CIO Perspective: Things to Consider Before Co-locating Your Data Center

Co-locating your data center is essentially moving some of your data center to an outside company. An example of that can be giving your Microsoft Exchange infrastructure to a host, both the Client Access and the Database Availability Group servers. This is something slightly different than the cloud solutions;

• This is not a private cloud, because you are moving your servers to a different location,
• This is not a PaaS or an SaaS solution by definition. In a way this is like a partial IaaS solution, but you just move part of your infrastructure to a different company.

Co-location allows a company to keep its data center expansion under control, while providing greater agility. In the Exchange example, the host is responsible for keeping the hardware and the virtualization layer up and running, while the Exchange Administrators are responsible for keeping the servers running, patching them and providing the Exchange services to the clients. If there is a need for expansion, whether adding another server or just increasing the database sizes, then the host will be the one who will be thinking about the expansion.
Although the idea sounds great, there are still things that should be considered when thinking about co-location.
The first thing to consider is, meeting the IT obligations and saving money, which all is a no-brainer. Thinking deeper, meeting the IT obligations is very broad. Following the example above, it is not just providing the Exchange services, but rather governance, regulatory and security issues as well. A breach in security may cost a business or trade secrets compromised but a regulatory breach can cost reputation, customers, careers and in some cases, the business as a whole. In that case, it is imperative for the company to ensure that the host can meet all the requirements that the company faces. If the host cannot comply, simply don’t co-locate in their data center.

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The second consideration is the host’s ability to provide services that match your business’s needs. The immediate question is whether the host has a Service Level Agreement and if yes, does it match your own? If your SLA states 99% availability and the host can provide you with a maximum of 95%, then it is obvious that you will be on a slippery surface. Plus, make sure that you can measure the host’s SLA. I have seen hosts admit secretly that they are operating between 50-60% availability where their customers believe they have 95% availability, just because the customers are unable to measure it. Simply put, if the host does not have an SLA, simply do not do business with them.
What about the data center location? Make sure that the host has its own data center and the data center is compliant with the current IT requirements. There are hosts who outsource their data centers to another hosts. If that is the case, your co-location is co-located, making you one step away from the actual host. In the case of an outage or an unmet SLA requirement, you may have a worse headache than you have actually thought of. Do not co-locate to a host if it will act as a “hosting broker.”

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Even if the host has its own data center, it should be in compliant with the current IT environment’s requirements. At the very least, the host should have a disaster recovery (DR) solution and the solution should match your company’s. And this DR solution should be a working solution. Make sure that your co-location contract has one annual DR test that would be carried out jointly with the host and your IT staff.
The host’s technology upgrade cycles is another important consideration. Carefully think about your upgrade cycles, in terms of hardware, operating system and the application layers and make sure that it meets with the host’s cycle. If these two do not match, then you risk falling out of current technologies, which will bring increased support payments and even to the point of running unsupported software.
If the host is technically stable, then you need to make sure that it is also financially stable in the long term. A financially sound host will be one step ahead as a reliable business partner but this type of host will also be a target for a merger or acquisition. A reliable and easy-to-work host may turn out to be a difficult-to-work one after a merger. Make sure that your contract gives you a no-cost termination option in case of a management change in the host.

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Although not pleasant to talk, termination clauses are one of the most important parts of the contracts. Make sure that the termination clauses are explicitly stated on the contract and the paths that lead to termination are transparent. These may be concurrent SLA breaches, these may be changes in the management as I have just stated, these may be continuous low-performance issues etc. but they have to be measurable, transparent, fair and easy to understand.
Finally there are the financial considerations. We expect to save money by co-location. In some cases, the startup costs of co-location can be as low as 20% of the costs of building your own. However, in time, the co-location costs will break even with the own data center. It is important to think strategically here: what are the long-term implications of own vs. buy, considering also the infrastructure lifetime? What will be the effects of SLAs on the business? There will be many more questions depending on the co-location considerations and the business requirements, which should be evaluated both by the technical and the financial staff.