Mark Bauer, Managing Director and co-lead of the Data Center Solutions, JLLWhere your co-location facility is located has a profound impact on security and latency reduction
The days are numbered for hosting your data in a co-location facility in the middle of nowhere, miles and miles of transmission cable from your metropolitan headquarters. With the proliferation of the Internet of Things, latency, processing speed, and security have become top priorities for organizations that need to share and analyze data in real time. And that’s true for most businesses today.
“The data center of the future is at hand”
Business continuity is contingent upon a reliable connection to data and applications hosted off-site. Increasingly, these remote, lower-cost locations are not feasible for the pace of business today, and that means having a data center closer to ‘home’.
Indeed, where your data lives, has a direct impact on download and upload time, as well as your company’s ability to effectively recover from disaster. That's why the most effective locations for data hosting and processing are more likely than not to be those close to operations and customers, in an area with mild weather and with low-cost energy infrastructure. As data-centric enterprises increasingly look to third-party co-location as a flexible and cost-efficient alternative to managing complex technology and infrastructure in-house, physical location can make a major difference in business productivity.
So, how can savvy CIOs decide where to house data? It begins with familiarizing yourself with the lay of the land—and then mapping out your route through the growing market accordingly.
Yesterday's RFP: Not a fit for today's data center outsourcing
Demand for sophisticated data center services is skyrocketing. Last year, independent data center operators in the United States earned revenues of $115.3 billion and grew 6.1 percent, according to JLL's annual Data Centers Report. That demand isn't coming from just one sector, either. With security concerns permeating the digital world, sectors from retail to finance to government are seeking sophisticated hosting and processing services that can drive productivity and resiliency across their footprint.
However, forward-looking data center selection is far more complex than a straightforward RFP process typically seen in the procurement of third-party services. Factors that should influence the decision process include service offerings, energy costs, infrastructure and security specifications, as well as contingencies, efficiencies and competitor rates.
Following are key considerations for information leaders seeking a new path forward in data center outsourcing strategy:
• Get Real Estate-Savvy: The 15 hottest markets for data center activity across the country—as identified in JLL research—share a mix of large populations, appropriate talent pools, affordable energy costs and amenable infrastructure. The clear leader is Northern Virginia, with more than 60MWs of absorption last year, and additional growth expected to come.
However, many organizations will need more than one location, making it especially valuable to look outside the hottest markets to suit their unique needs. For example, Reno is emerging as a strong alternative to San Francisco/Silicon Valley, where data center availability in 2016 is expected to be less than 2 percent—a shortage that contract costs are certain to reflect. In contrast, data center clients in Reno benefit indirectly from low electricity costs and no corporate income taxes that translate into lower hosting fees.
• Know What to Look for in Security Offerings: Physical and cybersecurity can differ widely from center to center—and each detail can play a role in data integrity. In modern co-location facilities, look for well-maintained, highly secure fencing, video monitoring of access points, human guards and high-tech access controls from the parking lot to each client server rack. For example, dual authentication, such as a badge reader and biometric scanner, will ensure that only authorized personnel can access the data center floor.
• Don't Pay for What You Don't Need: Different sectors face different connectivity and compliance challenges, so it's fitting that data centers offer different levels of service and rigor. A standard procurement process might miss opportunities to avoid higher-cost services you don't need. Financial institutions, for example, need to be SOC-compliant, which requires capabilities, controls and processes available only with top-tier facilities. Companies in other industries might not need these costly options.
• Do Negotiate: Ancillary IT services, security offerings, and proximity all play a huge role in rates and reductions—and these aspects of third-party data center services are not cut-and-dry costs that would fit a standard procurement model. Every circuit and cross-connect can be a negotiation point that ultimately influences costs over time. What happens if 100 percent uptime is not achieved? What are the remedies? What are the renewal options? These are topics for the negotiations table.
• Think Big Picture: No organization wants to drop millions into equipment for its co-location space for a three-to-five-year lease and end up without longer-term contingency plan. How can the data center support an evolving strategy?
• Know the Operator's Pressure Points: Energy, tax and construction costs are not your headaches when you choose to outsource data hosting and processing. But, they are helpful in negotiations on multiple levels. For one thing, it's easier to sell your C-suite colleagues on the higher costs of a data center that has valuable proximity to your users, and therefore reduces latency and drives productivity.
Meanwhile, when you know what the data center operators are really grappling with in terms of financial and geographic pressure, you can better negotiate a contract that balances their costs with your demands.
• Leverage Data-Centric Real Estate Partners to Arrange Partnerships: Many IT professionals perceive the data center hosting decision as an IT challenge alone, but it is also a real estate challenge. Qualified real estate advisors can bring the insight and negotiating skills to the table at no charge to your company. A qualified real estate partner is data center agnostic, will have a track record in negotiating complex hosting agreements, and has a deep understanding of local market conditions including tax incentives, current and future planned capacity, and co location pricing options. They can offer sophisticated data and business intelligence tools for researching your optimal data center location based on power costs, natural hazards to infrastructure, network latency requirements, and proximity to corporate headquarters, among other factors.
The data center of the future is at hand. With the plethora of third-party co-location options in the marketplace, even the most sophisticated IT team needs to be armed with the best insights and negotiating power to secure the best solution for its organization. With the right real estate insights, you can help set up the rules for information security, agility and competitive advantage for years to come.
