Rent vs. Build

Posted on May 15, 2013 by Adam Burnham

Years ago it was standard for companies to own and operate their own data centers. However, in recent years a number of factors have made businesses think twice about whether they need, or even want, their own facility. Virtualization, cloud computing and financial constraints have contributed to rethinking this. Before determining what option best fits your business it is important to fully understand the factors influencing the change in thinking from build to rent.
Virtualization and cloud computing have worked hand in hand to push IT managers toward renting data center space. With many applications already running on public or hybrid cloud environments, having servers and other hardware move off-site is becoming less and less of a worry for IT departments. Many companies who previously resisted the idea of moving equipment out of their own facilities have begun renting colocation space at the same facility that they run their cloud at; they’ve already vetted the vendor as being safe and secure, and it makes sense to keep hardware close to the cloud to help with speed and maintenance issues.
Colocation also offers a huge advantage in scalability when compared to an in-house data center. When companies devote part of their in-house real estate to servers, power and other IT equipment, expanding that footprint becomes difficult and expensive. In contrast, forward-thinking IT managers who prepare more space than they initially need, with an eye on future growth, are paying high prices for unused space for long periods of time. Colocation virtually eliminates this potential headache by making it easy to scale your footprint by paying only for the space and power you need, and when you need it.
All that said, perhaps the biggest reason companies are renting data center space more often is the cost. The expense of building, staffing and keeping a data center updated can be extremely high, especially as you grow and expand as an organization and have to ensure your data center grows with you. For a growing organization, or one with aggressive growth plans, it’s best to see that your staff’s time and resources should go toward strategic business initiatives – not building and maintaining a data center.
Large data centers spend millions to ensure they are running the most updated pieces of hardware and use the newest advances in power and cooling. Another advantage is that by renting, companies can be confident they have the latest technology on their side. Companies who chose to build their own data centers need to make sure they carefully examine not only the initial cost, but the potential costs to keep it upgraded and running properly. After all, a data center that goes down regularly or has latency issues will be extremely detrimental to the company. The cost of hiring a staff of engineers, electricians and facility managers to make sure the data center is running at an optimal level is yet another added cost that many initially overlook.
Some very large corporations still decide to build their own data centers, but for most companies it simply doesn’t make financial sense to do so. As more companies embrace cloud computing and virtualization, the need to have a data center in your backyard is becoming less important. For most IT departments, the benefits of leveraging the latest technologies and 100 percent uptime guarantees while simultaneously reducing costs makes renting data center space and collocating a winning strategy.