many providers exaggerate TUI tier ratings; very few are Tier 4.
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9. Select Provider With AGreat Cultural Match
Interview provider’s key personnel – match interviews with your team SME’s.
Is the provider’s team and corporate culture going to work well with yours?
This is a long-term “going steady” relationship – not a prom date.
Strive for Win/Win deal terms; Punitive Win/Lose economic negotiation is usually a bad bargain.
A great relationship is most important when extensive managed services or a flexible growth model is required.
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10. Form Multi-Disciplined Colo Selection Team
Enlist SMEs from your organization: Hardware, Applications, Electrical, Cooling, Facilities, Telecom, Security, Business Continuity, Financial and Legal
Designate a project coordinator. Engage an outside advisor if your coordinator hasn’t evaluated
colo before or is too busy. Outside advisors are generally much less expensive than the
time and money savings they provide.
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11. Get ContractOptions
Seek flexibility through reasonable options in colo contracts:
Power/cooling growth option is very important. Contraction Right should be reasonable (advance notice, return
highly re-leasable subset of cage, pay subdivision costs, etc.). Early Termination Right should be reasonable (advance notice,
limited termination windows). Termination Option for Poor Performance should be verifiable. Get a Renewal Option at fixed rates, not “market” rates,
including modest increases over original pricing. Seek a one-year Extension Option in addition to other renewal
option term. Ability to add managed services at pre-determined prices.
Contract options are one-sided to customer’s benefit: get them!
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12. Study Future or In-Progress Construction
Scrutinize critical dates on provider’s construction schedule. Verify funding sources for future or in-progress construction. 95% of project steps may occur on time but the other 5% can
put construction project weeks/months behind schedule. Assume projects not already underway will not deliver as
originally promised. Some providers have promoted “vaporware” growth plans. Allow one month for new data center commissioning. Decide if you’re comfortable being the first customer in a new
data center, especially regarding telecom circuits.
Several steps can be completed simultaneously. Process can be accelerated under certain circumstances.
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Conclusion
Enterprise colo can be a great solution for the corporate data center user under certain circumstances.
Colo facilities and providers are not “One Size Fits All”, so evaluate and select wisely.
Carefully selecting and negotiating with providers can yield significant savings and a contract with flexibility tailored to your specific needs.
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Evaluating a Colocation Data Center
Call or E-Mail With Any Follow-Up Questions:
Kirk A. Killian, Executive Vice President214/365-2050 (direct)214/244-1111 (mobile)E-Mail: [email protected]
10000 N. Central Expressway, Suite 1001Dallas, TX 75231
This presentation was given during the Spring, 2012 Data Center World Conference and Expo. Contents contained are owned by AFCOM and Data Center World and can only be reused with the express permission of ACOM. Questions or for permission contact: [email protected].
Interested in data center management?
Learn about the data center management sessions offered at the upcoming Fall 2012 Data Center World Conference at:
