Driving Data Centre Costs Down

If you are looking at migrating from on-premise to a colocation data centre, consider running a RFX process, which will drive down costs. How you are wondering? Here’s how.

Timing is Everything

Data Centre colocation providers build out capacity and then need to fill that capacity as quickly as possible to realise a return on their investment. This means that they are keen to sell and even pre-sell capacity when new space comes online. If you shop around you may find providers that are willing to discount more than others depending on the timing of your need against their capacity.

The other timing factor to consider is how a salesperson is tracking in against quarterly or annual sales quota. If its close to end of quarter, or end of year, then you are more likely to be able to drive down the costs so the salesperson can register the sale in the current period and potentially get their quote ‘across the line’.

Square Pegs in Round Holes

If you don’t have a requirement for your own suite or caged area, then you may be able to use stranded capacity within a data hall that is typically difficult for the colocation provider to sell. If you are able to take advantage of this stranded capacity then you should be able to negotiate a significant discount.

Designing and Managing the RFX Process

If you really want to drive the best data centre colocation deal that you can, you need to ensure you have detailed requirements defined and document these into a RFX process. The first step is a Request for Information (RFI) to get a feel for each provider, understand if they have capacity you require in your timeframe, see how they stack up against your initial requirements and obtain indicative costs.

Once you have RFI responses, you can evaluate, discuss responses with each provider, and shortlist ready for a Request for Quote (RFQ). A RFQ is the way to go if you have detailed requirements and know what you want. Alternatively you could put out a Request for Proposal (RFP) and ask respondents to propose the solution that they feel best meets your needs. However this makes it difficult to make apple-to-apple comparisons, so go for the RFI and RFQ process ideally.

Total Cost of Ownership

Whilst the RFI and RFQ process will provide you with costs for data centre colocation space, power, and optional services such as racks, PDUs and smart hands, there’s more to consider. In terms of figuring out your full project/capital costs and your ongoing operational costs you also need to consider migration labour, fit-out labour, hardware seed and swing kit, hardware refresh, telecommunications circuits, cross-connects, cabling and potentially software licensing. Until you have all of this enumerated its difficult to get project funding as you don’t know how much its all going to cost. The RFI process can help provide some of these indicative costs for budgeting purposes.

End to End

If you are considering migration to a colocation data centre, you need to think through the project end-to-end. That means before the project starts you need to figure out what the target state will look like, determine all the costs, compare those to current costs, define the business benefit of migrating, and formalise all of this into a financial model, schedule and business case. If you can then get the business case across the line you have your project and then that’s a whole different ballgame of planning, refining and executing.

About the Author

Simon Abela is a Principal in the Australian practice of CS Technology where he specialises in data centre and cloud strategy.

This article was originally posted on LinkedIn here on the 11th November 2020. 

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