by Michael Rareshide, on Nov 23, 2015 10:37:21 AM
The site selection process for data centers has evolved in the past decade. Historically, the leading Internet, financial services and technology companies located their enterprise data centers close to home, driven both by management’s preference and by technological limitations such as fiber connectivity and latency concerns. Factors such as these were heavily weighted along with six to eight other primary categories that limited the options considerably.
Today, many advances in technology and fiber have mitigated these risks and enable a data center to be located in any tier 1 metro area as well as many smaller, tertiary metro areas. Several new categories have moved up in importance while others deemed crucial in the past have moved down on the list of priorities.
Factors evaluated in the data center site selection process
“The factors evaluated in the data center site selection process have changed in the last decade. The location opportunities have multiplied as a result,” explains Michael Rareshide, Executive Vice President of Site Selection Group, who negotiates mission critical and colocation projects for data center users.
To help identify the factors utilized when developing a data center site selection model, Site Selection Group analyzed the following categories for their importance for most data center users today.
Data center site selection factors
| Site Selection Factor | Weighting Range |
|---|---|
| Capital Constraints (Upfront Costs, Labor) | 25%-35% |
| Cost of Doing Business (Utilities, Telecom) | 15%-25% |
| Colocation Operator (Financial Capability, Future Needs, Pricing) | 15%-25% |
| Green Status | 10%-25% |
| Site Infrastructure (Existing, New Build, Strengths/Weaknesses) | 10%-20% |
| Business Continuity (Operational, Flight, Rail Risk ) | 10%-15% |
| Economic Incentives (Negotiated, Ongoing Compliance) | 5%-15% |
Data center location criteria that has moved up the ranks
Capital constraints has moved up significantly to one of the primary categories when developing a data center site selection model. The enterprise CFO can now deploy this substantial amount of up-front capital typically required to another revenue-producing initiative. “On the 100-point scale, the subcategories within capital constraints are totaling 25 percent, even 35 percent, of the model’s weighting, up from less than 15 percent several years ago,” notes Rareshide.
This constraint has also led to the enormous growth in wholesale colocation developers — such as Digital Realty, DuPont Fabros, T5 Data Centers, CoreSite, Equinix and CyrusOne — as a preferred option for many enterprise groups. These colocation wholesalers have provided a solution in many categories of the model — with capital preservation likely the most important. The colocation operator category is now becoming an important component of the model to the tune of 15 to 25 percent. To the enterprise user, these developers have already spent the time vetting the site, thereby enabling the user to focus on other important factors.
Green Initiatives will continue to gain in strength in data center site selection, comprising 10 to 25 percent of importance in the matrix from a single-digit or nonexistent subcategory 10 years ago. Companies are always looking to drive efficiencies, so the desired location must have reliable and low-cost green power along with a efficient construction design. And with the concerns that data centers can be “water hogs” in an increasingly water-sensitive U.S. community, the raised-floor environment must have the flexibility to implement new initiatives, such as free cooling, to address these concerns.
Moving down the ranks in the data center site selection model
While the assessment of all hazardous risks remain important, this risk category has trended downward to 15 percent (or less) from 30 percent. Obvious challenges such as fault lines and 100- to 500-year flood plains should be avoided at all costs. But other risks such as minimum site setbacks, airport flight path, active rail and highway proximity (often referred to as the planes, trains and automobiles category) do not carry the ranking they once had.
Locating its mission critical operation in a multitenant building used to be a “deal-killer” with many corporations. Often the site was rejected singularly for this reason The influx and acceptance of the wholesale data center business line has changed this perception to the point that the site and operator are, as mentioned above, an important part of the rankings.
Conclusions
While the enterprise IT executive will triage their data center site selection requirements according to its specific needs, the dynamics of such research will continue to evolve as new technologies develop. Site Selection Group has provided some high-level guidelines to help data center users understand how complex the site selection process has become.
