Datacentres are expensive. Whether you have one in-house or have chosen to outsource, there is a strong fighting chance that it carries a big pound sign, at least one comma and more zero’s than you’d like.
The datacentre itself was once viewed as a decision owned by the IT department but technology budgets are on the rise and unfortunately contain the sort of variables that have the potential to spiral out of control.
Equally the technology is only one consideration for a CFO. Property also plays a big part, as does the running cost, maintenance and resourcing. Taking into account the risk components and having clear view on the capital and operational expenditure are also all important factors.
Then there is the issue of energy. Now that presents some interesting questions.
While energy companies have been criticised for their role in pushing up household bills, the financial impact on businesses has been something companies of all sizes have had to tackle.
It is also a cost that has been traditionally difficult to predict but thankfully, the world has moved on. There has been an emergence of smarter, more efficient data centres that mitigate the traditional risks faced by the CFO.
The problem with power
Whether your datacentre is in-house or outsourced, it is likely to contain business critical data, so keeping the lights on tends to be number one on the agenda.
That data will be stored on racks of servers that require huge amounts of power, as does the facility itself to cool the rows of machines that are designed to keep temperatures at optimum levels.
This brings us back to control and predictability – whilst efforts are being made around energy issues for businesses, a CFO cannot control the price of the electricity that their business consumes.
There are ways to mitigate this risk though. Information can be be gathered on how the data centre is powered – is this power secure and constant? What is the back-up strategy? The cost to your business should your servers go down can be catastrophic – both in financial terms, and reputation. As can an absence of true transparency, understanding and action.
PUE – What it is and why it matters
The efficiency of the data centre across the industry is quantified by its PUE – Power Usage Effectiveness which is a measure of how efficiently a datacenter uses energy; In other words, how many kilowatts of power does it take to support an equivalent kilowatt of technology.
PUE is effectively your new best friend because it provides you with visibility on how well the data centre is running, which translates to how much it costs you in pounds and pence.
To give some perspective and real numbers, we find most companies tend to run at a PUE of 2.5 or higher. If you could attain a PUE of 1.25, there is potential to achieve savings of around £1.1 million, per megawatt, per year. From an environmental perspective, that’s 6000 tonnes of carbon that you could potentially be taxed on.
Operating a data centre with a lower PUE is better for business. We know that we can’t control energy prices but you can control what you use and how it’s measured.
It can be likened to running a car – you can’t control the price of petrol, but you can choose whether you buy a car which does 70 miles to the gallon or one that does just 15.
Even if you could achieve 70mpg, you’d still be reliant on perfect weather conditions, never turn on the radio, don’t use the air conditioning, open a window or dare to breathe out.
Efficiency needs a modern footprint to deliver. That is the role of today’s datacentre.
Why cool is the new cool
When I speak with my CFO peers, the issue of predictability is a recurring theme. If you underperform as a company you have some serious questions to answer. Over perform and it looks like you’re not in control.
If the role of the datacentre is critical to the business, then ensuring your PUE is capped will provide you with a better method to measure and predict your operating cost.
This changes how I viewed the datacentre world and how it affects the businesses of the customers that we serve. By ‘capping’, the data centre company is taking the risk of an unexpected efficiency reduction rather than passing on the associated cost.
Datacentre DIY
The vast majority of data in the UK is currently insourced because simply put, there was a time when having your own datacentre was perceived as being in control, even if not the most efficient path.
The market has since matured and acknowledged that not everyone is a datacentre specialist. Why would you be? You have business to run. If you’re managing it yourselves, you need to be asking the same questions internally that you would to an external provider.
As CFO’s, we all run risk mitigation and to my mind the questions are quite simply the same for my peers as they are for me. If you were to build your perfect datacentre, what would it look like?
The answers are normally pretty black and white. Keep the costs low and predictable, have the best security available and if it’s critical to the business, make sure it’s resilient and your risk is minimal.
Some questions are worth asking
If you have an ‘in-house’ datacentre or are building one, there are some areas worth considering.
Understand all of the costs involved and what control you have over them. Take your own assessment of whether you feel comfortable that your internal team have the right skills to mitigate your risk and still keep a firm handle on your cost. Is expending capex on such non-core activity sensible or could it be better spent on winning in the market?
Equally, you may have already outsourced or are considering it as an option. That raises some different questions worth looking into.
Ask the providers how they cope with rising energy prices and their strategy to safeguard any long-term investment that you’re considering.
What is their stability? How financially secure is the datacentre itself and what kind of investment do they personally have? A fair measure is to ask if they own the land themselves or if they’re leasing it because it affects both stability and cost.
Lastly and perhaps most poignantly, what happens once you sign on the dotted line?
The real value will come down to the type of people that you engage with. Will they work with you to solve your problems? Will they proactively help you to tackle issues like rising energy costs and provide a commitment to continuous improvement?
I certainly hope so.
Datacentre efficiency has changed beyond measure and it will continue to evolve. It used to be that predictable wasn’t cool…
Well, times have changed.
Ian Perryment is the Finance Director of Ark Data Centres
