Data Center Decisions: Build versus Buy

Data Center Decisions
“Build versus Buy”

Jeff Gilmer
Senior Partner
612.978.4493
jgilmer@excipio.net 1
© 2010 Excipio Consulting, LLC. All Rights Reserved. This document is proprietary and confidential and may not be duplicated,
redistributed, or displayed to any other party without the expressed written permission of Excipio.

Data Center Review
Agenda
1) Data Centers Today
o Trends

2) How do I “Evaluate” my Data Center?
o Operational
o Facilities

3) “Consolidation”, What does this really mean?

4) How do I know when we are going to run out of Data Center
capacity?

5) How Mature are my Data Center Services?

6) Build versus Buy?

2

Trend 1: Greening of Data Center Services
Of all respondents 71.3% indicated they are actively engaged in Greening,
however only 42.2% have a “formal” Greening Initiative.

Results experienced of implementing Green measures are:

1) Power Efficiency (using less power) 60.8%
2) Cooling Efficiency 51.4%
3) Water Usage (Reduction) 11.5%

The major obstacles data centers have faced in implementing Greening
techniques have been:

1) 39.4% reported not having enough money in their budget
2) 29.6% blamed procrastination (discussion no implementation)
3) 22.7% lack of senior management commitment
4) 20.4% lack of a clear definition of Greening

2009/2010 AFCOM Data Center Trends Survey Results & Analysis 3

Trend 2: Data Center Consolidation
Data Center consolidation has historically been cyclical in this industry.
As the economy suffers, more and more companies have traditionally
looked to consolidation as a method of saving money.

Of all respondents 62.1% either already are in the process of
consolidating one or more data centers, or seriously considering it.

More than half of these respondents (52.1%) plan to relocate their newly
consolidated data center to another existing facility, or build an entirely
new one.

In determining the location of these new facilities, the number one
consideration reported was:

1) The availability of sufficient power (67.1%)
2) Susceptibility to local natural disasters (46.6% )
3) Proximity to other company facilities (30.3%)
4) Availability of sufficient water supply (20.5%)
5) Availability of local work force (17.1%)


Trend 3: Emerging Technologies in Data Center Services

Data center services are always changing with the adoption of new
technologies. The technologies with the highest levels of adoption in today’s
data centers are:

1) Virtual Processing (72.9%)
2) Web Applications (70.4%)
3) Automation (54.8%)
4) Cluster Computing (50.0%)
5) Cloud Computing (14.9%)

Surprisingly, there is a significant rejection of Cloud Computing at this point
(only 14.9% of all data centers have adopted), yet this technology has been
considered by an additional 46.3%, but never implemented.

These are very interesting figures as Cloud Computing gets all the press and
hype but the reality is the adoption rate still lags more traditional and proven
technologies.


Data Center Assessment

o Operational
o Facilities

6

How do I “Evaluate” my Data Center?
“How do we determine our future Data Center Strategy?”

Phase I – Data Center Operational
– Operating Systems
– Applications
– Technology
– Data Storage
– Infrastructure

Phase II – Data Center Facilities
– Facilities Capacity and Capabilities
– Power
– Cooling
– Fire Suppression
– Telecomm
– Security

7

Phase I – Data Center Operational
Operating Systems
A review operating systems in order to leverage the redundancy and maximize the resource
utilization. Examples include: H/P–UX, UNIX, AIX, Solaris, Windows NT, 2000, Advanced
Server, Datacenter, Linux, Netware, etc.

Applications
The review will include current server applications in use, versions and the potential to
consolidate different applications, partition or utilize alternative technologies.

Hardware Technology (Servers)
A review of the current server environment including server mix; Blade, Commodity and
Enterprise class.
It also includes a review of the potential for optimizing the current environment including;
physical consolidation, virtualization, application stacking and life cycle management along
with other options.

Data & Storage
Storage analysis should include local server drive storage, Data Back-up/Restoration, Data
Retention, NAS and/or SAN options as well as Disaster Recovery process related to data
handling capabilities.

Infrastructure Review
The LAN/WAN components and connectivity requirements along with switches, routers,
firewalls and other connectivity points.
8

Phase II – Data Center Facilities
Objective
To review the Current Data Centers for the ability to meet
the current and future requirements defined in the Data
Center Operational review.

The Facilities Assessment includes a review of all Data
Center/Computer room facilities and related equipment including:
- Capacity, Environmentals and Physical Components
- Maintenance Schedules
- External Connectivity
- Physical Security, Monitoring, Testing and Documentation
- HVAC, Fire Suppression, Wiring, Power, Redundancy
- Sensors, Space Requirements, Utility Costs, etc.
- Data Center Facilities Staff Knowledge and experience

9

How do I know when we are going to run
out of Data Center capacity?
“We always seem to be running out of power or cooling in our Data
Center? Is this common?”

Data Center Capacity Drivers:

o Physical Space
o Rack Space, Ceiling Height, Floor Weight

o Power
o Main Power Feed, Facilities Draw, Actual Power to Rack, Equipment

o Cooling
o External, Internal, Ambient Air, In-Row Solutions, Raised Floor Height

10

How Long will my Data Center “Survive”?
Number of BTUs per
# Tons Min BTUs Max BTUs
Units Ton
Building air supply - - 12,000 - -
Cooling capacity per Unit 20.0 15 12,000 3,600,000 3,600,000
Cooling capacity per Unit 12.0 3 12,000 432,000 432,000
Cooling capacity per Unit 5.0 2 12,000 120,000 120,000
Total Cooling Capacity 346 4,152,000 4,152,000

Typical Typical
Physical
Watts per BTU per Min BTUs Max BTUs
Devices
Device Device
Cooling demand
WAN 118 135 460 (54,297) (90,495)
LAN 61 77 262 (15,972) (26,620)
Storage & Backup 92 427 1,455 (133,882) (223,137)
Telco 42 310 1,057 (44,373) (73,955)
Servers & Mainframes 701 433 1,478 (1,035,742) (1,726,237)
Estimated Cooling Demand (1,284,266) (2,140,444)

Less estimated efficiency loss 30% (1,245,600) (1,245,600)

Available Cooling Capacity (BTUs) 1,622,134 765,956

Cooling Adequate (Yes/No/Insufficient Data) Yes Yes
Cooling Redundant (Yes/No) Yes Yes
Maximum Number of Servers 1,799 1,012
Minimum Cooling Required (Tons) 211 282

11

Consolidation – What does this really mean?
Upfront
Technical Outage Support Resource
Methodology Explanation Examples Cash
Risk Risk Impact Risk Impact
Investment
Conslidate like
Immediate
servers on existing
Compression File and print Low Low Low Low decrease in
hardware or retire
workload
applications
Migrate applications • File and print Shift in
from expensive • Utility servers workload,
Re-platform Low Low Moderate Low
platforms to • Itanium to typically no
commodity servers. quad core decrease
Consolidation of Moderate
• Virtualization Increased
servers as due to
• Application resource
equipment is changes in
Rolling Migration stacking Moderate Low Low cost due to
replaced during OS and
• Physical extended
regular lifecycle App
replacement timeline
refresh intervals versions
Initial
Purchase of new Increased
• P2V increase,
servers with new resource
Mass Refresh • 3-5 year lease High High High followed by
technologies and cost during
agreements tapering of
migrate en masse transition
support
Migration of key • Web services
Reduces or
systems to third • B2C systems
reallocates
party hosting • SAAS
Outsourcing Low Low Low Low internal
facilities to avoid • Systems with
support
upgrades to the data 24x7 uptime
staff
center requirements

This chart provides example methodologies which may be utilized in the
consolidation of Data Center operations. One, some or all of these may be
implemented depending upon the environment, business requirements, risks
and costs. 12

Actual Client Results

Corporate Entity
Organization Background

- Three Primary Data Centers, two production, one Disaster Recovery
- 30+ remote Data Centers/Computer/Telecomm rooms
- Approximately 5,900+ servers, (Mainframe, Midrange and Wintel)
- Estimated 10,000 remote and 20,000 corporate users

Issues
- Client was reaching maximum Data Center power capacity
- Client had upgraded their Data Center cooling to maximum capacity
- They were looking for a way to extend the life of their Data Centers
- They needed to reduce their Data Center physical foot print

13

Internal Client Solution
Corporate Entity
Clients Solution
- Implement server virtualization in their environment
- The internal server team made this decision with management support
- Plan was to complete server virtualization in four years

Issues with Client Approach
- They were approaching the solution from a single view – virtualization
- The Client did not have an overall Data Center Operational Strategy
- The VP wanted to validate the internal virtualization process

Operational Review identified Issues
- Operating Systems – Client had 43 different O/S versions
- Applications – Identified 1,743 different applications and versions
- Servers – 66% of the production servers were older than five years
- Storage – diverse storage and under capacity
- WAN/LAN – Appropriate for the enterprise
- Staff – The staff had limited virtualization experience 14

Is Server Virtualization worth the Effort?
Corporate Entity

Clients Server Virtualization Results

- The solution would be completed with internal staff
- The solution would reduce the server counts from 5,972 to 4,031
- The virtualization would be complete in four years
- Server virtualization would save the Organization $6M over 5 years

Client Issues still present

- Operating Systems – Client had 43 different O/S versions
- Applications – Identified 1,743 different applications and versions
- Servers – over 50% of the servers were older than five years
- Storage – diverse storage and under capacity

15

Is a Data Center Enterprise Strategy Beneficial?
Corporate Entity

Complete Data Center Strategy Results

- Operating Systems – The 43 O/S versions were reduced to under 10
- Applications – 1,743 applications/versions were reduced to 890
- Servers – reduced from 5,972 to 2,167, all five year old servers replaced
- Storage – Additional storage was purchased to meet capacity
- Staff - Internal staff supported with eight external staff
- The solution was completed in 15 months
- The solution incorporated: physical consolidation, compression,
virtualization, application stacking, storage and limited re-platform.

Financial Results

- Organizational NET Savings of $26M over five years.

16

How Mature are my Data Center Services?

o Collocation
o Managed Collocation
o Outsource
o Service Stacks
o Cloud Computing

17

Data Center Services Maturity Model

As the Data Center Services mature, the ability to provide services on
an “As Needed” basis to the end user client maximizes efficiencies
and is typically more cost effective.

Collocation Managed Outsource Sourcing Cloud

Basic Services Advanced Services

18

Data Center Collocation

“Power and Pipe”
Vendor Responsibilities
o Building Facilities
o Security: 24 x 7 security and alarm monitoring
o Power: AC and DC power with emergency generators
o Cooling: HVAC redundant design with air distribution
o Fire Detection: Detection and suppression technologies
o Cabinets and racks
o Network: WAN bandwidth

Client Responsibilities
o All assets owned by Client: server, network, and storage hardware
o Resources to support all hardware, OS, and applications
o Tape backup and rotation responsibilities
o Disaster Recovery responsibilities
o Monitoring and Service Desk capabilities
19

Data Center Managed Collocation

“Managed Services”
Same as collocation plus the following services:
o Implementation and support of hardware and OS
o Performance monitoring of all hardware
o Tape backup and rotation responsibilities
o Updates, patches, log maintenance, troubleshooting, security
o DBA support to triage and perform routine maintenance
o Managed Networking: user access, firewalls, IDS/IPS, anti-virus
o Virtual infrastructure Management: utilization, failover, performance
o Standardized support processes: continuous process improvement
o Service Desk integration (single service desk at the enterprise level)

o All assets owned by Client: server, network, and storage hardware
o Resources to support applications
o Disaster Recovery responsibilities
20

Data Center Outsource Services

“People, Processes, Product”
Same as Managed Collocation plus the following services:

o All resources are provided by vendor
o Assets are owned and responsibility of the vendor
o Processes and methodologies to manage IT operations
o Software support for the commodity applications
o Application performance metrics and reports
o Multi-level Disaster Recovery plan
o Service coverage is 365 x 24 x 7
o Help Desk is the vendor’s responsibility

o Custom applications, (test, development, support)
o Custom DBA work (new enhancements, development)
21

Data Center Service “Stacks”

“Services are Sourced”

Traditional IT Structure Service Sourcing Structure Cloud Computing

Applications Software As a Service

Operating Systems Platform As a Service Solutions are
deployed
Mainframe, Servers “On Demand”
Internet
with
“Pay as you go”
Data, Storage, DR
Infrastructure As a type of service.
Service
WAN, LAN, Network

Data Center Client
Facilities

22

Data Center Cloud Computing
“Services are Sourced via the Internet”
Traditional IT Structure Service Sourcing Structure Cloud Computing

Applications Software As a Service

Operating Systems Platform As a Service

Mainframe, Servers Internet

Data, Storage, DR
Infrastructure As a
Service
WAN, LAN, Network

Data Center Client
Facilities

Solutions are deployed “On Demand” with “Pay as you go” type of service via the Internet
NOTE: There are no standard industry common components to “Cloud Computing” 23

Data Center “Build versus Buy”

o Are there advantages to making a long-term commitment to build
a Data Center, or would we be better off utilizing a current hosted
facility to meet our needs?

o What can I get for my investment?

o What is the best use of my money?

o Do I upgrade, build new, or use an external provider?

o Do I address production, DR and test/development environments
differently?

o What is a Tier Level and how important is this as opposed to a
business level?

24

“Building a New Data Center”

The decision to own the facility
The benefits of owning and building include:
o Typically the lowest cost long-term option
o If the strategy includes consolidation of other DC’s return on
investment can be as soon as four years but less than ten.
o The Client owns and controls the facility
o The Client can make independent decisions without impact to other
vendor provided requirements.

The disadvantages typically are:
o Significant upfront initial investment
o Long-Term process which may require an interim solution
o Requires a long-term commitment
o May not offer the technical and business flexibility

25

“Buying (Sourcing) a New Data Center”

The decision to buy Data Center Services
The benefits of sourcing DC services include:
o Typically the lowest up front cost option
o Implementation can occur quickly in relative terms
o The Client can take advantage of already implemented policies
o The option provides for technical and business flexibility
o It does not require a long-term commitment

The disadvantages typically are:
o Typically higher long term cost
o Will require some conversion to providers requirements
o May not provide a long-term solution
o Control of the facility is by the vendor

26

“Build versus Buy Cost Comparison”

10-year Projected Costs
New Data Center Collocation Managed Services Outsource

$600,000

$400,000

$200,000

$0

Year 10
Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9
This client example shows the cost of collocation and build are the lowest.
The cost to build becomes more cost effective around year 7.
27

“Hybrid Options – Common Solutions”

The decision of a hybrid solution
“ A hybrid solution requires a prioritization of the Data Center
services from the operational assessment. Upon completion of the
operational assessment, the services are ranked and Data Center
services are provided based upon criticality.”

An Example of this might be:
o High criticality services (applications and infrastructure) are
placed in a managed collocation external type of service.
o Mid criticality services are placed in a standard collocation service.
o Low criticality services are consolidated into limited current Data
Centers with specific upgrades.
o Commodity services could be outsourced to a “Cloud” solution.

28

Thank You

Questions
&
Answers

Sponsors Summary

29

Excipio Consulting Organization
Who We Are – Overview
Excipio Consulting has experts with many years of IT experience. They
perform a wide variety of IT/IS assessments for organizations. This includes,
Desktop, Network and Service Desk Management, Data Center operations
and facilities, Application evaluation and integration, Shared Services Catalogs
and Cost Models along with client RFP creation and vendor analysis.

Specific to Data Centers, Excipio has completed over 400 Data Center
assessments in the last 30 months, for both public and private organizations
ranging in size from 350 to over 100,000 employees.

This includes organizations such as the States of Minnesota, Washington,
Michigan and Pennsylvania, private companies of US Bank, Carlson
Companies, MD Anderson, Baxter Labs, Lowes and others.

Excipio helps clients focus on assessing growth, capacity, consolidation, risk
and financial benefits related to operating your own data center or location of
your equipment with an external partner. Key evaluation topics focus on the
most effective and efficient ways to understand and determine your future
Data Center strategic “Road Map”.
30

Data Center Decisions: Build versus Buy

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