Data center outsourcing has been a sustained trend this decade with companies removing on-premises data center space in favor of cloud services and modern colocation.
Next decade will likely see more of the same, as the global data center colocation market is estimated to see investment of over $31 billion by 2023, growing at an impressive CAGR of 8% during 2017-2023, according to ResearchandMarkets.com.
As industries look to strategize on how to approach the present and future of their physical infrastructure, let’s take a look at some of the costs involved with building versus colocating your data center operations and infrastructure.
Data Center Build vs Colocating Costs
Each day, more enterprises are realizing the competitive advantage of having colocation infrastructure behind their products and services versus on-premises data centers.
Some of these movers include large corporations, who built their own data centers in the aughts and are now realizing that it’s going to cost millions to get their infrastructure to match the rapidly changing technology standards.
On the flip side, newer corporations have found the cost of building vs colocating is no comparison.
Say you want a set-up of 10 cabinets in a Tier 3 data center. Intel recently estimated the price for a three year period would be $275,175 for colocation, versus $886,523 if you build your own.
Construction factors to consider:
- Preparation costs like engineering, permits, and demolition
- Power costs like main switch gear, UPS systems, generators, PDU’s, and other utilities
- Environmental costs like HVAC, fire suppression, and raised floors
- Security costs like monitoring systems and CCTV
IT Staff Expense: Having an in-house IT team can get costly in a hurry. Aside from the employees’ base salary, remember to include benefits like vacation days and medical, knowledge gap, unproductive rate, and turnover rate. Additionally, think of all the time you get back when you no longer have to spend time on installation, maintenance, and hiring IT staff. With colocation, you receive 24/7/365 support from highly specialized server professionals, and the cost is always simple and predictable.
Connectivity: Many data centers are single tenant; if you seek carrier neutrality, this will be a costly and lengthly process. Colocation providers have a huge advantage here, as they have Point of Presence rooms that feature multiple carriers and ISPs linking straight to the server racks from the source. This provides full redundancy, lower latency, and the flexibility to switch carriers. Read our previous article for more benefits of a carrier neutral data center.
Legal Compliance: Regulatory compliances are usually taken care of by data center providers. For starters, you need to ensure the confidentiality and privacy of your users and their data, which is required for a SOC 2 Type II certification. Additional compliance is required if you are a large payment processor, government identity, and so on. Data center certifications for compliance is not a cheap process; wholesale colocation is an easy way to avoid these costs.
Global Scalability: Large enterprises looking to maintain or become a global presence need to leverage edge data centers in order to succeed. Obviously building data centers in every major city isn’t feasible; finding colocation in mid-sized cities with the capacity and infrastructure needed to support intensive operations is a much more cost-effective solution.
HostDime Global Colocation
All enterprises are trying to increase performance, reduce latency, gain speed on their deployment, and save money. Colocation checks all these boxes.
HostDime has data centers strategically placed around the world to make sure your visitors are receiving the fastest response times to your website.
The key toward successful globalization is employing locals who understand the culture and language of their region. HostDime brings our expertise to these countries and provides consumers the tools and services required to bring their ideas online.
Open a chat now to get started on your customizable colocation solution.
Jared Smith is HostDime’s SEO and Content Strategist.