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Does Data Center Consolidation Make Sense For Your Clients?

December 16, 2017

Does Data Center Consolidation Make Sense For Your Clients?

Data centers continue to extend their reach into the cloud, adding assets and resources both inside and outside the firewall. New technologies such as the Internet of Things (IoT) and convergence networking increase data traffic, leaving IT managers looking for new ways to simplify their networks. Data center consolidation is one strategy to streamline operations, increasing capacity with less hardware. However, consolidation may not be the right solution for every data center.

One of the drivers for consolidation is data center sprawl. According to Deloitte Consulting, M&A activity over the past decade has left companies with legacy data centers that are outdated and costly to maintain. Some large companies may run up to 60 different data centers, each at an annual cost of $10 million to $25 million. Updating all these data centers in order to take advantage of the latest cloud services and virtualization technology may not be cost-effective. Consolidation provides companies with an opportunity to assess their data center assets and determine what’s working and what isn’t.

Turning Assets Into Variable Costs

First, let’s define what we mean by data center consolidation. Data center consolidation, or IT consolidation, generally refers to the strategy used to reduce data center assets by deploying technologies that are more efficient. Often, this translates into making existing systems do more using server virtualization, storage virtualization, blade servers, and cloud computing. Better capacity planning, process automation, and cloud and hybrid cloud resources make it easier to expand data center capacity without adding hardware.

Increasingly, CIOs are using consolidation as a means to control costs. Taking advantage of cloud computing, for example, converts fixed costs into variable costs using cloud assets as needed on a pay-as-you-go basis. Consolidation using virtualization and cloud services also makes networks nimbler and more able to adapt to changing business demands. Having a scalable infrastructure that can react to changing needs is more cost-effective than investing in a data center that is overprovisioned in order to handle occasional peak computing loads.

In short, consolidation can prepare data centers for the future, eliminating assets that will become outdated or underutilized in favor of virtual assets that can be accessed and upgraded as needed.

Consolidating for the Future

Data center consolidation should be part of a long-term strategy rather than a quick fix for specific data center shortfalls. As part of your customer’s consolidation goals, they should be eliminating outdated systems, getting more out of existing servers and storage with the help of virtualization and other strategies, and using elastic resources such as cloud services in order to expand capacity. The goal should be to establish a foundation for future growth.

With that in mind, here are some steps to consider before embarking on data center consolidation:

Inventory the assets – Have a firm grasp on operating costs for the data center as a benchmark for changes. That includes the cost of hardware, software, services, personnel, power, and space. As you and your client take stock, note what assets you might be able to standardize or consolidate.

Know the objectives – What is the reason for consolidation? Is it to reduce operating costs? Simplify operations? Improve performance? Free up capital? What is the operating budget for data center costs? Make sure you know the client’s goals and constraints.

Understand the end game – Be sure to talk to all the stakeholders in order to determine what their expectations are at the end of the process. Is it about potential savings, closing down outdated facilities, improving regulatory compliance, SLAs, or some other factor? If you understand expectations, it will be easier to meet them.

Take the long view – Look beyond the end game to a five-year plan. Does the data center have a longer-term objective that may require a specific technology or architecture? For example, is IoT monitoring or big data planned for the future? This will guide decisions about consolidation strategies.

The Pros and Cons of Cloud Consolidation

Also, weigh the pros and cons of consolidation. For example, working with a colocation or cloud computing provider could offer a number of advantages, especially when it comes to expanding an existing data center. Weigh the advantages of incorporating virtual servers and storage, such as:

Fast deployment – Cloud-enabled services are almost instantaneous, because services are already in place and ready to go.

Scalability – There are virtually no restrictions in cloud computing, which can be a real advantage if computing needs vary throughout the year (e.g. on a seasonal basis).

Agility – Cloud services can be rapidly adapted in order to meet changing needs.

Lower startup costs – Less capital expenditure is required in order to implement cloud services, because usage is set on an as-you-go basis.

Lower maintenance costs – Support is part of the service, freeing internal IT and help-desk staff for other tasks.

Depending on your client’s industry and operations, there may be a compelling reason against consolidation. Here are some of the cons to consolidation using the cloud:

Connection dependence – A stable Internet connection is essential in order to access cloud services.

Latency – If the connection is made over the Internet, then the client may experience performance issues beyond their control.

Reliability – In some cases, cloud services may not be as reliable as private cloud or server-based applications.

Data protection and ownership – Regulated industries have specific requirements as to what data can be hosted and where and the security measures required to protect those data.

Re-engineered applications – Custom applications and other business-critical software may have to be adapted for the cloud or replaced.

Consider all these factors when talking to clients about consolidation strategies. In most cases, it should be easy to make a case for data center consolidation, but before forging ahead, look for hidden issues or concerns that may cause you and your client to rethink your consolidation strategy.