Considerations for Owning versus Outsourcing Data Center Physical Infrastructure

Overview

Four worked cases give capex per watt, 10-year TCO and the year in which cumulative in-house cost drops below colocation. Airflow upgrade: $2.10/W capex, $15/W TCO, under 1 year, 61% savings. High-density pod: $4.84/W, $20/W, 2 years, 50%. Facility modules: $8.45/W, $24/W, 3 years, 37%. New build: $11/W, $26/W, 5 years, 20%. Colocation 10-year TCO is taken as $39/W for the upgrade cases and $33/W for the scaled 1 MW new-build comparison.

In case 1, a Tier 3, 1 MW room limited to 900 kW by air mixing reclaims 100 kW with blanking panels, brush strips and cold-aisle containment for about $210K. Common assumptions: electricity $0.12/kWh, cost of capital 8%, 3%/yr escalation, 5 kW/rack, colocation at $1000/rack/month plus $925 power/rack/month, build PUE 1.5. Raising cost of capital from 3% to 8% narrows the build-versus-colocation gap from $13/W to $8/W.

Owning is cheaper over ten years in every case, but the advantage shrinks as project scope, cost of capital and short facility life increase. Traditional builds can take up to two years from concept to commissioning versus about 6-9 months for modular; colocation can be live in 1-2 months.

The paper adds decision filters: a need in under 6 months or a temporary need (under 5 years) rules out facility-module and new-build options, and a regulatory need to keep IT in-house rules out colocation. A ten-factor qualitative scorecard (10-100) covers non-financial preferences. Figures are 2013 US dollars.

Key points

1. Case 1 airflow upgrade: $2.10/W capex, $15/W TCO, under 1 year cross-over, 61% savings.
2. Case 4 new build: $11/W capex, $26/W TCO, 5 years, 20% savings.
3. Colocation 10-year TCO: $39/W (upgrades), $33/W (scaled 1 MW new build).
4. A Tier 3 room limited to 900 kW reclaims 100 kW for about $210K.
5. Cost of capital from 3% to 8% narrows the gap from $13/W to $8/W.
6. Timeframes: traditional up to 2 years, modular 6-9 months, colocation 1-2 months.
7. Filter: a need under 6 months or under 5 years rules out facility modules and new build.
8. Owning does not pay back if facility life is shorter than the cross-over year.

Using it in design

• Offer an option-compare calculator (airflow upgrade, add pod, facility module, new build, colocation) with inputs mirroring Appendix A-D: electricity price, cost of capital, escalation, kW/rack, PUE, colocation fees.
• Output capex $/W, 10-year NPV TCO $/W and cash cross-over year, seeding 2013 values only as clearly dated presets.
• Flag that owning is unlikely to pay back when planned facility life is below the computed cross-over year.
• Add a decision-filter step (deployment deadline, life expectancy, data residency) before showing costs.

Who should read it

Decision makers choosing between upgrading, building and leasing for new IT capacity.

Related standards

• Uptime Institute Tier Standard: Topology

Publication details

Authors

Wendy Torell; Kevin Brown

Publisher

Schneider Electric

Year

2013

Document number

WP 171

Document language

English

Source type

Manufacturer

Access

Free to read

Licence

Copyright retained; citation only — the publisher’s terms apply to the original document

Citation