Study Weighs Building Data Centers Against Colocation for SMBs

Published: January 22, 2007

by Timothy Prickett Morgan

It isn't often that companies talk about the costs of setting up data centers, and small and medium companies generally do not talk very much about their data center costs. It might be simply because no one asks them. So what does a data center cost SMBs, and how does that compare to outsourcing the data center through the use of colocation services--putting your data center in someone else's facility and paying rent?

In an effort to try to win some customers for data center colocation services it provides, Baltimore Technology Park, which has an outsourcing services data center located in the Maryland town of that name, has just spent $3.5 million to do an 11,000 square foot expansion of its 30,000 square foot data center, put together a report last week and put some numbers on the build-versus-rent issue for data centers.

To make a comparison for an SMB customer, BTP did the math for what it would cost to build a data center in the Washington metro area that had 1,120 square feet of space, which is enough to hold 20 racks of servers and storage; such a setup would require 43 watts of power per square foot, or about 48 kilowatts. (This means BTP was looking at standard rack servers, not ultradense blade server racks that can pack 15 to 20 kilowatts into a single rack these days without too much effort.) Building a data center of this size--including the cost of the electrical systems, air conditioning, fire suppression, and security systems--would cost $562,000, and adding in architect fees, engineering fees, project manager costs, and contingency planning would boost the price to $707,000. Recurring costs for electricity, telecom, maintenance, physical security, insurance, and property taxes would add another $270,000 each year. So over a five-year term, such a data center would cost over $2 million.

Compare this to the cost of colocating in the BTP data center. For the same 20 racks of servers and storage, there is an initial $39,000 setup fee and annual rental, bandwidth, electricity, and cooling fees of around $206,000. Over a five-year period, that comes to just over $1 million.

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