The price of outsourcing your data center

By SearchSMBAsia Editors | Jun 4, 2009

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Data center outsourcing is growing in popularity among midmarket organizations. In a time of evolving technologies and outsourcing ecosystems, the allure of lower costs and maintenance time is hard to resist. But how safe is it to outsource your data center operations to a third-party vendor?

Midmarket CIOs looking to negate the need for new hires and expand their outsourcing horizons should consider all possibilities when it comes to data center outsourcing strategies before taking the plunge.

Should SMBs outsource their data center operations? How do you address data center security with your third-party partners? What are the risks? Is data center outsourcing really a cost-cutting option? Learn the answers to these and other pressing questions regarding data center outsourcing strategies in our collection of news, tips and advice from other CIOs and industry experts.

Table of contents

What factors should be considered in making your data center outsourcing decision?
 How will your data center strategy affect your business?
 Is cost the No. 1 factor driving data center outsourcing?
 How are your third-party providers addressing data center security and cloud computing?
 

To outsource data center services or not, that is the question. Is it nobler to have and manage our own data center, or is it better to outsource such services? Like most of the really interesting questions we face in our lives, the answer to this question is: It depends.

'It depends?' That seems like a weasel of an answer. Why not a simple yes or no? Because the answer depends on a pretty wide range of variables. When sorting through such questions and their options, I rely on my Purpose Alignment Model.

I have written about this model before, but, as a refresher, Purpose Alignment looks at business processes, activities and questions about data center outsourcing (or any other business decision) in two dimensions. First, the extent to which this process, activity or decision will differentiate us in the marketplace. Second, the extent to which the process, activity or decision is mission-critical to our organization.

Learn more about your data center decision making in 'A CIO explains how to make a data center outsourcing decision .' Also:

• Data center outsourcing: Ten best practices
  A growing number of midsized organizations are opting to outsource much, if not all, of their data center services. Should you be one of them?
• Disaster recovery strategies: Should you outsource, manage in-house or partner?
  A key consideration when selecting a disaster recovery facility site is whether to outsource, maintain your site in-house or partner with others on disaster recovery strategy.

In this recession, with companies loath to make big capital outlays, outsourcing a data center in need of an upgrade can be an attractive option for midmarket CIOs. But hard times or not, a sound data center strategy is first and foremost all about the business, as we found out when talking recently with several IT chiefs.

Dave Banks, chief technology officer at the growing online auction business PropertyRoom.com Inc., rents space in a colocation facility owned by Savvis Inc. near his company's headquarters in Mission Viejo, Calif., for the IT infrastructure that runs the business' back-end operations. His company already owned servers when he arrived in 2003, and it made sense to make use of them. Any enhancements or fixes needed, he can zip up the road and make the tweak himself.

For PropertyRoom's customer-facing website, which is subject to frequent traffic spikes and generates most of the company's $34 million in annual sales, a different strategy prevails. Banks utilizes Savvis' 'cloud' facility in Chicago to ensure bandwidth and scalability. 'I've never seen our servers there and don't need to,' Banks said.

Get more information in 'Data center strategy starts with the business.' Also:
 

• Negotiating a successful data center outsourcing arrangement
  Outsourcing can save money. However, it can also increase costs and business risk, and lead to a loss of control of your company's central nervous system.

Data center outsourcing is on the upswing and a recession economy is only one reason. A recent study from research and advisory firm Computer Economics Inc. shows that more companies plan to increase rather than decrease their data center outsourcing and most are pleased by the results. Another telling sign? Data center providers are expanding facilities and adding services.

First, some hype control: The whole world is not going to start outsourcing data centers overnight. The percentage of companies that entrust some part of their data center operations to third-party providers has hovered around 33% in recent years, according to Computer Economics survey data. But an uptick of three percentage points in 2008 (from 32% to 35%, an increase of 9%) is a harbinger of greater growth to come, the firm believes.

Learn more about the factors driving outsourced data centers in 'Study: Data center outsourcing increases; most happy with results.'