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Looking at Colocation Vs Build Your Own

My name is Richard Stacey, a data centre Presales Consultant at Future-tech. My job involves talking to clients about the costs associated with building and operating their own data centres.

During these discussions I hear clients say ‘We’re looking into co-locating our services as it must be cheaper’. So I thought I’d better have a look into this myself, as I could be accused of being biased due to me working for a company that designs and builds data centres.

When talking to clients about co-location vs. owning infrastructure, the thing I encounter most often is that costs are looked at annually or over 3 years. Although I understand this is how many organisation’s budgets and projections work it is not a very good way to assess an infrastructure investment like a data centre. This is because a well designed, built and maintained data centre will last at least 10 years. So regardless of how your balance sheet works, if your company aims to be around for the next 10 years and will require IT services during that period then a time scale in-line with a 10 year life cycle would be more appropriate.

So first things first, I had to crunch the numbers to establish the costs associated with building a micro data centre. By using Future-tech’s online budget estimator, I designed a room which had a very similar specification that required by the majority of my clients. To make things more interesting, and realistic, I measured up a meeting room at the Future-tech Head Office to see what was achievable within our standard office space. The room measured 4.4 x 3.4 with a floor to ceiling height of 2.6m. I then based the room on the best specification I could fit within the space.

Below is a brief specification of the facility:

4 x 42U 800 x 1000 Cabinets with 2 x 32amp single phase supplies 5kw Average power per cab
6.8kW Maximum power in any one cab 2 x power and earth supplies per cab
8 x in Rack power strips ( 2 per cab ) 2 x 24kW UPS to give N+1
2 x AHU rated at 27kW each to give N+1 2 x Modular walls ( to cover existing window and one glass wall )
Modular roof Suspended ceiling
Raised access floor Floor grilles
Door with viewing panel Access ramp
Access steps Lighting
Switchgear FM200 Fire Suppression
Pressure relief damper Category 5e UTP data cabling
12 x interlink cables per cab Temp & Humidity Monitoring
Fault Condition Monitoring IP Addressable Environment Monitoring System
Swipe card door access Design, Testing and commissioning
Project management CDM Compliance
All materials are data centre suitable products All design and installation in-line with current best practice and standards

Estimated Price £92,919

There is more cost involved with a data centre than just its construction, so below are the associated costs for both power and planned preventative maintenance.

Power costs:

4 cabinets at 5kW per cab = 20kW x 8760 x 10p p/kWh = £17,520 per annum

Supporting infrastructure = 10kW* x 8760 x 10p p/kWh = £8,760 per annum

*This figure assumes a PUE of 1.5. This figure is easily achieved by the facility priced in this exercise.

3 Star Manufacturers Maintenance costs £12,000

Total facility cost per annum £38,280

Total 10 year cost £475,719 (based on paying up-front for data centre build)

Leasing Option: £27,122 p.a. (includes maintenance but not energy costs – see table below)

Once the design parameters had been set I then used Google to search for the ideal Co-Location host.

Now I genuinely feel for anyone who has attempted this before as it is an absolute minefield of offers and tariffs. In fact I found it impossible to get a complete cast iron price from anyone.

After a lot of time spent on the phone I narrowed it down to 4 providers for this exercise:

  • Host A – Nottingham Area
  • Host B – Hampshire Area
  • Host C – London Area
  • Host D – Yorkshire Area

The 4 potential hosts had the same criteria to work with, 4 cabs / racks that are able to handle 5kW to each. Comparisons were then made using the 10yr lifecycle of an in house data centre:

Host A: After talking with a sales representative about my requirements I was offered the standard online package of £699 per cab per calendar month with a set up fee of £349 per cab. This equates to £2796 per month for my 4 cabs excluding the set up fee. Over the 10 year life of a Data centre this cost £336,916. The big thing to note is that this price does not include energy bills. Later that day I received an email saying my power requirement was too high and they were unable to offer me hosting services.

Host B: Was very helpful and made sure everything was covered to make sure I was well looked after and all my requirements were met. I was promised a quote at the end of the day to confirm figures. As promised the quote arrived in my email and of all the hosts the only one who would provide the information in black and white. 4 x 47U private full racks with single power feed to each rack, 100Amp aggregated power, 100Mbps CDR with 1Gbps Burst (includes 5TB monthly bandwidth and 8 IP’s) (additional bandwidth and IP’s can be provided with ease),Price: for 4 cabinets was £5,830 per month with a Setup fee: £4,000 or £6,230 per month Setup: FREE. As helpful as they were this still meant paying £703,600 or £747,600 over 10years. What is good about this quotation is that it does include the energy usage.

Host C: I was offered £895 per cab. This did not include energy bills and I couldn’t establish whether there was a set up fee or not. So that’s 4 x cabs at £895 in year one that has cost £42,960, half the price of a purpose built room. Over 10 years I would spend £429,600.00 PLUS energy costs!

Host D: I was told about a ‘special offer’ for this month of only £699 per cab per month. This didn’t feel too special after speaking to the other providers. After reading the small print I discovered the salesperson neglected to inform me of the £599 per cab set up fee. So over 10 years this would have cost me £337,916.00, again this did not cover the cost of the electricity used by the equipment.

Pricing table: Solutions not including power usage

Year 1 Year 5 Year 10
Own Build (cash) £104,919 £152,919 £212,919
Own Build (lease) £27,122 £135,610 £271,220
Host A £34,948 £169,156 £336,916
Host C £42,960 £214,800 £429,600
Host D £35,948 £170,156 £337,916


Pricing table: Solutions including power usage

Year 1 Year 5 Year 10
Own build (cash) £131,199 £284,319 £475,719
Own Build (lease) £53,402 £267,010 £534,020
Host B £73,960 £353,800 £703,600


Although the owning and operating of a data centre facility isn’t right for every organisation the figures speak for themselves. Regardless of CAPEX or OPEX this equates to profit lost, and in today’s financial climate being as costs effective as possible matters. And if cash-flow is an issue, or there is OPEX budget for collocation but no CAPEX budget, then perhaps a leasing contract is the answer.

Outsourcing has some advantages however if you take one thing from this blog post it should be not to assume one of those advantages is cost.

If your organisations plans to be around for the next 5 to 10 years research all the solutions that are available to you.