What’s The Total Cost of Your Data Centre?

Mon, 09 June, 2014

According to IBM, 70% of every IT dollar is spent on managing the data centre environment. This means that when you plan, build, implement or expand your data centre you need to ensure that your money is being spent wisely and efficiently. This needs a big picture approach and the use of TCO analysis.

Organisations are experiencing rapid IT growth but their data centres are aging. International Data Corporation (IDC) puts the average age of a data centre at nine years old whilst Gartner says data centres older than seven years are obsolete. This means that many organisations, including yours, are probably thinking about how and when to upgrade their Data Centre.

Data Centres are evolving at a rapid pace. Consider the many choices you have and the decisions you need to make such as:

  • Multi-tier or server cluster model
  • Converged or separate networks
  • Containerised or modular
  • Own it or outsource it
  • What and how much to virtualise
  • Rack or blade servers
  • What sort of cooling
  • How to maximise power usage effectiveness

Data CentreIt’s easy to fall into the trap of just considering the capital costs involved because they are, after all, so large! However, it’s critical to look at all the costs involved over the lifetime of your Data Centre – both acquisition related(capital expenditure) and the operational costs involved in running it.

At the same time, costs for a modern Data Centre are typically spread across IT, networking and real estate departments which makes management of these costs and assessment of alternatives difficult.

There are many things which can be overlooked, unaccounted for or perhaps underestimated over the life of a data centre. Using a Total Cost of Ownership (TCO) model of analysis will help you to think about all the components involved in setting up and running a Data Centre and to take into account all the departments involved.

TCO is designed to look at an investment from a strategic, big picture point of view and is divided into two streams of expenditure:


This is capital expenditure involved in buying the infrastructure (hardware and software) and is generally contained within a financial year


These are the ongoing and long term costs associated with the operation, maintenance, and administration of your Data Centre

The Uptime Institute developed a spreadsheet to help businesses determine their TCO and, although it’s a few years old, it is a great starting point as it can help you to clarify your thoughts about what to include:


External hardwired connections
Internal routers and switches
Rack management hardware
Cabling costs
Interest during construction
Land costs
Architectural + engineering costs


Electricity costs
Network fees
IT site management staff
Facilities site management staff (cleaning, repairs, upgrades)
Property taxes

Using a TCO model allows you to compare the real cost of different options that you may be considering and also lets you see the impact of changing certain aspects such as:

  • Redundancy Levels
  • Energy Efficiency
  • Power Density
  • Size and Scale of Facility
  • Modular Design and Build-out Level
  • Occupancy Rate – Design vs Actual
  • Staffing Requirements
  • Cost of Energy

Poor planning of a Data Centre can lead to underutilised capital and an increase in operational costs. Careful and thorough planning using the TCO approach can help you to create a data centre that will meet your organisation’s performance goals and business needs today and tomorrow.

Read more about Data Centres or give us a call on 1 300 780 730 to discuss your specific needs