Windstream and Forrester Research analyst Rachel Dines will look at the economics of data centers and how you can maximize IT dollars by outsourcing your data center facilities.

1. Data Centers: Outsource or Own?
Presented by:
Rachel Dines, Forrester Research, Inc.
Christopher Nicolini, Windstream Hosted Solutions
Nov. 17, 2011

2. Introduction
Today’s Presenters:
Rachel Dines, Research Analyst
Forrester Research, Inc.
Chris Nicolini, Data Center Operations Director
Windstream Hosted Solutions
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3. Data center facilities are the most
expensive investment in infrastructure
— before making this big decision, make sure you
have explored all the options!
3 © 2011 Forrester Research, Inc. Reproduction Prohibited

4. Agenda
Current trends in data center facilities
Key factors to consider when sourcing your facility
Best practices for data center site selection
Recommendations
4 © 2011 Forrester Research, Inc. Reproduction Prohibited

5. More than a quarter expect to increase spend on
data center and IT facilities
“How do you expect your firm’s spending on data center and IT facilities to
change over the next 12 months?”
49%
On average, companies devote 19.3%
of their hardware/infrastructure IT
budget to data center and IT facilities
26%
9% 8%
5%
3%
Decrease Decrease Stay about Increase Increase Don’t know
more than 5%-10% the same 5%-10% more than
10% 10%
Base: 2100 IT decision-makers at enterprises and SMBs worldwide
5 © 2011 Forrester Research, Inc. Reproduction Prohibited
Source: Forrsights Hardware Survey, Q3 2011

6. Overall trends
! Interest in data center outsourcing is increasing due to:
– Lower initial cost.
– Improved speed to market.
– Consolidation of smaller computer rooms and facilities.
– Expansion as older data centers run out of capacity.
– Business continuity requirements.
! Still, there are valid reasons to build your own data center
6 © 2011 Forrester Research, Inc. Reproduction Prohibited

7. The use of colocation and managed services for
provisioning recovery sites is on the rise
“How do you provision your recovery site?”
We own the site 46%
Shared fixed-site IT infrastructure at a
31%
service provider
Colocation site 17%
Multi-tenancy managed hosting 13%
Dedicated fixed-site IT infrastructure
9%
at a service provider
Dedicated managed hosting 7%
Cloud-based 4%
Other 4%
Base: 180 disaster recovery decision-makers and influencers at business globally with a recovery site
(multiple responses accepted)
7 © 2011 Forrester Research, Inc. Reproduction Prohibited
Source: Forrester/Disaster Recovery Journal November 2010 Global Disaster Recovery Preparedness Online Surveys

8. Agenda
Current trends in data center facilities
Key factors to consider when sourcing your facility
Best practices for data center site selection
Recommendations
8 © 2011 Forrester Research, Inc. Reproduction Prohibited

9. The spectrum of data center sourcing options
In-house Outsourced
Infrastructure
outsourcing/
Own and operate managed
data center services/ hosting
Colocate data IaaS/Cloud or
center strategic right-
sourcing
Less managed More managed
9 © 2011 Forrester Research, Inc. Reproduction Prohibited

10. Key considerations:
power
Build
Outsource
! Power is limited by what
the utility company can ! Better access to power
deliver to your location. ! More competitive rates on
! Power costs will be at the power
local commercial rate. ! Wholesalers: actual power
costs at industrial or lower
negotiated rate
! Retailers: flat rate for a
fixed capacity circuit,
which includes markup
10 © 2011 Forrester Research, Inc. Reproduction Prohibited

11. Key considerations:
cost model Outsource
! Costs are low or nonexistent
upfront (usually equivalent to
Build first month’s rent).
! Costs are high upfront, then ! Ongoing costs are for rent and
continued maintenance, power, power and are much more
and security costs are ongoing. predictable.
! Costs can be unpredictable ! Costs are predominantly
due to break/fix and operational expenditure.
maintenance.
! Infrastructure and power costs
will be higher due to less
purchasing power.
! Costs are predominantly
capital expenditure.
11 © 2011 Forrester Research, Inc. Reproduction Prohibited

12. Key considerations: flexibility and control
Outsource
Build
! Changes in requirements can
! Slower to accommodate
be accommodated very quickly
changes in IT/business
as colocation providers are
requirements (power, space,
constantly building out
etc.)
additional space.
! Time-to-market for initial build
! Construction is often modular,
can take years for a traditional
easy, and quick to expand.
facility.
! Time-to-market is measured in
! More control over operating
weeks.
environment (maintenance
windows, temperature, access ! Less control over the facility
control, cooling systems,
infrastructure, etc.)
12 © 2011 Forrester Research, Inc. Reproduction Prohibited

13. Other key points to consider
Build
! It’s hard to plan for a life span of
Outsource
20-plus years.
! Outsourced data centers are run
! Building out too much space can
by professionals with extensive
be costly, as it is inefficient to run
experience running mission-
an empty site.
critical facilities.
! Most companies don’t have the
! Outsourced facilities house an
expertise on staff to design and
ecosystem of potential partners
build a facility.
(network providers, trading
! Bringing multiple network platforms, hosting providers,
providers to your facility will be cloud providers, etc.).
costly.
! Outsourcing commodity services
can allow you to concentrate on
more strategic ones
13 © 2011 Forrester Research, Inc. Reproduction Prohibited

14. Agenda
Current trends in data center facilities
Key factors to consider when sourcing your facility
Best practices for data center site selection
Recommendations
14 © 2011 Forrester Research, Inc. Reproduction Prohibited

15. Where in the world should you put your data center?
! Most companies prefer to keep their data centers close to their
corporate headquarters, however consider the following…
– Companies with headquarters in expensive (real estate and
power costs) or risky regions should consider locating their
data centers elsewhere
– The majority of IT systems today can be managed remotely
– For tasks that require a physical presence
(i.e., racking and stacking, swapping
tapes, etc) consider using a data center
provider’s “remote hands”
15 © 2011 Forrester Research, Inc. Reproduction Prohibited

16. Checklist data center site selection
" Cost of labor, real estate, utilities, and taxes
" Natural and manmade threats
" Economic and political risk
" Availability, stability, and reliability of power and space
" Telecommunications availability
" Accessibility of the location
" Ability to utilize green technologies
" Availability of local talent
16 © 2011 Forrester Research, Inc. Reproduction Prohibited

17. Fewer companies locate the recovery site beyond
1000 miles
What is the distance between your primary data center and your
furthest backup data center, in miles?
Greater than 1000 20%
miles 13%
500 to less than 1000 13%
miles 17%
250 miles to less than 13%
500 miles 14%
100 to less than 250 2007 (n=238)
6%
miles 11% 2010 (n=180)
50 miles to less than 10%
100 miles 11%
25 miles to less than 15%
50 miles 15%
Less than 25 miles 22%
21%
Base: Disaster recovery decision makers and influencers at businesses globally with a recovery site
(percentages may not total 100 due to rounding)
17 © 2011 Forrester Research, Inc. Reproduction Prohibited

18. Agenda
Current trends in data center facilities
Key factors to consider when sourcing your facility
Best practices for data center site selection
Recommendations
18 © 2011 Forrester Research, Inc. Reproduction Prohibited

19. Recommendations for getting started
Define business requirements
• Before you begin, make sure you know the business requirements for
your facility:
• Availability and resiliency (Tier III or Tier IV?)
• Future growth (ability to accommodate acquisitions or new products,
etc.).
• Speed to market (how quickly do you need to be able to provision new
capacity?)
Start capacity planning
• However you provision your data center, knowing your current and future
capacity is key to achieving ROI.
Plan for future flexibility
• Even if you plan today for future IT growth, business requirements are
constantly changing.
• Plan with your data center provider or architect your facility for flexibility.
19 © 2011 Forrester Research, Inc. Reproduction Prohibited

20. Operational Insights
Chris Nicolini, Director of Data Center Operations
for Windstream Hosted Solutions
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21. Windstream Corp. Snapshot"
S&P 500 company with full suite of IP-based voice and data services, MPLS
networking, data center and managed hosting services and communication
systems to businesses and government agencies
• $4 billion in annual revenues
• 10,000 employees
• 29 states and District of Columbia
• Data centers: 13
• 60,000 route miles of local
and long-haul fiber network
21"

22. Presence
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23. Trusted by Top Brands
Biotech/Healthcare Technology Retail/Consumer Banking/Finance Digital Media
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24. Data Center Overview
! Tier II and III, SAS 70 Type II compliant data centers
! System + System uninterruptible power supply (“UPS”) systems, and carrier
neutral network connections
! Heating, ventilation and air conditioning (“HVAC”) systems to maintain
temperature and humidity within strict tolerances
! Hardened facilities with automated facility management tools
! Fire control with early warning smoke detection, clean agent suppression and/
or dry-pipe sprinkler system
! 24 x 365 NOC & facilities staff provide for high security externally and internally
! Service Level Agreement (“SLA”) backed guarantee of 100% power availability
! Modular builds - most expansions are less than four years old (10k sf or larger)
! 24-36 in raised floor no open systems or racks
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25. Build vs. Buy
Costs of building Data Center Space
$1250 - $2000 / sqft – Initial Cost
Redundant Internet
1000 sqft data center = $1.25 -$2.0 Million in CAPEX
*Maintenance & Repair = $150K - $250K / year
Human Capital = $150K - $400K / year
Utility Power Cost = $300K-600K / year
* Does not include maintenance on IT / Network Equipment
- All costs except utility power are fixed in the short term 25

26. Distractions from your core
competency
! Facility Infrastructure Maintenance
! Capacity Management
! Physical Security
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27. Infrastructure Maintenance
! Facility Maintenance is a full time function
! Generator (M, Q, A)
! ATS (A & 5yr)
! Switchgear (A & 5 yr)
! UPS (Q and A)
! Batteries (Q, A, and 5 yr)
! PDU (Annual)
! HVAC (Q)
! Fire (S & A)
M = Monthly, Q = Quarterly, S = Semi-Annual, A = Annual, and 5 yr = 5 year
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28. Capacity Management
Areas often overlooked:
Power
! Redundancy at the Panel, PDU, UPS, Gen, and Utility
! Seasonality - 35% swing causes overages
Internet Capacity
! Circuits sized for average speeds are overwhelmed by
seasonal traffic or single upstream provider outage
HVAC
! Power Density growth
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29. Physical Security
! 24/7 staffing for security takes a lot of effort
Redundant Internet Redundant Internet
! Complete Physical Security is hard to achieve
! Camera system storage is time consuming and expensive
! Card and Biometric systems require constant monitoring /
maintenance
! Documentation for Receiving / Shipping of packages and critical
media is difficult
! Compliance Concerns
! SSAE 16 Standards are very high
! Compliance standards are “Order Qualifiers” for hosting providers
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30. Summary
Q&A
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