10 June 2019

The hidden costs of hosting your infrastructure on-premise

By Claire Sangster - WA Sales Manager

Operating and running your mission critical infrastructure in-house is an enormous responsibility on top of your day job. The specialised requirements associated with managing the power, cooling and security amongst other things hits hard on the bottom line. Additionally, the excess overhead on company resources to keep the infrastructure and its surroundings running optimally creates its own set of challenges.

Outsourcing, cloud readiness and financial pressures are a constant reality check

The role of IT has come a long way, with the success of business now relying heavily on the organisation’s ability to digitally transform. IT and the infrastructure they build are under extreme pressure to perform, with most facing an uphill battle to keep up with the demand. Digital technologies drastically alter the way we do business, with the rules of business seemingly changing daily. With businesses continuing to reinvent themselves, the requirements of IT now and in the future is becoming increasingly difficult to predict.

Almost 70% of digital transformation projects fall over, with only one fifth of customers citing their transformation projects are successful long-term. With that said, taking on added financial and resource overheads needed to build and maintain your mission critical infrastructure makes little sense as your digital journey and your business continues to mature. As such, moving on-premise infrastructure into a specialised colocation data centre has fast become the preferred choice that organisations are considering, as part of their quest to successfully digitise their business.

The on-premise costs mount up

Relocating your IT infrastructure is not a decision to be taken lightly. There is significant effort, time and cost involved, so it is essential to weigh up the true costs of keeping your data centre in-house so you can make an informed choice about whether it is worth making the move to colocation.

There are so many variables that need to be considered when calculating the total cost of keeping your critical IT infrastructure on-premise, under the management of your internal IT function. In addition to procuring space, racks, cables, switches and other kit, there are a myriad of other costs involved with designing, engineering, powering, cooling, security and connectivity to take into consideration. There is no doubt that all these functions can be undertaken internally, the question rather is whether they will be managed efficiently and cost-effectively? And given it’s not your core business, what is the most realistic level of quality you can expect to deliver your business and your customers?

Office space is for humans, not hardware

Let’s face it, the office environment is not built for a large, hot, power-hungry enterprise IT hardware. Your business can’t run without your critical infrastructure, so with business now running 24x7 this represents a lot of heat and noise being generated in a confined space that is not purpose built to support that kind of environment.

Traditional office air-conditioning is built for keeping people comfortable as opposed to the specialised cooling required to keep machines running optimally. With office air conditioning set to run when there are humans around, running it around the clock to keep your infrastructure cool means your power bills are likely through the roof. Similarly, air-conditioning units can control temperature (to a point) but they can’t control humidity. This is less of an issue for humans, but for critical IT infrastructure it’s life threatening. Excess moisture can be a contributing factor to the premature failure of devices, thereby reducing their lifespan and increasing the frequency of equipment maintenance and replacement.

In addition, cooling units primarily facilitating human comfort are also only designed to be run for limited periods of time, but your infrastructure doesn’t go home when you do. If the unit fails, your IT equipment will start to heat up very quickly, resulting in thermal overload where the equipment will shut itself down before serious damage can occur. This poses a massive risk to business continuity, we all know that downtime of our mission critical infrastructure has a huge impact on productivity and an organisation’s brand, reputation and ultimately the bottom line.

The cost of office space and power

Then there is the cost of office space to consider. Prime office space is priced at a premium, which becomes a costly exercise to house IT infrastructure which could be located elsewhere in a purpose-built facility. When you consider the average rack has a footprint of 1200mm x 600mm plus supporting infrastructure and access paths, the amount of space required to house infrastructure adds up quickly, so it’s important it is factored into the total cost of ownership equations.

Similarly, the cost of power used to run IT infrastructure and keep it cool in an office environment is frequently billed at a much higher rate than a specialised colocation facility. Hyperscale data centres are purpose built to avoid standard power obstacles. Colocation facilities are designed and engineered to use power more efficiently and modelled to buy and consume very large quantities of power more economically. With the price of utility power skyrocketing, this is also an important consideration to factor in to the TCO lifecycle.

Many on-premise managed IT infrastructure set-ups are not designed and engineered to the dramatically improved new standards of hyperscale data centres, so they will be stuck in highly inefficient set-ups. Leading colocation providers today should be operating at the best power efficiency ratings, resulting in reduced total cost of operation for your IT infrastructure.

It’s all about the security

Security has become a major concern and a cost centre. Data is now the most valuable business resource and when it comes to security, no local environment can compare to the 24 x 7 x 365 security protocols that are deployed by a hyperscale colocation data centre operator. In the 13th annual 2018 Cost of a Data Breach Study: Global Overview from IBM Security and Ponemon Institute, it was reported that the global average cost of a data breach is $3.86 million, up 6.4% from the previous year. The average cost, globally, for each lost or stolen record containing sensitive and confidential information is also up and now lands at $148 per record.

Often colocation facilities will have multiple security zones including dual factor authentication requiring both an access card and biometric fingerprint scanning just to gain entry. In addition to this multi-layered authentication model, such facilities will also generally include perimeter fencing, comprehensive alarming, monitored CCTV and permanently located security staff onsite. This means the security posture your organisation maintains around its data is dramatically improved in specialist data centre facilities at a significantly lower cost than could be achieved on-premise.

The cloud and connectivity

Ultimately all the above is irrelevant if you can’t seamlessly connect to your ICT partners, carrier networks and cloud service providers that are now most likely the platform upon which many of your core business processes are managed. In addition to the cost of managing infrastructure that is located on-premise, there are additional costs for WAN infrastructure and intercapital connectivity services required to keep you linked to the multi-cloud hybrid world that organisations now operate in.

Without the flexibility to access to a comprehensive connectivity ecosystem, your organisation cannot grow or succeed, and this is an area where the benefits of colocating your critical infrastructure in a hyperscale data centre really start to drive value back to your business. Not only do you get access to a significantly broader range of telecommunication carriers, you can also directly connect to all the major public cloud providers as well as many of the local private cloud providers.

NEXTDC’s partner ecosystem includes over 560 cloud providers, carrier networks, ICT providers along with a myriad of other hybrid value-adding technology innovators. This body of expertise is ready and able to assist you to immediately start racking up the cost, productivity and risk management benefits obtainable from deploying the type of flexible, reliable and sustainable hybrid solutions that are helping progressive organisations achieve their objectives.

Can you afford to stay on-prem?

With your customers, partners and employees now expecting an ‘always-on’ level of service as well as a seamless and frictionless experience, can you afford to persevere with the costs and complexities of maintaining an on-premises data centre?

Downtime of any sorts is no longer an option. It costs organisations dearly in terms of both financial and reputational damage. Perhaps the best example of this is a one-hour outage suffered by Amazon in 2018, costing them $100 million in revenue, not to mention the customers who went elsewhere. One last area that must also be considered when assessing the value of colocating your critical infrastructure with a Data Centre-as-a-Service provider is ease of access. Many technical teams absolutely love the fact that they can access their equipment whenever they need to, and not only when their service provider allows. After all, Murphy’s Law dictates that “anything that can go wrong will go wrong when you least expect it”, and when this happens, you need to act immediately.

For this reason, it is critical you choose a provider that gives you unrestricted access 24 x 7 x 365 and provides all the necessary support you need to meet your business requirements all day, every day. Colocating your infrastructure and halting the over-investment of capital into managing your own on-premise data centre frees up a lot of funds that can then be redirected into other critical activities and initiatives that are core to your business.

Over the last nine years we’ve learnt a lot about helping our customers realise the true value of colocation. We take pride in our ability to help customers optimise the return they drive from their mission critical infrastructure and we would love the opportunity to partner with you and deliver the same outcome. To connect with our local Perth team call us at 13 NEXT or contact us here.