Colocation Data Centers: Benefits of Buying vs. Building

How do you know when it’s time to buy, or lease space in a colocation facility rather than building new processing capacity in-house? It is important to consider both options seriously before selecting a strategy that best fits your computing requirements, business objectives and budget.

How much time do you have? What is your budget? What resources do you have for power and staffing? These are all important questions to ask when you are weighing the pros and cons of buying vs. building. Most organizations are seeking increased processing power and storage and quick deployments, without breaking the bank. Finding the solution that meets all three of those needs can be difficult.  

The first thing you should consider is how quickly you need to implement your new solution. Building in-house usually means you’re starting a project from scratch, so you should expect a two to three year delay before you can use your new storage. If you select to lease space off-site, you may be able to meet your deadline more quickly. Remember, you will need to discuss your timeline with your provider.

If time is not an issue, building may be a feasible solution. However, in addition to the expense of time, building comes with large up-front costs. After planning, design, commissioning, construction, land, physical security, permits and taxes, you can expect a hefty price tag for each square foot. When you use colocation services, your capital costs are rolled into your monthly costs.

Even if time and cost aren’t obstacles to your plans, you must still factor in both electric power and manpower. Powering data facilities is expensive, and downtime is equally if not more costly. If you cannot afford the financial blow of downtime, you must be able to afford uninterruptible power supplies, backup generators or other forms of power redundancy.

The overhead costs of engineers and IT staffing can also exhaust your in-house resources. The highest-performing data centers have around-the-clock personnel and state-of-the-art managed service options. Within three years of building a data center in-house, your annual maintenance costs could be as much as three to five percent of the initial construction cost.

By leasing space in an off-site data center, your energy costs will be lower, as data center providers consume industrial-scale wattage and are typically located in low utility rate areas. Additionally, your maintenance costs will be shared amongst other tenants.

Ultimately, the decision of whether to buy or build comes down to your financial resources and timeline. It is frequently true that leasing data center space is more cost-effective than building from scratch. If that is the case for you, you will have to select from dozens of potential providers.

QTS has extensive expertise, unmatched customer experience and a broad portfolio of solutions to choose from.