PAETEC has just cut the ribbon on their 4,400 square foot Phoenix data center as part of an expansion program that adds to their facilities in Bethlehem and Conshohocken, PA, Andover, MA., Houston, TX and Milwaukee, WI. Why? Customer demand. The role of Information Technology is changing and the “cloud” has a lot to do with it. PAETEC is positioning itself to capitalize on this movement with services that improve business continuity, information safeguarding, network latency reduction and a reduction of management needs. The idea behind the cloud is one of economy of scale. You can have every company buying servers and racks, putting them in environmentally controlled rooms, providing the electrical power for both equipment and the cooling needed to take away the heat generated by the equipment, and hiring a staff to tend to the data center facilities. Alternatively, you can have a service provider create a much bigger facility and let companies buy their computing and storage services for a fee.
This is what cloud service providers do. They figure out the IT services that are common to many businesses and then provide those as a service themselves. But isn’t that six of one and a half dozen of another? How is the cloud a net saver of anything?
This is where economy of scale comes into play. The cost of operating a cloud services company doesn’t go up linearly with size. You need a certain amount of real estate, electrical power, HVAC, bandwidth and staffing to create a data center of any size. Having twice as many servers, disk drives and network appliances doesn’t necessarily mean you need to double your staff. Yes, you’ll need more floor space, air conditioning, electrical power and backup generation, but it probably won’t cost twice as much. The same is true for bandwidth. It gets cheaper by the Mbps and Gbps when you order big lines compared to little ones. Your staff can also be more specialized, since they are only dealing with a certain range of facilities and a defined set of services.
The contrast is even more dramatic when you compare the startup cost for small companies to create their own IT services compared to simply purchasing what is needed from a company that already has the facilities and expertise. Web site hosting, for instance, has gotten so cheap when purchased from a large hosting service that small businesses are hard pressed to justify buying and running their own servers. Many of them are now finding that offloading their telephone systems to a Hosted PBX service saves investment and staffing.
The colocation center fits somewhere in-between running your own facilities and outsourcing to the cloud. The colo offers the economy of scale for environmentally controlled and secure server space and WAN bandwidth. Yet, you have the option of providing your own equipment that you maintain yourself. Some colocation providers are now offering cloud-like services that include renting servers and storage they already have available and handling maintenance and repair through their 24/7 technical staff.
Should you be going to the cloud or relocating to a colocation facility instead of trying to do it all yourself? It may be time for a quick study to compare the capital and expense costs that you pay now with the monthly fees to get the same services outside. Get complementary support for pricing and availability of cloud and colocation services so you can do a good job.
Note: Photo of Phoenix skyline courtesy of Wikimedia Commons.
