I recently spoke on a panel regarding "Buying vs. Leasing" a Data Center. Following the event, several people reached out and asked me to document some of my thoughts, so I thought a blog on the issue would serve the purpose. I certainly welcome any feedback....
Historically, when faced with the decision of building vs. leasing a data center, the size of the deployment has been a key factor… however this thinking is rapidly shifting.
Historically, when faced with the decision of building vs. leasing a data center, the size of the deployment has been a key factor… however this thinking is rapidly shifting.
I will submit that there are instances where it’s in the company’s strategic best interest or in their governance to own…or when requirements simply don’t dictate the redundancies, scale and connectivity a Service Provider offers…. but by and large there’s a reason why your company didn’t pick the Real Estate & Building Management Business….It’s probably a similar reason why you use FedEx/UPS instead of having your own Fleet of Trucks. In Most Cases the investment simply can’t be justified given the alternative choices in the market.
In today’s economic climate I've seen a major shift in how companies are choosing to put their capital to work. If you DON'T have capital… well the decision is an easy one. If you DO have capital… are you better off sinking that precious resources (capital) into the brinks/mortar/steel of a data center that at the end of the day is going to look very much the same as your competitor? Or... can that capital be of more strategic and economic use by investing it in that which TRULY differentiates your company; an investment that provide you a unique competitive edge within your core competency?
In summary, for most companies it doesn't make a lot of sense to buy or build a data center; capital is precious, and markets are too dynamic. Leasing is far better alternative and a Service Provider can achieve better economies of scale while spreading risk over multiple industries and clients. In turn, customers will have more flexibility, faster speeds to market... and most importantly CAPITAL to put to work in areas that will matter most to their business.
