The ONE question you should be asking about your data centers and who can answer it
In my last blog, I started a discussion on the relative maturity of our industry by arguing that to achieve true maturity as a business, the basic finances have to be clear, understood and under control. Most importantly, I wrote, this is a critical capability that must be in place to manage tomorrow's finances – critical because industry winners are the ones that do it better.
This particular line of discussion leads to at least one obvious further line of questioning.
What really influences cost performance across a data center portfolio?
Well, there are many global variables that influence your business such as market conditions, market pricing, eager competitors, the number of new market entrants and the scale and maturity of clients. In reality, these are usually out of your control. What I mean by ‘usually’ is that companies that can control those things often find themselves in front of the FTC or the EU – and that is a problem that we can’t help you with!
In reality, we all know that success comes from being able to manage the things that are within your control.
Before I start, let me lay out some terms of reference.
Cost Performance is how your data center behaves in a way that has a measurable cost impact, positive or negative, on your business. If it doesn’t have a cost impact on your business it is, frankly, of academic value. And, most importantly, cost performance is temporal, i.e. it has a time element; specifically past, current and future.
Understand means you know what causes cost performance to change and what you can do to control it. It means you know what good looks like, where the ‘not-so-good’ is in the business and what you can actually do about it.
Portfolio is your estate of data centers. Understanding cost performance in one data center is useful, understanding cost performance across the estate is invaluable. It enables you to benchmark and standardise, drive economies of scale and control your macro business outcomes.
To understand the cost performance of a data center portfolio, you must first start by understanding the performance of your individual data centers.
Let me get to the point. There are four major things that influence cost performance of a data center. Of course, I’m assuming that you have an ops team that is good at running the data center and a sales team that is more than capable of filling it quickly!
• Design topology – your single line drawings and schematics
• Control strategy – your BAS / BMS / EMS controls
• Resilience strategy – how you maintain resilience and availability
• Device efficiency – individual M&E or IT devices and how they perform
If you know anything about data centers then this will not be news to you. What might be interesting is the extent to which these influence cost performance. Our technology here at Romonet, has been used in over 1500 data center models and we find the 95% number a recurring theme. Three of the four elements influence 95% of the cost performance. The fourth accounts for the rest, often what is referred to as the loose change!
Design topology and controls and resilience strategies are the BIG 3. Device efficiencies are the very SMALL 1.
At this stage, you may have to read the preceding paragraph again!
What does this all mean to you?
Let’s start with the BIG 3
• If your Design Engineer firm tells you that the design matters, they are right.
• If your Controls firm tells you that site control strategies are important, they are right.
• If your Mission Critical consultants say that your resilience strategy is critical, they are right.
Now for the SMALL 1
• If your favourite equipment vendor is telling you that their kit is the best, they could be right.
So here’s the rub. If your Design engineers, Mission Critical consultants and Controls engineers aren’t on the same page (i.e. using the same schematics, using a common set of data, using a common and consistent method of calculating future cost performance, knowing your load growth forecasts etc.) you don’t need me to tell you what you’re doing to get. It’s time to ask them THE question.
If your favourite equipment vendor is promising you an ROI or TCO analysis without understanding the ‘other’ 95% of your data center cost influence, I think the time has come to ask them THE question.
What is THE question? Well it goes a little like this.
Can you prove how my data center will perform from a cost point of view for the next n years? where n is obviously greater than 1!
If they can’t, you really should call us. And when we’re talking, we can help with some of the other things that are vexing you such as unit and marginal delivery costs, understanding cost and margin of delivering services to your clients before you sign them, developing a true cost allocation model, prioritising your capital investments, releasing stranded capital and reducing your energy use.
Bottom line: if you don’t control cost performance, it will control you.
Arun Shenoy is Director of Sales at Romonet Ltd