Improving Your IT Cost Reduction Strategy With a Data Center

By: Alan Seal on January 30, 2020

When organizations build their networks, they must make IT budget decisions with an eye toward cost. In addition to the question of how much it will cost to get their systems up and running, they also have to consider how much it will cost to manage and scale them over time. Traditionally, building these networks required companies to build a new, on-premises data center from the ground up. The high information technology costs associated with these facilities, however, posed a significant barrier to entry for many companies and made it difficult for others to scale effectively.

For many organizations, data centers represent both a challenge and an opportunity for their cost reduction analysis. While building a private facility will significantly add to any IT budget, migrating equipment to a carrier-neutral colocation data center is quickly becoming one of the most popular IT cost cutting ideas.

The Role of Colocation in IT Cost Reduction Strategies 

For organizations that have to manage a lot of data and deliver services over their network, there are two major IT cost reduction strategies worth considering. The first option is to do away with physical infrastructure completely and migrate all of their assets to the cloud. While this obviously eliminates the challenges associated with maintaining equipment and consolidates information technology costs into a single service, there are significant limitations to a purely cloud-based solution that are simply not acceptable for many organizations. Data repatriation concerns, downtime issues, and compatibility challenges with legacy systems all make cloud platforms an imperfect solution for companies offering diverse and specialty services, causing them to seek other IT cost reduction strategies for their business.

Colocating servers and IT assets with a third-party data center is another popular cost reduction strategy. Most organizations like the flexibility and control that comes with managing physical assets in a data center; what they don’t like is blowing up their IT budget to build and operate these facilities themselves. Given the high costs of building a private facility, it’s no wonder that only large companies with extensive capital resources and extensive service offerings can justify the information technology costs of such a project. Data center colocation allows even the smallest organizations to gain access to the benefits of an enterprise-grade data center at a fraction of the price it would cost to build their own facility, greatly reducing their own operating expenses in the process.

4 Ways Data Center Colocation Enhances Your IT Cost Reduction Strategies

There are a number of ways that colocation can help organizations to save money, making contracting with one of them among the most effective IT cost reduction strategies. These facilities also provide tremendous flexibility for companies looking to undergo a true digital transformation and reposition rapidly to take advantage of IT cost cutting ideas.

1. More Efficient Power & Cooling

One of the biggest IT budget costs a company has to manage is powering and cooling their equipment. The processing power of computing equipment is constantly improving, allowing organizations to offer newer and better services. However, that increased performance doesn’t come without a price. More powerful processors generate more heat, which in turn requires better cooling infrastructure to regulate their temperature.

Efficiency and scale matter when it comes to regulating power and cooling. A highly efficient network uses sophisticated analytics and monitoring software to ensure that computing assets are provisioned properly, powering systems down when they’re not needed and cycling them up when the demand is there. Without this intelligent monitoring ability, the average server runs constantly, consuming far more power than is necessary and generating excess heat. But managing that heat can be a problem if a facility has an inefficient cooling system. Conventional cooling systems consume a great deal of energy, so running them more than needed can quickly send information technology costs spiraling out of control.

Data center colocation not only uses economies of scale to distribute power and cooling costs across its infrastructure, but also utilizes the very latest in monitoring tools to ensure that equipment is operating as efficiently as possible. With business intelligence platforms like vXchnge’s award-winning in\site platform, data center colocation customers can even manage their infrastructure remotely to ensure that they’re using only as much power and cooling as they need to control their information technology costs.

2. Streamlined Connectivity & Cloud Deployment

Whether a company is using an edge computing framework to deliver services through the Internet of Things (IoT) or managing workloads in a hybrid cloud environment, having the right connectivity options can make or break a business. When operating a private data center or relying on a public cloud computing platform, organizations are limited in their choice of connections. To get the connectivity to the service they need, it might be necessary to invest heavily in running physical cables to a new location. And even after they get that service, their lack of alternatives could leave them facing a vendor lock-in situation.

Carrier-neutral colocation data centers provide a connectivity-rich environment for their customers. These competitive marketplaces are a huge asset to IT cost reduction strategies, allowing companies to secure the services they need at prices that won’t break their IT budget. A quick IT cost reduction analysis will generally show that it’s easier to build and maintain a multi-cloud hybrid IT environment through a software-defined network (like Megaport) that meets a variety of organizational needs rather than building a piecemeal solution. 

3. Compliance and Disaster Recovery Awareness

Managing a private data solution brings a number of compliance-related headaches along with the standard information technology costs. While colocating assets with a data center doesn’t mean a company can forget about compliance standards altogether, it does provide them with the best possible start when it comes to building a network aligned with regulatory standards. Since a compliance violation can result in costly fines, taking the time to get compliance right should be viewed as one of the most critical IT cost reduction strategies in the long run. 

There’s also the challenge of building a backup and redundancy strategy that can protect an organization’s data and applications in the event of a disaster. A good disaster recovery plan can keep key systems and data accessible to employees and customers even when primary network systems go down. Setting up the physical and network redundancies that make this possible can be quite costly without a data center partner. Data center colocation makes disaster recovery much easier to manage not only by providing more reliable infrastructure, but also makes it possible to back up mission-critical data offsite. While setting up a disaster recovery plan may seem like a major undertaking, it’s a far more efficient business cost reduction than rebuilding everything from scratch after a disaster occurs. 

4. Reduced Personnel Costs

Any organization that delivers services over a network obviously needs experienced and talented IT personnel to help execute its business strategy. However, they also face an important question about how they want those employees spending the majority of their time. Do they want to spend their IT budget to constantly troubleshoot their network or to develop innovative new ways for their company to deliver the services customers will want?

One of the more exciting IT cost cutting ideas available to data center colocation customers is access to 24x7x365 remote hands support teams. Rather than tasking their own IT department with managing the day-to-day burden of monitoring and testing their network infrastructure, companies can outsource that role to a remote hands team. This allows their own IT personnel to focus on higher-value tasks that will help their business grow in the future, making it an excellent cost reduction strategy.

While migrating assets to cloud computing platforms is a viable overhead cost reduction strategy, many organizations are instead turning to data center colocation for their IT cost reduction strategies. Colocation facilities provide the visibility, control, and flexibility that today’s high-information companies need to evaluate the market, identify opportunities, and take quick action to capitalize on them without exploding their information technology costs. By adopting data center colocation as part of their IT cost reduction strategies, these companies can position themselves to scale and succeed without compromising their IT budgets.

Speak to an Expert About Your Company's Specific Data Center Needs