Today's enterprises increasingly occupy the cloud. ... biggest enterprises and cloud providers in the world can offload
W h i t e Pa p e r
Colocation: The Logical Home for the Cloud Today’s enterprises increasingly occupy the cloud. As in nature, the IT cloud needs a sky in which to live. That environment is colocation—sophisticated data centers where some of the biggest enterprises and cloud providers in the world can offload the risks of growing capital costs, facility management and obsolescence and focus on their core mission. Colocation isn’t a threat to the cloud; it’s an enabler. Faster, Better, and Cheaper The only constant for today’s Fortune 1000 CIO is change. The ongoing explosion of IT demand is driven by multiple forces—from virtualization and the move to digitize everything, to unified communication and extreme mobility. The gating factor is an infrastructure with the power and cost efficiency to handle it all. These trends force CIOs, many of whom are responsible for the enterprise’s private cloud, into areas outside their expertise and core mission. They find themselves in the real estate business—in charge of providing always-on accessibility to dozens of secure data centers scattered around the globe. They’re managing facilities with sophisticated infrastructure that falls outside the purview of a building manager, even as it becomes obsolete in as little as two or three years. Meanwhile, CIOs need to do everything faster, better and cheaper, with no tolerance for failure of infrastructure or applications.
“When I meet with CIOs, everyone has the same problems,” says Gary Wojtaszek, CFO of Cincinnati Bell, which earlier this year acquired Houston-based CyrusOne, a major colocation provider. “They’ve got a bunch of data centers around the world, and they have to figure out the optimal size and location to house all these applications that they’re tasked with managing.” All of this is driving CIOs to colocation —data centers and infrastructure as a service.
The Power of Colocation Colocation technology has its origins in telecommunication utilities. It allows multiple customers to access network, server and storage gear, and connects them to a variety of telecommunications and network service providers. Its evolution parallels that of electric utilities about a century ago. When electricity first became a mainstream
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white paper
Colocation: The Logical Home for the Cloud
“When I meet with CIOs, everyone has the same problems. They’ve got a bunch of data centers around the world, and they have to figure out the optimal size and location to house all these applications that they’re tasked with managing.” — Gary Wojtaszek, CFO, Cincinnati Bell
power source, each enterprise had its own generating plant. It quickly became clear that this was inefficient and a costly diversion from a company’s major focus—to connect with customers and sell its products. It made much more sense to buy electricity, as needed, from a central utility. The same is happening today with data centers. As CIOs struggle to maintain, secure and upgrade their individual centers to keep up with the demands of both internal and external customers, the need for a central utility has emerged. The advantages are plenty:
4 Energy: It’s reason enough to hand off data center capacity and management to a trusted partner. The demand is increasing in line with Moore’s Law, which holds that processing speed, memory storage and other digital capacity will double every two years. Caroline Brelsford, national accounts director for CyrusOne, notes that a decade ago, “when somebody had their own data center, they would work with their maintenance people, but it’s not that way today. It’s a very fine science. You can’t just drop a CRAC [computer room air conditioning] unit into a data center.”
4 Consolidation: Colocation allows enterprises and cloud providers with dozens of data centers around the world to consolidate to three or four. The economic benefits, in people and assets, are obvious. An IT staff can focus on serving the enterprise, instead of trying to maintain the underlying infrastructure. Also, with
fewer data centers, entire regions of the world can be managed during regular shift hours rather than night shifts.
4 Future proof: Colocation offers scalability. If an enterprise grows quickly, the storage and power will be there. If it grows more slowly than anticipated, the enterprise hasn’t spent money on facilities that are underused. “That means you’re not trying to build five or 10 years out without a crystal ball,” Brelsford says, noting that rapid growth does not require a request to a board of directors for another capital acquisition. “It’s a change order,” she says.
4 Security: The layers of security at colocation centers likely exceed those of most enterprises. CyrusOne, for example, requires triple authentication—key card, fingerprint and volume. Prospective customers are required to surrender their ID when they visit a site.
4 Other advantages: Colocation also provides redundancy, remote support, facilities management, environmental controls and 24/7/365 technical assistance.
Getting to the Bottom Line: Capex vs. Opex No matter the advantages, colocation still has to make economic sense. Hence the ongoing debate over whether the capital expenses required to host local data centers will be more or less expensive than the ongoing monthly operating expense of colocation.
Be warned, though; calculating TCO is not as simple as taking the price of building a data center, dividing it by 36 to determine its monthly cost over a three-year useful life, and then comparing that to the monthly cost of colocation. Ongoing direct costs of running a data center include power, floor space, storage, and IT operations to manage it. In addition, overhead costs include procurement, accounting personnel and, again, IT management. To help customers make an accurate analysis, CyrusOne has developed an evaluation tool with a dozen assumptions, which include the starting kilowatt load, the expected percent of growth over time, how many cabinets are on the floor, the square feet needed, construction contingencies, whether it is in an earthquake zone or heavily unionized area, and whether the enterprise owns property. “By using their own data, senior IT people can get a good sense of the mechanical components they would need, not only for today but in five to 10 years,” Brelsford says. “That evaluation shows very quickly what it’s going to cost them.”
The Cloud Goes Colocation Whether clouds are held by a single enterprise or serve multiple customers, the advantages are the same— colocation enables them to focus on their customers, instead of infrastructure. Done right, it provides economies of scale that are as hard to beat as it would be for an enterprise to compete with a major utility in providing its own electricity. And it lowers the risks for CIOs who need tight security, constant support and the knowledge that they will no longer face the capital cost of a major infrastructure refresh every three years or less. Colocation lets the cloud be the cloud, at much less cost. n
