Make your data center a financially manageable asset

The cost associated with your data center and IT infrastructure has long been shrouded in very expensive mystery. But as firms take an increasingly critical view of expenditure within cost centers across their business, financial decision makers can rest assured the mystery of data center cost and capacity has been revealed. Here’s how..

As businesses look at their recovery / growth strategy through and beyond the pandemic, there’s a pressing need for judicious cost management. No one is fully sure what’s coming next. But in a challenging market, opportunities for growth are equally important to capitalize upon. Your data center sits squarely in the middle of this cost / opportunity equation.

On the defensive side, the Uptime Institute has shown that in 2020, a greater percentage of data center outages cost more than $1 million (now nearly one in six rather than one in 10, as in 2019), and a greater percentage cost between $100,000 and $1 million (40% vs. 28%). So this isn’t an area that readily fits on the chopping block for cuts.

Equally, the data center can underpin strategic initiatives that are critical to the survive / thrive status of the business. As Gartner states: “CFOs who… invest in and protect costs associated with differentiation increase the odds that their organization realizes value from investments by over 42% — which translates into a full 6 points of excess return over a three-year period.” 

So the question is, as a CFO, where does cost management of your data center fit within the equation?

Your data center doesn’t need to be a financial sinkhole

Despite its increasingly recognized strategic value to the business, your data center runs at enormous cost. In fact, for most large organizations, their on premise infrastructure and data center facilities are seen as nothing short of an enormous financial sinkhole—often with a similar level of visibility.

As data and applications proliferate—a trend not reduced by the deluge of demands associated with remote working—the pressure on this infrastructure will only increase. The ability to use such resources seamlessly can be a key part of your competitive advantage—whether it’s through improved customer experience, faster time to market for products or more effective sales teams. 

The need to deliver faster times to market or increase reliability though creates a tension between data center operations and budget constraints. As operations look to quickly increase capacity, often the simple route is taken and new equipment is quickly installed. This however, leads to costs overrunning and drives up the overall cost of capacity.  

But alarm bells may be ringing. Seasoned CFOs know that at some point, an enormous budget allocation for the redesign, refitting or outright construction of increased data center floorspace will follow. How does this fit in your strategic cost analysis? As Gartner states:

“As organizations move through and beyond the low-hanging fruit of cost-cutting in a crisis, they need a programmatic and structured approach to cost optimization, says Cesar Lozada, Senior Principal Analyst, Gartner. “They also need a shared framework to evaluate cost proposals across a range of key factors, such as the impact on the business, risk and the level of investment required.”

An accounting perspective applied to a data center

Most organizations still struggle to make an accurate critical appraisal of their existing infrastructure and its capacity to absorb more workload. For the CFO, a question that’s simple to ask but vastly complex to answer, is: “do we need to make a significant investment in our data centers in order to keep pace with the business, or can we thrive using our current resources?”

However the answer to this question isn’t as opaque as it might first seem. It’s long been the case that fully understanding the true capacity availability in your data center, or knowing how susceptible it is to business-crippling outages, was seen as a mystical art. Something that certainly wouldn’t transpose to the sort of meticulous order you’d see in an accurate set of accounts.

Today, we’ve made it possible to create a Digital Twin of your data center —a virtual replica of your real facility. This allows you to explore the true capacity availability that’s left to exploit before initiating costly expansion programs. It allows you to manage different facility variables before deploying changes in the live facility—so you can make changes to your IT without risk. And if you do need to increase or adapt your footprint, it provides the exact visibility needed to keep costs under control while maximizing the business potential of a data center project.

So as the opportunities and challenges of this evolving, disrupted economy begin to emerge, gain certainty about the role your data center can play—and the costs associated with it—using a Digital Twin.


Blog written by: Danielle Gibson, Lead Marketing Editor, and Robert Schmidt, Director of Sales + Client Innovation - Data Center Infrastructure Software SME

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27 October, 2020

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