The Evolution of Data Center and Colocation Site Selection Factors

by Michael Rareshide, on Sep 18, 2018 2:14:54 PM

Data Center Site Selection continues to evolve on a fast track. The infrastructure and operational technology that IT executives have understood over the past 10 years are undergoing dramatic changes. The role of IT is fundamentally shifting from a cost-efficient enablement technology to a more strategic element of the enterprise. 

For the end user, the traditional data center had always been the enterprise’s “primary” facility with all mission critical IT services handled in-house in a secure xenophobic environment. Over the past several years, that traditional model has shown its limitations both on flexibility and scalability, while also forcing the company to upgrade this infrastructure with the latest expensive technology. The role of the data center within the enterprise has now changed from being an infrastructure facility to a provider of the right service at the right time and the right price.

“By 2025, 80% of enterprises will have shut down their traditional data center, versus 10% today,” according to a 2018 Gartner study. The implication is two-fold. First, the traditional data center is being relegated to a smaller role housing only IT operations required to be supported locally. Second, a colocation data center and enterprise cloud solutions model has risen in importance and become the “primary” data center strategy for many corporations.

These colocation developers—whether providing a retail colo, wholesale colocation, cloud or hybrid cloud, powered shell or turnkey data center model—have shown that they can provide a robust raised-floor, scalable solution in a highly secured facility that easily meets the demands of enterprise customers.

The success of this colocation model has led to the enormous growth in wholesale colocation developers such as Digital Realty, T5 Data Centers, CoreSite, Switch, Equinix, Cyxtera, TierPoint, Iron Mountain and CyrusOne as preferred options for many enterprise groups. These colocation wholesalers have provided a solution in many categories of the matrix, with capital preservation likely the most important, and the colocation operator category is now becoming an important component of the model approaching 40% to 55%.  As the same Gartner report notes: “An emerging trend in the colocation market has been the introduction of enhanced services that go well beyond traditional power, floor space and support services. These enhanced services include carrier neutrality, cloud-enabled services, access to multiple cloud services via secure networks, cross-connects to partners on the same premises, or interconnect fabrics to other sites or services.”

 Data center site selection matrix factors

When a corporation is facing an IT “asset refresh” (meaning it is time to replace older equipment or implement new networking infrastructure), many organizations undergo a significant internal assessment to project future business demands and the best possible solutions. Many times the answer includes expanding into the colocation and cloud services sector to best meet these requirements.

The data center site selection decision matrix has continued to be re-developed to address the changing landscape to meet the priorities of the enterprise in merging its requirements with its ultimate customer. It is now more heavily weighted to the colocation provider and the services it can provide, along with more consideration for factors that reflect an agility to meet the customer’s needs.

To help identify the factors utilized when developing a data center site selection model, Site Selection Group has identified the following categories with their relative importance for most data center users today. These factors comprise over 100 decision points that can be used in the matrix.

Data Center Site Selection Factors

Colocation/Cloud Operator (Financial Capability, # Locations, Services Offered, "Partner Role") 20%-30%
Colocation Facility (Scalability, Expansion/Contraction, Managed Services, Security) 15%-25%
Cost of Doing Business (Utilities, Telecom, Fiber, Cloud, Edge Networks) 10%-20%
Other Security Considerations (Regulatory, Customer Requirements, Backup and Recovery) 10%-15%
Other Location Strengths/Weaknesses (Vulnerability) 10%-20%
Financial Considerations (Colocation, Cloud, New Build, Powered Shell, Sale/Leaseback, Operational Efficiency) 25%-35%
Green Status (Free cooling, solar, renewable energy) 5%-15%
Economic Incentives (Negotiated, Ongoing Compliance) 10%-15%

This site selection matrix will continue to evolve. Whether it is the continuous risks posed by ongoing security challenges, the threat of digital disruption, or an inability to keep pace with the latest trends, virtually every enterprise seeks operation efficiency with the need to be more agile.


The digital economy will provide new business growth opportunities, requiring IT departments to scale mission critical operations appropriately and cost-effectively. As such, when considering the site selection matrix, enterprises see third-party colocation and cloud deployments as opportunities to rethink traditional data center infrastructure in the effort to reduce downtime, improve operational efficiencies, accelerate business cycles, and ensure business continuity.

Topics:Economic DevelopmentReal EstateData CenterSite Selection GroupSite Selection



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