Escaping the Real Estate Trap of Traditional Data Centers

Enterprise data must be stored somewhere. While cloud-based data center management has rapidly gained in popularity for businesses of all sizes in recent years, many enterprise organizations continue to rely on physical data centers managed at their business location, or at a separate facility privately owned by the company.

While this strategy may have been backed by a strong business case in the past, the improved scalability and resource efficiencies of cloud and SaaS alternatives has changed how businesses now calculate the cost and ROI of traditional data center models—especially when it comes to acquiring and maintaining the necessary real estate to house and protect these facilities.

The challenges of physical data centers become even more pronounced as enterprise organizations grow—or, in many cases, as the volume of proprietary and private customer data protected by their business increases. As business operations become more data-driven, data management becomes more integral to supporting those operations, managing operating expenses, and delivering a customer experience that retains and grows a company’s customer base.

This data-driven transformation can face significant challenges when faced with the practical limitations and cost considerations of the physical real estate required by on-premises data centers. To free your organization of these constraints and enable transformation, innovation and scalable growth, it will eventually become necessary to break out of this traditional approach and migrate to cloud or SaaS-based infrastructure.

The Cost and Constraint of In-House Data Centers

The cost of maintaining an in-house or physical data center must be accounted for in two different ways. First, there is the operational cost of building, maintaining, and adapting these facilities over time.

In addition, businesses must also consider the opportunity cost that comes with rigid data center infrastructure, particularly when growing your business or innovating business operations to embrace a more data-centric approach. These costs and constraints include:

• Physical real estate. Whether the data center is housed at an existing business property or a separate location, this space must be purchased or rented.
• Hardware and supporting infrastructure. Estimates for building an enterprise-grade data center can range between $8 million to $12 million.
• Staffing to manage and monitor the facility. This includes IT professionals, or third-party service management vendors, to manage and maintain the data center technology itself. It also includes facility staff dedicated to securing the site and monitoring for outages or mechanical breakdowns.
• Utilities, including electricity to power the data center. Depending on its size, your data center electricity bill could be one of the largest bills your company pays on a monthly basis.
• High costs when expanding your data center. If you outgrow your space, the cost of acquiring and transitioning to a larger one can be high and potentially delay this necessary upgrade. Similarly, the cost of hiring new staff can spike your expenses and cut into the ROI of managing your own facility.
• Increased liability for facility shutdowns, security breaches, or other disruptions. Since you are managing the data center on your own, the cost of security response, switching over to backup generators, and maintaining business continuity are all footed by your company, rather than a cloud-based partner.

Ensuring Security, Compliance, and Business Continuity

For businesses prioritizing data security and compliance, on-premises data centers are sometimes viewed favorably because of the increased sense of control and security these physical solutions offer over cloud-based alternatives. In many cases, though, business leaders are drawn to managing their own data centers not because of the inherent business benefits of this model, but out of a wariness of unfamiliar cloud technology.

The problem with this approach is that it offers a false sense of stability and control. In practice, an on-premises data center can actually create more risks and challenges in ensuring data security, industry compliance, and business continuity in the face of power outages or other business disruptions.

For example, while it’s true that a private data center has fewer entities accessing it—which insulates it from unwanted intruders—this isolated facility also requires a higher level of security expertise to properly manage and monitor. Without the right skill sets among your IT professionals or partners, a traditional data center could actually be easier to breach than a cloud-based alternative.

Similarly, the cost of meeting certain specialized compliance requirements can be significant when footing the bill for these measures all on your own. A cloud-based provider, meanwhile, likely has the infrastructure, in-house expertise, and prior experience within that industry to implement these compliance requirements with cost-efficiency, speed, and reliability.

Those cloud providers also have more comprehensive infrastructure to overcome power outages and maintain business continuity in the event of an emergency. If your local data center is compromised in a flash flood, for example, your entire system may go offline. A cloud-based data center can keep your data infrastructure online and available even if you’re forced to evacuate your office.

Enabling Scalability Through Cloud IT Infrastructure

When you base your enterprise operations out of a physical data center, the costs and constraints you face are finite: You’re equipped with a fixed amount of data storage space, which puts a ceiling on your ability to grow both your customers and your overall data complexity.

If you want to increase these limitations even slightly, the costs can quickly become prohibitive. Cloud IT infrastructure alleviates this growing pain by offering services and service costs that can scale up or down as your needs change. If you outgrow your current data center, you can expand its capacity without creating any friction for your organization. The value of this scalability will only increase over time as your business evolves and becomes more data centric.

Don’t let a physical data center stop your enterprise organization from reaching its goals. If you currently own and operate a physical data center that serves as the hub of your IT infrastructure, Origina’s migration experts can help build a blueprint for transitioning out of this rigid framework and into a more cost-effective, future-focused solution. Learn more about the benefits of migrating your data center to a cloud or SaaS approach — download our latest guide.