This presentation was given during the Spring 2012 Data Center World conference by Jerry Gallagher and Jeff Robinson from Mission Critical. Learn more about Data Center World at www.datacenterworld.com.

1. •
Interested in data center build and design?
Learn about specific sessions on build and design at the upcoming
Fall 2012 Data Center World Conference at:
www.datacenterworld.com.
This presentation was given during the Spring, 2012 Data Center World Conference and
Expo. Contents contained are owned by AFCOM and Data Center World and can only be
reused with the express permission of ACOM. Questions or for permission contact:
jater@afcom.com.

2. “Buy vs. Build”
Considerations in Today’s
Data Center Marketplace
Presenters:
Jerry Gallagher, CEO & President
Jeff Robinson, Vice President

3. The Situation Today
• In t o d a y ’ s d y n a m ic D a t a C e n t e r
m a r k e t , f ir m s n e e d in g IT s p a c e
a r e f a c e d w it h t h e c h o ic e o f B u y
v s . B u ild
• B o t h s id e s h a v e t h e ir b a c k e r s
• B u t w h ic h f a c t o r s & t o o ls s h o u ld
d r iv e t h e d e c is io n ?
• T h is s e s s io n p r o v id e s a h ig h -
le v e l o v e r v ie w f r o m s e v e r a l
p e r s p e c t iv e s :
– F in a n c ia l
– O p e r a t io n a l
– T e c h n ic a l

4. Today’s Learning Objectives
• F o llo w in g t o d a y ’ s p r e s e n t a t io n ,
y o u s h o u ld b e a b le t o :
– Id e n t if y f a c t o r s & d if f e r e n c e s t o
e v a lu a t e c o -lo c a t io n a n d b u ild -o u t
s o lu t io n s
– D e t e r m in e s it u a t io n s w h e r e b o t h
o p t io n s m ig h t b e c o n s id e r e d v ia b le
s o lu t io n s
– C o n d u c t a C o m p a r a t iv e A n a ly s is o f
t h e o p t io n s t o d e m o n s t r a t e t h e b e s t
c h o ic e

5. Distinguishing Buy & Build
• B uy
– O u t s o u r c e d W h o le s a le
– C o lo
– M a n a g e d H o s t in g
– C lo u d ( S a a S )
• B u ild
– T r a d it io n a l C o n s t r u c t io n o f a D a t a
C e n t e r F a c ilit y
– M a y b e e it h e r :
• U s e r -O w n e d
• U s e r -L e a s e d

6. What We Won’t Be Talking About
• S t r a t e g ic P la n n in g : W id e r
V a r ie t y o f O p t io n s
– C o n s o lid a t io n s
– P la t f o r m M ig r a t io n s
– O p e r a t io n a l R e c o n f ig u r a t io n s
• H y b r id F a c ilit ie s
– C o m b in e d O f f ic e & D a t a C e n t e r
S pac e
• R e v e r s e C o lo O p t io n s
– O v e r b u ild in g , t h e n r e n t in g t o o t h e r
s u b -t e n a n t s

7. Today’s Situational Examples
• S c e n a r io A – M a jo r In s u r a n c e
F ir m
– O u t g r o w in g t h e C u r r e n t F a c ilit y
• S c e n a r io B – F o r t u n e 5 0 0
S e r v ic e s P r o v id e r
– N e e d s a D is a s t e r R e c o v e r y
E n v ir o n m e n t
• S c e n a r io C – N o t -f o r -P r o f it
G o ve rnme nta l C o ntra c to r
– C u r r e n t F a c ilit y is R e a c h in g E n d -o f -
L e a s e ( o r E n d -o f -L if e c y c le )

8. Factors to Consider
• T e c h n o lo g ic a l
• F u n c t io n a l
• O p e r a t io n a l
• F in a n c ia l
• O the r

9. Factors: Technological
• M ix o f Yo u r E q u ip m e n t
– S e rve rs
– S to ra g e
– N e tw o rk
• P r o je c t e d G r o w t h & P r e d ic t a b le
E x p a n s io n s
• P r o je c t e d C o n t r a c t io n s
– V ir t u a liz a t io n
– C o n s o lid a t io n s
• P la t f o r m s D e p lo y e d & E v o lu t io n s
• S p a t ia l, E le c t r ic a l a n d C o o lin g
D e n s it ie s

10. Factors: Functional
• In f r a s t r u c t u r e R e lia b ilit y ( T ie r in g )
• U n c e r t a in t y in t h e G r o w t h P r o f ile
• N e c e s s a r y P r o x im it ie s &
A d ja c e n c ie s
• B u s in e s s C o n t in u it y P la n s

11. Factors: Operational
• S t a f f R e q u ir e m e n t s
• S LAs
• S e c u r it y
• L i m i t a t i o n s w /D a t a C e n t e r
S upport
• N O C R e q u ir e m e n t s
• P ow e r Ma na g e me nt
• T e le c o m m u n ic a t io n s
• C o r p o r a t e C u lt u r e

12. Factors:
Other Advantages/Disadvantages
• S to ra g e S p a c e
• D is t a n c e & P r o x im it y t o H Q a n d
S ta ff
• “ C o r e B u s in e s s ” C o n c e p t s
• T h e Neighbors

13. Big Question:
C a n t h e F a c t o r s Yo u ’ r e
C o n s id e r in g
( T e c h n o lo g ic a l,
F u n c t io n a l, O p e r a t io n a l,
O the r) b e R e d uc e d to
F in a n c ia l T e r m s ?
I f n o t , t h e n y o u ’l l n e e d t o
d e v e l o p a F a c t o r W e ig h t in g
a p p r o a c h t h a t h e l p s we e d o u t

14. Applying the Factors
• In it ia l “ M a n d a t o r y F e a t u r e s ”
C h e c k lis t
• N a r r o w O p t io n s t o 5 o r 6
C h o ic e s
• S o lic it L e a s e P r ic in g
• D e v e lo p C o n s t r u c t io n E s t im a t e s
• P r e -W e ig h t Im p o r t a n c e o f N o n -
F in a n c ia l F a c t o r s
• J u d g e C h o ic e s B a s e d o n F a c t o r s

15. Financial: Checking the Numbers
• C o s t C o m p a r is o n s
T y p ic a lly In c lu d e :
– C o n s t r u c t io n C o s t s v s .
– H o s t Ve nd o r L e a s e C o s ts

16. Financial: Checking the Numbers
• B u t D o n ’ t F o r g e t t o C o n s id e r :
• S h e ll L e a s e C o s t s
• L a n d /B u i l d i n g P u r c h a s e O p t i o n s
• E ne rg y C o s ts
• F a c ilit y M a n a g e m e n t
• F a c ilit y M a in t e n a n c e
• S e c u r it y S e r v ic e s
• S t a f f in g D if f e r e n t ia ls
• T e le c o m m u n ic a t io n s
• Ta x C o n s e q u e n c e s
• In c e n t iv e s

17. Financial: Checking the Numbers
Colo/Host Vendor Pricing
• T r u e le a s e c o s t b o t t o m lin e m a y
b e d is g u is e d
– O f t e n u n t il a f t e r y o u ’ v e d e t e r m in e d
t o g o c o lo
• P r ic in g T o m f o o le r y
– N o F in a l P r ic e Q u o t e s n o t u n t il n e a r -
t im e c o n t r a c t s ig n a t u r e
– T r a n s l a t i n g $ /k W v s . $ /s f v s . $ /R a c k
– A d d e d C o s t “ O p t io n s ” :
• C r o s s -c o n n e c t s
• M a n a g e m e n t fe e s
• P o w e r w h ip s a n d e le c t r ic it y c h a r g e -
bac ks
• A llo c a t e d v s . A c t u a l P o w e r D r a w

18. Financial: Checking the Numbers
Construction Pricing
• P r ic e E s t im a t e s m a y b e a ll o v e r
the ma p
– U p t im e In s t it u t e h a s a s y s t e m t h a t
t e n d s t o le a n u p w a r d
– N a t u r a l in c lin a t io n f o r in t e r n a l
e s t im a t e s : T o o lo w
– In e x p e r ie n c e d A M E P s t e n d t o f o r g e t
R e lia b ilit y E s t im a t e s
• C o n s t r u c t io n O p t io n s &
V a r ia t io n s
– N o F in a l P r ic e Q u o t e s n o t u n t il n e a r -
t im e c o n t r a c t s ig n a t u r e
– T r a n s l a t i n g $ /k W v s . $ /s f v s . $ /R a c k
– A d d e d C o s t “ O p t io n s ”

19. Best Practices: Cost Estimating
Tricks
• A p p ly R u le s f o r t h e T im e V a lu e o f
Mone y
– A llo w s f o r a F a ir C o m p a r is o n f o r
T r a d in g O f f L o n g -T e r m O p e r a t io n a l
C o s t s v s . C a p it a l C o s t s
• S o m e C o s t E s t im a t in g R u le s -o f -
thu mb

20. The Final Comparisons
B e s t S e r v e d w it h :
• S t r u c t u r e d E v a lu a t io n P r o c e s s
• S t a b le W e ig h t in g F a c t o r s
• C o m p a r is o n U n d e r s t a n d a b le b y
B o th:
– Uppe r Ma na g e me nt &
– Us e rs
• E v a l T e m p la t e P r e p a r e d &
A g r e e d o n in A d v a n c e

21. Co-location May Not Fit When
• 10 +- Y e a r U s a g e H o r i z o n
– C o lo C o s t S a v in g s d o n ’ t m a t c h O w n e r -
C o ns tru c te d
– T C O b a s is : C o n s t r u c t io n c o s t p a y -b a c k
is t y p ic a lly 7 t o 8 y e a r s
• C o n t r o l O v e r F a c ilit y O p e r a t io n s
R e q u ir e d
• T i g h t D a t a C e n t e r C o l o /H o s t i n g
M a rk e ts

22. Purpose-Built May Not Fit When
• R a is e d F lo o r < 2 , 5 0 0 s f
• N e e d f o r E n v ir o n m e n t a l &
O p e r a t io n a l C o n t r o l
• A f f o r d a b ilit y D e p e n d s o n
R e v e r s e C o lo O p t io n

23. Take-Away’s
• T a k e I n d u s t r y W h i t e P a p e r s w /a
g r a in o f s a lt
• N o “ O n e -S iz e -F it s -A ll” A n s w e r
• R e a l D a t a C e n t e r c o n s t r u c t io n
c o s ts o fte n
– G r e a t e r t h a n in t e r n a l e s t im a t e s
– L e s s t h a n in d u s t r y s t a n d a r d
e s t im a t e s
• w /M o s t D a t a C e n t e r c o s t
c o m p a r is o n s , it ’ s v e r y c o m m o n
t o f o r g e t a n e x p e n s iv e e le m e n t

24. Q&A

25. “Buy vs. Build”
Considerations in Today’s
Data Center Marketplace
Presenters:
Jerry Gallagher, CEO & President
Jeff Robinson, Vice President

26. •
Interested in data center build and design?
Learn about specific sessions on build and design at the upcoming
Fall 2012 Data Center World Conference at:
www.datacenterworld.com.
This presentation was given during the Spring, 2012 Data Center World Conference and
Expo. Contents contained are owned by AFCOM and Data Center World and can only be
reused with the express permission of ACOM. Questions or for permission contact:
jater@afcom.com.