Data center selection is an exercise in compromise. Everybody would like to have the best of all worlds, with a highly connected facility offering 24×7 smart hands support, impenetrable security, protection from all natural and man-made disasters, in addition to service level agreements offering 5-Nines power availability at $.03/kW. Not likely we will be able to hit all those desired features in any single facility.

Data center operators price their facilities and colocation based on several factors:

• Cost of real estate in their market
• Cost of power and utilities in their market
• Competition in their market
• Level of service offered (including power, interconnections, etc)
• Quality of facility (security, power density, infrastructure, etc)

Networks, Content Providers, Enterprises, and Eyeballs

The basic idea of an Internet-enabled world is that eyeballs (human beings) need to access content, content needs access to eyeballs, eyeballs and content need access to networks (yes, eyeballs do need to communicate directly with other eyeballs), and networks need access to content and eyeballs. Take one of the above out of the equation, and the Internet is less effective. We can also logically add applications to the above model, as applications are now communicating directly with applications, allowing us to swap eyeballs for apps to complete the high level model.

Organizations using the Internet fall into a category of either a person, an application (including enterprise, content, and entertainment applications), or a network (including access, regional, and global networks).

Each potential organization considering outsourcing some or all of their operations into a data center needs to ask themselves a few basic questions:

1. Is the organization heavily dependent on massive storage requirements?
2. Is the organization highly transaction-oriented? (such as a high volume eCommerce site)
3. Is the organization a content delivery network/CDN, requiring high bandwidth access to eyeballs?
4. Are your target applications or eyeballs local, regional, global?
5. Is the company a network service provider highly dependent on network interconnections?

Storage and servers = high density power requirements. The more servers, the higher the operational expenses on both space and power. This would logically drive a potential collocation customer to a location with the cheapest power – however that might be a location outside of central business districts, and possibly outside of an area well connected with domestic and international telecom carriers, network service providers, and access networks (including the cable TV networks serving individual subscribers).

Thus the cost of power and real estate might be favorable if you are located in Iowa, however bringing your content to the rest of the world may limit you to one or two network providers, which with limited competition will likely raise the price of bandwidth.

Locating your business in a city center such as New York or Los Angeles will give you great access to bandwidth through either a colocated carrier hotel or carrier hotel proximity. However, the cost of real estate and power in the city center will be a multiple of that you may find in areas like Oregon or Washington State.

In a perfect telecom world, all networks and customers would have access to dark fiber from facility-based carriers serving the location they are either located or doing business. Allied Fiber’s Hunter Newby believes that facility-based carriers should be in the business of providing the basic “interstate highway” of communications capacity, allowing any company who can afford the cost to acquire high capacity interconnections to bring their operation closer to the interconnection points.

If you follow the carrier world you will know that at least in the United States, carriers are reluctant to sell dark fiber resources, preferring to multiplex their fiber into “lit” circuits managed and provisioned by the carrier. Clearly that provides a lot more potential revenue than selling “wholesale” infrastructure. Also makes it a lot more expensive for a company considering collocation to locate their facility in a geography separated from the major interconnection sites.

The Business Case and Evaluation

Again, selecting your desired location or locations to outsource your business is a compromise. In the United States Virginia is a good location for power, and an expensive location for interconnecting and collocating. Los Angeles is among the lowest cost areas for interconnections, mid way up the power scale, but more expensive for space.

Consider the possibility of moving to a great location in Idaho, with low cost power, and low cost real estate. You build a 500,000sqft facility, with more than 300 watts/sqft power capability. Your first project supports more than 20,000 servers delivering Internet streaming media content. Your facility costs are low, but your network costs become very high. You cannot buy dark fiber from a facility-based carrier, and the cost of leasing 10G wavelengths is nearly $10,000/month per wavelength. You probably have 500GB of data to push into the Internet. Is the power cost vs. connectivity and bandwidth compromise in your favor?

Here is another exercise. Let’s say for argument, in a Los Angeles carrier hotel static costs may run:

1. $1000/month for a cabinet in the carrier hotel, $500/month for a cabinet in nearby facility.
2. $12/breakered amp (breakered amps are still the norm, moving to usage-based models)
3. $200/month for a cross connection within the carrier hotel building
4. $1000/month for a fiber cross connect to a nearby or adjacent building
5. $1000/month for an Internet Exchange Point/IXP connection (if you are a network service provider)

NOTE: Los Angeles has several large carrier hotels in the downtown area, as does New York, with buildings such as 60 Hudson and 111 W. 8^th offering potential tenants multiple options. Other cities such as Seattle, Miami, and Chicago have more limited options, with a single dominant carrier hotel.

If you are a medium sized network service provider, you may consider getting a couple cabinets in a nearby facility and acquire a couple fiber cross connections to one or more nearby carrier hotels. Get a cabinet within the carrier hotel, add high capacity switching or routing equipment in the cabinet, and then try to maximize the number of local cross connects with other networks and content providers, and connect to a local Internet Exchange Point for additional peering flexibility.

Then take your same requirement for both cabinet space and interconnections, and try the evaluation in several different cities and markets. Fit the cost into one of the above squares in the Data Center Basic Elements chart, and determine the cost for each component.

If your business requirement is more dependent on space, and that is the highest potential operational expense, then you need to consider which location will minimize cost increases in the other three quadrants while you evaluate the best location for meeting your space budget. If your requirement spans several different geographies, add the cost of interconnection between locations to your interconnection costs. Does the location give you adequate access to the target applications or eyeballs?

If you find that a location in Omaha, Nebraska, meets all your requirements, but your target audience also includes a high percentage in India or China, then the cost of getting to your eyeballs in both OPEX and performance may make the Nebraska site untenable – even though it meets your high level budget.

Enter the Cloud

Nearly all businesses and organizations now have an additional alternative. The virtualized commercial cloud service provider. Virtualization products have come a long way over the past couple years, and are maturing very quickly. CSPs such as Google, Amazon, Rackspace, and Layered technologies are providing very powerful applications support for small and medium business, and have become a very visible debate at the national level as governments and large corporations deal with questions of:

• Focusing on their core competencies, rather than internal IT organizations
• Building more efficiency into the IT infrastructure (heavy on energy efficiency)
• Recovering space used by IT and computer rooms
• Reducing OPEX spent on large IT support staff
• Better technologies such as netboooks
• And more…

Thus the physical data center now has competition from an unlikely source – the cloud. All new IT and content-related projects should consider cloud computing or software as a service (SaaS) models as a potential alternative to bricks and mortar data center space.

Many venture capital companies are now requiring their potential investments to consider a hosted or SaaS solution to outsource their office automation, web presence, and eCommerce applications. This is easily done through a commercial web service or cloud hosting company, with the additional option of on-demand or elastic expansion of their hosting resources. This may be the biggest potential competitor to the traditional data center. The venture community simply does not want to get stuck with stranded equipment or collocation contracts if their investment fails.

Disaster Recovery and Business Continuity

One final note on selecting your location for outsourcing. Most companies need some level of geographic diversity to fulfill a business need for offsite disaster recovery apps and storage, load balancing, proximity (to eyeballs and applications), and interconnections. Thus your planning should include some level of geographic diversity, including the cost of interconnecting facilities to mirror, parse, or back up files. The same rules apply, except that in the case of backup the urgency for high density interconnections is lower than the primary operating location.

This does raise the potential of using facilities in remote locations, or locations offering low cost collocation and power pricing for backups.

Links to Data Center Resources

Here are a couple links to magazines and eZines supporting the data center industry.

• Data Center Knowledge
• Data Center Journal
• Carrier Hotels

Part 3 will explore the topic of understanding the hidden world of data center tiers, mechanical and electrical infrastructure, and site structure.

John Savageau, Long Beach

Prior articles in this series:

28Oct09

Selecting Your Data Center Part 1 – Understanding the Market

Read the original blog entry...