Post on 20-Aug-2015
Practical IT Research that Drives Measurable Results
1Info-Tech Research Group
Develop a Co-location Strategy
Introduction
Info-Tech Research Group2
The decision to co-locate all or part of the data center facility can be a risky one. Because the decision to build vs. buy is essentially one of cost, IT decision makers must put in the time and effort in requirements gathering, determining the needs of the business, and selecting a co-location vendor to ensure the engagement is successful. Most small-mid-sized organizations only require a basic level of co-location services to fulfill their co-location needs; however, vendors are trending towards managed services as their entry level offering. Thus, IT must understand the needs of the business in order to determine the right level of service and select the best vendor for the organization’s needs.
Determine if a Co-location Strategy is a fit with the Business
Understand the market and vendor offerings
Evaluate Vendor
offerings
Manage the Relationship
The co-location strategy solution set will take IT decision makers through the following process to select a co-location vendor that fits the organization’s needs:
This solution set is designed for: Organizations of all sizes that are facing
a data center build vs. buy decision.
Organizations that are looking to outsource all or part of their server inventory.
Organizations that are looking for a solution to the constraints in their current facility.
This solution set will provide you with: High level budget and cost comparison tool
for the build vs. buy decision.
Examples of co-location service level criteria to include in the RFP.
A co-location RFP template complete with proposal scoring tool.
Site evaluation checklist for final due diligence in the selection process.
Executive Summary
• 64% of organizations engage in some form of data center co-location services, but over 77% of do not outsource the entire data center. Instead they outsource a subset of physical servers that require extra recovery and availability while leaving the rest in-house.
• While many organizations avoid co-location due to perceived misconceptions about size and service, Info-Tech research found that all organizations can be successful in a co-location engagement:
–Organizational size is NOT a factor to success.–Size of engagement is NOT a factor of success.
• Factors of success in a co-location engagement require effort on behalf of the organization:–Successful co-location requires a minimum of 3 months planning and due diligence.–Organizations that gathered current and future facility requirements, were able to estimate a high level budget and conduct cost comparisons and were more successful in their co-location agreement.–Profiling servers before entering a co-location agreement were a significant factor to the engagement’s success.–55% of organizations that established a shopping list of services aligned with their business needs, were more likely to experience co-location success.–Organizations that solicited vendors through an RFP process were more likely to experience success in their vendor selection and co-location engagement.–62% of organizations conducted site visits to vendor locations before entering into an agreement which resulted in a more successful co-location arrangement.
• Many vendors in the co-location market space have cut out their basic level of service and are only offering managed services as their entry level service, however basic co-location services suit the small to mid-sized organization’s needs. Customers must be prepared to have educated conversations with vendors to ensure they are engaging with the right vendor and the right level of service for the business needs now and in the future.
• Co-location SLAs range from the very simple to the very complex. They must be enforceable under contract and managed on at least an annual basis. Vendors should be held accountable for non-performance.
Info-Tech Research Group 3
Co-location Strategy Roadmap
Info-Tech Research Group 4
Evaluate Vendor
offerings
Align vendor offerings with
business requirements
Evaluate vendor proposals
Vendor Site Visits
Determine if a Co-location Strategy is a fit with the Business
Gather facility requirements and baseline cost information
Validate the Build vs. Buy Decision
Understand the market and vendor offerings
Review the Market
Basic Co-
location
Managed Services
Recovery Services
Engagement Practices
Manage the Relationship
Constructing Service Level Agreements
Assess the collocation relation on an annual basis
Co-location is a risky initiative, but has many misconceptions and irrational fears surrounding it
Many organizations are hesitant to outsource the data center due to fears regarding:
– Security and privacy.– Physical separation from servers.
However, in automated and mature data centers it is uncommon that an organization requires to physically touch the servers to implement changes.
While these are fears that are commonly expressed, the underlying fear is more a factor of discomfort in vendor management issues that arise in this type of relationship.
– For example, risk of downtime and being held accountable for another’s actions. Leaving many organizations with a belief that if they ‘control’ the data center in-house it will be more stable.
Info-Tech Research Group 5
There were two prime concerns. One was around data security, and the second was for the system administrators about their job security. We addressed the job security somewhat by saying that we are not purchasing admin services from the co-location vendor. We are only purchasing power and a rack and WAN, and all the admin would still be done by us. So the folks involved weren't so concerned about their jobs - Source: IT Director, Semiconductor Manufacturing
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Fear of the unknown
Info-Tech Research Group 6
8% 8% 8%8%
19% 23%16% 19%
26%26%
45%
11%
19%32% 32%
11%12%
Privacy &
security concerns
4%4%
11%
22%
48%
Lack of executive buy-in
4%
7%
19%
19%
Term & length of
commitment
4%
28%
8%
12%
Change of
physical location
of servers
19%
23%
8%
Budget constrain
ts
4%4%
27%
12%
42%
Lack of lights out
management
8%8%8%
Perceived high risk
27%
19%
12%
Switching & implementatio
n costs
23%
31%
12%
1 = Strongly Disagree
2
3
5
4
6 = Strongly Agree
Organization’s that explored the co-location option but chose not to co-locate the facility came to their final decision based on the factors stated in the graph above.
– 81% of organization’s that did not co-locate had concerns about privacy and security in the co-location facility; however, 84% of organizations that successfully co-located the data center stated that the facility security standards exceed the current security capabilities of the organization.
– While many of these factors are reasonable fears regarding the co-location decision, organization’s that co-located all or part of the facility experienced the factors in the graph on the right.
5% 7%16%9% 9%
11%
15% 10% 13%
15%
5%5%7%
5%
5%7%
Dedicated resource
to manage engageme
nt
9%
25%
30%
Both parties
view as a partnership
9%
41%
25%
Knowledge and
helpful staff
23%
30%
23%
Defined escalation process
9%
39%
23%
Service and
availability match
contract
2%
12%
44%
26%
Security exceeds
expectations
2%
18%
25%
41%
64% of organizations engage in some form of data center
co-location services
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20%
33%
25%
76%
40%
14%
40%
67%
30%
17%
31%
18%
14%
60%
43% 29%
251-500
12% 6% 24%
501-1000
8% 8% 8%
1001-2500
19%
33%
51-100
101-250
1-50
50%
5001+
25%
30% 20%
2501-5000
No Co-location
Fully Managed Services
Basic Co-location
Disaster Recovery Services
Managed Services
Data Center Co-location Services by Organizational Size
8%
24%
36%
14%
18%
Co-location success comes in many shapes and sizes
Success does not increase according to company size
Info-Tech Research Group 8
Success does not increase according to level of co-location services
Are you avoiding co-location because of organizational size?Organizations that haven’t considered a co-location strategy based on their size, should not avoid this option. Info-Tech found that organizational size does not have an effect of the level of success achieved. A successful co-location engagement can be realized by both small and large organizations.
Organizations that haven’t considered a co-location strategy because the perceived notion that they have to engage in a higher level of service to be successful should not avoid the co-location option. You don’t have to dive into a higher service level to be successful, even the most basic levels of co-location engagements are successful.
Are you avoiding co-location because of perceived service requirements?
Basic Managed Services Hosted Services Recovery
0 100 500 2500 5000
Co-location fear is human based, not industry based
Certain industries, such as healthcare, financial services, and Government that require additional layers of security and privacy to protect data, are co-location adverse. However, an Info-Tech survey found that data center co-location can be successful regardless of the industry.
– Over 50% of healthcare organizations , 57% of Government organizations , and 67% of financial services organizations that co-located all or part of their data center experienced a successful co-location engagement.
Info-Tech Research Group 9
There is no industry barrier to co-location, fear and co-location avoidance is simply a human component in certain industries
50%
43%
44%
50%
33%
33%
33%
50%
45%
50%
33%
50%
34%
50%
17%
57%
50%
17%
Wholesale/Retail
Manufacturing
Education
17%
Primary Industry
33%
Business Services
Government
Trans/Utilities/Comms
11%
Healthcare
Financial Services
0% - 60%
60% - 77%
77% - 90%
90% - 100%
Success
There is no right size of engagement, the right size is what works for you
• Many believe that there is a sweet spot in terms of the number of servers when co-location becomes the better option. Info-Tech found that there was no significant relationship between the percentage of servers outsourced and the success of the co-location engagement.
• Over 77% of organizations do not outsource the entire data center and instead outsource a subset of physical servers that require extra recovery and availability while leaving the rest in-house.
Info-Tech Research Group 10
62%-100%
23%
25%-62%
27%
6%-25%
25%
0%-6%
25%
Every organization is unique. Conducting a comprehensive requirements gathering process and thorough cost analysis is required to determine the true cost and benefit of co-location engagements.
Info-Tech Recommends:
Perc
enta
ge o
f org
aniz
ati
ons
Percentage of servers outsourced
Organizations outsource servers according to the business needs
Info-Tech sees that the median percentage of servers outsourced is 35% of total physical servers. The minimum percent of physical servers outsourced was 4%.
Successful co-location requires a minimum of 3 months planning and due diligence
Info-Tech Research Group 11
Co-location can be a risky decision when presented to IT with a limited timeframe to make a decision on a vendor. Because it is a long-term commitment, the decision should be carefully considered. Take the time to plan and conduct due diligence to ensure the engagement goes right the first time – co-location switching costs are high.
55%
45%
Did not conduct a minimum of 3 months planning
Conducted a minimum of 3 months planning
55% of organizations that demonstrated success put a minimum of3 months planning into their co-location strategy
Successful co-location planning involves many tasks
Organizations that experienced success in their co-location engagements put more effort in gathering facility requirements, cost comparisons, profiling servers, setting business expectations, the RFP process, and conducted site visits to potential co-location vendors in the planning process.
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7%
6%
11%
12%
21%
9%
9%
5%
7%
7%
7%
14%
7%
5%
7%
12%
21%
26%
17%
9%
19%
11%
100%
14% 19%
Minimum of 3 months planning 16% 16% 23%
Cost comparison
Site visits 2% 16% 29% 35%
Formal RFP process 15%
20% 30%
Gathered facility requirements 2% 21% 23% 28%
Set of business criteria
19% 21% 21%
Profiled for high availability 19% 33% 23%
Profiled for redundancy 24% 40% 17%
25%
1 = Strongly Disagree
2
3
4
5
6 = Strongly Agree
Determine if a Co-location Strategy is a fit with the Business
Info-Tech Research Group 13
Evaluate Vendor offerings
Align vendor offerings with business requirements
Evaluate vendor proposals
Vendor Site Visits
Determine if a Co-location
Strategy is a fit with the Business
Gather facility requirements and baseline cost information
Validate the Build vs. Buy Decision
Understand the market and
vendor offerings
Review the Market
Basic Co-
location
Managed Services
Recovery Services
Engagement Practices
Manage the Relationship
Constructing Service Level Agreements
Assess the collocation relation on an annual basis
Assess organizational fit and appropriateness before engaging in data center co-location
Info-Tech Research Group 14
Reason Description
GrowthAn organization that is experiencing growth may consider co-location due to facility constraints such as lack of space, power, cooling, and standby power capacity.
High Availability
Many organizations can only achieve a Tier 2 facility in-house but require a facility for all or part of their server assets that can accommodate high availability, a higher level of standby power and redundancy for power and cooling loads. It is rare that an organization can achieve the level of multi-homing of that in a co-location facility.
Lifecycle Cost
When facing a build vs. buy decision, any organizations realize cumulative cost savings over an 8 year lifecycle in a co-location strategy. Increasing energy costs may also play a part in the decision making process.
Security
Organizations that require an extra layer of security for the data center may not be able to achieve the same level in-house as a co-location provider may possess. Access control such as card access, biometrics and 24/7/365 support are attractive components of co-location offerings.
Resources & Expertise
Organizations that do not possess internal infrastructure expertise or are short on resources. Facilities expertise is generally not a strong-suit for most organizations, building a data center requires specialized skills the enterprise likely will not have in house.
Aging FacilityAn organization with an aging facility that requires expansion or renovation may find co-location as an attractive alternative.
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The build versus buy decision requires a 360 view of the current facility
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Organizations exploring the option of data center co-location should assess all options surrounding the build vs. buy decision and must follow the same process to aid in making the final decision.
A thorough assessment of the current facility requirements should be conducted from assessing the business need by involving key stakeholders throughout the business to facility requirements gathering to develop a high level budget and cost comparison
For a more detailed explanation of each step in the decision making process, see Info-Tech’s “Data Center Facility Requirements Estimations At-a-Glance.”
Build
Buy
VS.
To build or not to build? It’s a question of cost
Many organizations that gather requirements and forecast data center costs into the future will find that over time, co-location will be a less expensive alternative than having all servers in-house.
Ongoing operating expenses represent 65% of the total costs associated with building a data center.
Both capital and operating expenses for the build vs. buy decision should be carefully examined.
Info-Tech Research Group 16
Use Info-Tech’s “Data Center Facility Build vs. Buy Tool” to determine a high level budget and estimate cumulative costs for data center build and co-location over the long term.
Organizations that estimated a budget and conducted cost
comparisons were more successful in their co-location
agreement
Case Study: Comparing costs for the build vs. buy decision
Info-Tech Research Group 17
Costs Initial Investment
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Total Lifecycle
Room build at $600 per sq. ft.
$600,000 - - - - - - - - $600,000
Ongoing Expenses:
Maintenance Contracts (for UPS, fire, cooling, etc.)
$36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $288,000
Totals $600,000 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $888,000
Table 1. Company ABC Estimated Build Costs
When considering a co-location strategy for the data center, IT must compare the costs associated with building the data center, and that of the co-location vendor. This case study is a real-life scenario of Company ABC and its build vs. buy decision for co-location.
• Table 1 illustrates the costs associated with a Greenfield build for a 1000 square-foot facility with approximately 50 servers.
• Table 2 demonstrates the costs associated with the co-location strategy examined by the company over a period of eight years.
Case Study: Comparing costs for the build vs. buy decision
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Costs Initial Invest-ment
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Total Lifecycle
Transition Costs (labor)
$10,000 - - - - - - - - $10,000
Ongoing Expenses:
Rack Costs - $15,732
$15,732 $15,732 $15,732 $15,732 $15,732 $15,732 $15,732 $125,856
Power costs - $17,280
$17,280 $17,280 $17,280 $17,280 $17,280 $17,280 $17,280 $138,240
Cat5e Interconnects
- $10,800
$10,800 $10,800 $10,800 $10,800 $10,800 $10,800 $10,800 $86,400
Fibre Interconnects
- $3,240 $3,240 $3,240 $3,240 $3,240 $3,240 $3,240 $3,240 $25,920
Internet connectivity
- $10,800
$10,800 $10,800 $10,800 $10,800 $10,800 $10,800 $10,800 $86,400
Totals $10,000 $57,852
$57,852 $57,852 $57,852 $57,852 $57,852 $57,852 $57,852 $472,816
Table 2. Company ABC Estimated Co-location Costs
After careful estimation, the company found that to build its data center in-house, it could cost approximately $888,000 over eight years. The co-location option would cost the company $472,816 over a period of eight years – almost half of the build cost even with Cat5e and Fibre interconnects factored in. It was evident in this case that the best option was co-location.
Facility requirements are the cost components
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Success
Detailed cost comparison
Detailed facility requirements
For help in estimating facility requirements for power, cooling, and standby power, refer to Info-Tech’s “
Data Center Power and Cooling Requirements Calculator
.”
I had to do a lot of homework ahead of time, and I think that’s important [to understand what our actual requirements were] so that when we went to the vendor, we were able to say we needed half a rack, we needed this much power, we needed this much bandwidth. And then you’ve also got some idea of what your growth is going to be [to understand how much it will cost]. - Source: IT Director, Semiconductor Manufacturing
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Understanding the facilities requirements can help the organization have better conversations with co-location vendors about the business needs and fit with vendor offerings.
Gathering facility requirements and detailed cost comparisons are directly related to the success of the co-location decision and engagement.
• 42% of organizations conducted a detailed cost comparison
• 51% gathered facility requirements before making the final decision to co-locate all or part of the data center facility.
Profiling servers in the data center for availability & redundancy helps determine what needs to go
out &what can remain in-house
The majority of organizations do not outsource the entire data center. Profiling servers before engaging in an outsourcing agreement can help to further reduce costs associated with the data center.
Successful organizations that outsource part of their data center target servers that require high availability and/or an extra layer of redundancy that their current facility cannot achieve.
– 57% of organizations profiled servers to determine requirements for redundancy.
– 56% of organizations profiled servers to determine requirements for high availability.
– Profiling servers before entering a co-location agreement was a significant factor to the engagements success.
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“Cost of provisioning and operating redundant power, diesel generators and fiber circuits at each company site would greatly exceed Co-location fees.”
“Co-location provides a level of recoverability that cannot be achieved by in-house service.”
“To in-source such services and redundancy a corporation required a huge investment into an infrastructure which is hard to justify. In a co-location the company shares the costs with other customers, reducing the cash flow burden of such an investment into these services.”
“It does if there are limited resources within the company as we provide those services for us it is not a major hurdle. Servers that require high availability and communication links makes more sense. Has been a deciding factor in our strategy was redundancy of communications and bandwidth availability.”
“As a mid-sized organization co-location allows us to take advantage of the stability and functionality that a larger installation base can afford to support.”
Is it best to co-locate servers that require
high availability and redundancy?“
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Profiling for High Availability & Redundancy
• Mission critical servers that have a high cost of downtime where in the case of an outage or service interruption, will affect employee productivity and business performance.
• Servers that do not have the required standby power to operate the business for the required amount of time in the case of an outage.
Warning: Co-location will NOT remove all in-house operating costs
Although co-location may be a less expensive option over time for many organizations based on estimates and monthly fees, co-location will NOT remove all costs. Beware of additional costs for switching, moving, and implementation, and ensure they are accounted for in the high level budget and cost comparisons.
Even when an organization outsources its entire data center, it will still require a wiring closet to tether the enterprise to the co-located services with the requisite costs for power, cooling, and standby power that will incur operating expenses.
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Switching, implementation
, internal requirement
costs
Lower monthly and long-term
operating expenses
Many organizations fail to factor in switching to implementation costs when co-locating the data center.
What initial and/or ongoing costs did you incur during the transition to a co-located facility?
“Network circuit changes, temporary extra gear to bring networks up, moving, packing, insurance costs”
“Dual hardware and software maintenance costs”
“Transport and consolidating cost ( the move trigger consolidation as now economic driver of space drove consolidation ( not part of original scope).”
“Carrier services expenses, additional time of existing staff”
“The initial team working on the co-location under estimated the build out costs. Initial costs were under €100K.”
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You want to be aware of all the factors that you’re looking for on a day to day basis. How do you measure your efficiency and make sure you apply all those same rules to an outsource model? People think “Oh, I’m just outsourcing it; it’s all turnkey; it’s all included. Not the case.” Source – General Manager, PMP, Air Transport Security
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Case Study: Excessive additional costs result in a no-go co-location decision
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Situation• An organization in the Insurance industry was moving locations and was faced with the build versus buy decision. They had to decide whether to build a new data center facility in an existing office building or co-locate the data center. The organization gathered its requirements for power, cooling, standby power, fire suppression, security and estimated its construction costs for the build.
• They sent out an RFI to co-location vendors to help estimate costs associated with moving their servers to the co-location facility. Because the organization was located in a rural area and did not have any vendor presence nearby, they had to look to a location that was a distance away in the closest urban center.Uncovered Costs
• Because the closest co-location facilities were so far away, the organization would have had to tether a communications pipe to connect the organization with the co-location facilities.
• The cost to tether a communication pipe to the co-location facility would have cost the organization an additional $10,000 a month in addition to monthly fees for service and estimated $50,000 in installation, moving and implementation costs.
Decision• After a thorough cost and risk assessment of the build versus buy decision, the organization decided to build a new facility as the long-term cost analysis was less for the build decision.
Case Study: Security concerns discourageexternal co-location, but result in an
internal shared services model
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Situation
• A police department with 18 physical servers found themselves with an aging facility and was exploring the option of renovating or co-locating the facility.
Uncovered Costs
• Policy states that anyone entering the police department’s data center must go through a background check first. Costs and effort required to background check every individual that entered the co-location facility
Decision
• Fears of privacy and security, along with cost and effort to conduct background checks deterred the police’s IT department from co-locating the data center with an external vendor. However, the department is currently looking into a shared services model with the municipal government’s data center to take advantage of an internal vendor for outsourcing.
Case Study – Build vs. Buy evaluationresults in a GO decision
Info-Tech Research Group 24
Situation• A federal government organization’s data centers were
located in extremely high security locations and wanted to reduce the amount of IT hardware being placed in these locations because it was too complex to get to them
Uncovered Costs
• The organization incurred costs of virtualizing servers before outsourcing and moving costs.
• No other unexpected costs were incurred.
Decision• After conducting a threat risk assessment and privacy
impact assessment, requirements gathering and RFP process, the organization based its decision off of geographical proximity of the co-location facility to each location within 25-50 km away (amongst other facility criteria such as security, availability, redundancy, business continuity and service).
Understand the Market and Vendor Offerings
Info-Tech Research Group 25
Evaluate Vendor offerings
Align vendor offerings with business requirements
Evaluate vendor proposals
Vendor Site Visits
Determine if a Co-location
Strategy is a fit with the Business
Gather facility requirements and baseline cost information
Validate the Build vs. Buy Decision
Understand the market and
vendor offerings
Review the Market
Basic Co-
location
Managed Services
Recovery Services
Engagement Practices
Manage the Relationship
Constructing Service Level Agreements
Assess the collocation relation on an annual basis
Basic Co-location offerings are fading away…
Many vendors in the co-location market have cut out their basic level of service and are only offering managed services as their entry level service.
This has deterred many organizations from considering co-location as an option; however, based on a recent Info-Tech survey, organizations that enter into basic level co-location services are no more successful than those that engage in higher levels of service.
Info-Tech Research Group 26
One lesson learned that was interesting is particularly some of the value added services that a lot of the organizations are putting out these days. I’m seeing and hearing that there’s a real drive to cut collocation and there’s much more of a preference for managed services because that way the vendor gets to sell you on things like disaster recovery; dynamic infrastructure. Today you might only need two ports on a switch or something to that effect. So instead of selling you an entire switch, they’ll sell you just those two ports and you can buy them by the port. You expand as you grow so it’s dynamic in that regard which is great for them because it’s a total money maker. They isolate each port to a V-line and you have a nice day. I think things like where people are growing applications and they need a server farm or something to that effect, there is a lot of benefits there but you pay for it as well. Source - General Manager, PMP, Air Transport Security
Co-location Services
Managed Services
Recovery Services Fully Managed Services
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… but unfortunately this is what the mid-sized market needs!
Small-Mid sized organizations: Tier 2 vendors are for you
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Cost
Vendor Possibilities
Tier 1
Tier 2Tier 3
• Tier 1 vendors can be categorized as large co-location vendors that focus on large businesses. They typically focus on larger processing objectives and see co-location as only a small portion of the value they add and the revenues for services they are hoping for with a client. This tends to push them out of the space for mid-sized enterprises seeking co-location for a few server racks.
• Vendors such as CGI, CSC, and EMC fall into this category
• Tier 2 vendors make up the majority of the market for co-location vendors. They offer facilities with high levels of availability, redundancy, security that most enterprises cannot achieve in-house. Tier 2 vendors can accommodate small, mid-sized and large organizations but typically focus on the mid sized enterprise.
• The Tier 2 vendor market is highly commoditized which makes it difficult to differentiate vendor services.
• Vendors such as Q9, Fusepoint, Coresite, Peak 10 fall into this category.
• Tier 3 vendors are generally lower grade facilities or resellers looking to sell extra space or aggregators who gather clients to enter them into a Tier 1 facility.
• Enterprises looking to co-locate the data center should stay away from these vendors and facilities as the service level are subpar when compared to Tier 2 facilities.
Tier 1 Vendors
Tier 2 Vendors
Tier 3 Vendors
Some enterprises may wish to explore the cloud as an option for outsourcing. While it is out of the scope for this solution set, Refer to Info-Tech’s Solution Set Build an Optimized Infrastructure-as-a-Service Internal Cloud for more information.
Info-Tech Research Article:
Snapshot of the market for co-location services
Co-location success is directly related to business need
Info-Tech Research Group 28
Fully Manage
d Service
sRecovery Services
Managed Services
Basic Co-location Services
Cos
t an
d se
rvic
e le
vel
55% of organizations that established a shopping list of services aligned with their business needs, were more likely to experience co-location success.
Enterprises find it difficult to sort through the commoditized services offered by vendors.
Whether or not a higher level of service is required at the time of selection, all levels of criteria are important for IT to include in the evaluation process.
Many organizations find themselves tied to a vendor that cannot support their growth and future service needs, which results in the need to change vendors and incur switching costs.
Infrastructure is a commodity these days. It is pretty difficult to differentiate sometimes. And those tier 2 guys, they were pretty much the same. One was just a couple hundred dollars a month more than the other. But there was really no difference in the facilities, no difference in the services that were available. No difference really in their ability to meet our needs if we decided to expand using their facilities. Made it difficult to decide Source – Director of IT, Semiconductor Manufacturing
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Selecting a basic services co-location vendor:Unique needs vs. commodity offerings
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Include additional criteria such as:• Primary and operational mirror site
locations.• Availability.• Carrier routes. • Additional power capacity in primary and
operational mirror sites.• Standby power in primary and operational
mirror sites.• Support and maintenance.• Power metering.• Monitoring and technical support.• Pricing.
Criteria
Geographical location
Pricing
Power capacity
Level of availability
A basic co-location service environment is a caged-space or rack infrastructure in a secure facility that is monitored and manned with full power (i.e. UPS, generators onsite, dual grid) and environmental management.
Typically, the customer relocates their existing server hardware into the facility and manages it themselves; however, the co-location provider may provide some basic services. Requirements that are specific to the business needs, such as geographical location, level of availability, and power capacity, can help to narrow the search for a co-location vendor.
24% of organizations engage in basic co-location services.
Info-Tech recommends that organizations entering into a co-location agreement for the first time start with a basic level of level of service.
Fully Managed
Services
Recovery
ServicesManaged
ServicesBasic Co-location Services
Basic co-location cost considerations should span fromshort-term to long-term engagements
Info-Tech Research Group 30
The following cost estimates and assumptions utilize aggregated cost information from a sampling of Info-Tech customers and are +/- 10% in accuracy.•1U of standard rack space, $80 per month
• 6U of standard rack space, $291 per month
•12 U of standard rack space, $621 per month
•42 U (or Full) of standard rack space, $690 per month
•110V 20A Circuit (‘A’ side/’B’ side included), $240 per month
•110V 30A Circuit (‘A’ side/’B’ side included), $360 per month
•208V 20A Circuit (‘A’ side/’B’ side included), $480 per month
•208V 30A Circuit (‘A’ side/’B’ side included), $720 per month
Explore costs for co-location engagements of 1 year, 3 years, and 5 years in the evaluation process
Monthly Co-location Cost
Monthly Power Cost / 110v 20A Circuit (“A side, B side”)
Monthly Power Cost/ 110V 30A Circuit (“A side, B side”)
Monthly Power Cost/ 208V 20A Circuit (“A side, B side”)
Monthly Power Cost/ 208V 30A Circuit (“A side, B side”)
Initial/Setup Fees
Other standard co-location options
Other standard power options
Establish a set of criteria for basic co-location services
Basic co-location services are the most commoditized offerings in the market. For this reason it is important that the organization determine the business requirements before seeking out vendors
Use Info-Tech’s “Co-location Basic Services Vendor selection Criteria Checklist” to help establish a set of criteria for the selection process.
This criteria checklist provides:
– Criteria items for consideration
– Full descriptions– Examples to use in the
RFP
Info-Tech Research Group 31
Manage your Managed Services
Info-Tech Research Group 32
Managed services offerings build upon basic co-location with added services provided by the vendor. The vendor typically provides Server-OS configuration and management , Server monitoring & reporting, Server back-up management which includes: scheduling, media handling, re-start, change control, incident handling, and limited ad-hoc restoration requests.
Fully Managed
Services
Recovery
ServicesManaged
ServicesBasic Co-location Services
Some examples of managed services selection criteria include:
Asset manageme
nt processes
Change Manageme
nt
Hardware provisionin
g procedures
Software configurati
on manageme
ntHardware configurati
on manageme
nt
Operational Support
Data manageme
nt
Remote access
Performance
management
Offsite storage
OS platforms
Hardware monitoring
Although managed services are becoming the entry level for many vendors, only 8% of organizations engage in managed services agreements.
Vendor pricing for managed services differs according to geography, services in scope, reporting, and responsibility
Info-Tech Research Group 33
Include costs for all types of servers (industry standards, Unix, Windows servers) in the cost evaluation process
Movement of company owned equipment into environment? (Initial/Setup Fees)
Movement of company owned equipment out of the environment? (Initial/Setup Fees)
Software Configuration Management Processes
Hardware Configuration Management Processes
Change Management Services/Processes
Management Reporting Processes
Operational Support for Servers
Operational Support for Network Equipment
Operational Support for Storage Environment
Offsite Tape Storage
ITRG has observed Managed Services pricing for:• Windows-based/Linux-based servers in a range
of $150 -$540 per month.
• Unix-based servers in a range of $240 - $950 per month.
• Estimated costs for the Managed Services on NetWare-based servers is based on Unix based server pricing.
Estimated costs include:• Server-OS configuration and management
(patching, MACs, change control, incident handling, remote-hands, etc).
• Server monitoring & reporting (real-time, basic utilization metrics from the server OS, SLA reporting, monthly distribution of reports)
• Server back-up (assume customer supplied Back-up/Restore solution not “full managed”, scheduling, media handling, re-start, change control, incident handling, and Ad-Hoc restoration service).
• Basic networking services and security services (NAT, IP sub-net, firewalls, etc).
Regardless of immediate need, IT should include managed services criteria in the vendor selection process
Managed services are becoming the entry point for many vendors. Understanding managed service offerings and expectations will help you to have better conversations with vendors.
Use Info-Tech’s “Co-location Managed Services Vendor Selection Criteria Checklist” to help establish a set of criteria for the selection process.
This criteria checklist provides:
– Criteria items for consideration.
– Full descriptions.– Examples to use in the
RFP.Info-Tech Research Group 34
Recovery Services can span fromcold site to full failover
Info-Tech Research Group 35
Co-location recovery services deliver high availability using replication and backup technologies to ensure continuity of the organizations’ operations. Recovery services provide a failover to another facility for business continuity in the case of a major outage including:
• Technology• Office space & resources• Infrastructure & amenities
Many organizations engage in co-location purely for recovery services; however, recovery services criteria can also be used to differentiate vendor offerings.
• Info-Tech found that 14% of organizations engage in recovery services.
Fully Managed
Services
Recovery
ServicesManaged
ServicesBasic Co-location Services
RTO & RPO
specifications
Recovery site ownership
Recovery si
te
locatio
nStandardizat
ion
Recovery terms and
procedures
Pricing
Some examples of recovery services criteria include:
Include recovery services criteria in the selection process to ensure that the vendor can support growth and future service needs.
Recovery services costs are influenced by thelevel of services required by the customer
Info-Tech Research Group 36
Include & specify level of services required in the cost evaluation process for recovery services
Configuration of Company’s Environment? (Initial/Setup Fees)
Recovery site Software Configuration Management Processes
Recovery site Hardware Configuration Management Processes
Recovery site Change Management Services/Processes
Recovery site Management Reporting Processes
Recovery site Operational Support for Servers
Recovery site Operational Support for Network Equipment
Recovery site Operational Support for Storage Environment
Offsite Tape Storage
Recovery Testing
Recovery Declaration
Recovery services costs can be significantly influenced based on:
• Geographic location • Services in scope • Reporting• Demarcation of roles
and responsibilities between vendor and customer
Evaluate costs for all server types and one-time provisioning and de-provisioning charges
Avoid a RFP disaster & include recovery services criteriain the selection process
Info-Tech Research Group 37
Many organizations cannot achieve the level of redundancy and business continuity that co-location recovery services can.
Use Info-Tech’s “Co-location Recovery Services Vendor Selection Criteria Checklist” to help establish a set of criteria for the vendor selection process.
This criteria checklist provides:
– Criteria items for consideration
– Full descriptions– Examples to use in the
RFP
Small-Mid sized organizations areavoiding fully managed services
Info-Tech Research Group 38
Fully managed services represents the highest level of service in a co-location environment and therefore highest cost. At this level of hosting, the client simply defines the business need through a requirements process that captures criticality, capacity, and growth plans for each application or service required.
Fully Managed
Services
Recovery
ServicesManaged
ServicesBasic Co-location Services
Fully managed services is a replacement of your infrastructure, not just a replacement for the facility.
• Fully managed services should only be explored by larger enterprises or enterprises that have outsourced to the co-location provider for at least a full contracts term of managed services.
• Fully managed services is a level of service that should be worked up to over a long period of time. In most cases, small to mid-sized organizations will never engage in this level of service.
Org
aniz
ati
onal Siz
e
Organizational Fit
Account management & service are key vendor differentiators
Info-Tech Research Group 39
Stability
Trust Communication
Account Management
Because basic services offered by data center co-
location vendors are largely commoditized, in the end,
the decision may come down to which vendor offers better account management
skills and service.
Engagement practices help to set expectations up front. Establish a criteria and evaluate vendors on practices, such as soliciting client references, aligning project management processes, and establishing channels of communication for the term of the contract to ensure a successful relationship.66% of organizations that co-locate all or part of their data center facility view the co-location relationship as a partnership and have experienced a successful engagement as a result
I think obviously the relationship with the vendor is going to be important particularly when you’re talking about your data; if your business is running entirely on that data. You want to make sure you have a solid relationship there particularly if it ever came down to any type of disaster recovery situation. Source – General Manager, PMP, Air Transport Security
“
“
Define internal expectations before approachingthe vendor on their engagement practices
Info-Tech Research Group40
After defining the organization’s requirements for co-location service offerings, expectations for the engagement methodology should be defined. Many organizations run into trouble in the co-location agreement when a vendor’s business practices and processes do no reflect that of their own.
Use Info-Tech’s “Co-location Engagement Vendor Selection Criteria Checklist” to help further define a set of criteria to differentiate offerings for the vendor selection process.
This criteria checklist provides:– Criteria items for consideration– Full descriptions– Examples to use in the RFP
Organizations should seek client references. As with most vendors, one way to get a better idea of how a co-location vendor really operates and manages its relationships is from other organization’s experiences with the vendor. Request client references to get an unbiased opinion and evaluation of vendor services to validate vendor claims.
Info-Tech Insight:
Organizations that properly plan, gather requirements & understand the business need, experience more
successful co-location engagements
Info-Tech Research Group 41
7%
5%
5%
5%
7%
16%
9%
9%
5%
5%
11%
10%
10%
13%
15%
7%
9% 41% 25%
Staff knowledgeable, friendly & helpful 23% 30% 23%
Defined escalation process 23% 30% 23%
Maintains level of service and availability
2% 12% 44% 26%
Security standards exceeds own capabilities 2% 18% 25% 41%
Dedicated resource to manage enterprise services 9% 25% 30%
Both parties view the agreement as a partnership
4
5
6=Strongly Agree
1=Strongly Disagree
2
3
Organizations that take the time to go through an evaluation process, experience high levels of success factors in their co-location arrangements.
While Security is a major deterrent for many organizations, 66% of respondents said that the security in the co-location facility exceeded the current security capabilities of the organization.
Case Study: Poor business requirements definitionleads to a poor co-location partnership
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Situation• A steel manufacturing company was faced with a divesture. The IT
operations and infrastructure manager was given 38 days to build a new data center facility. Recognizing that this wasn’t possible, the IT group decided to outsource their data center to a co-location vendor with the limited time they were given.Planning and Processes
• In a limited time frame, not only had to select a vendor and move their servers, but had to re-write every software and hardware contract, and implement a completely different WAN. Because IT did not have the suggested amount of planning time of a minimum of 3 months, they quickly chose a vendor to outsource their data center of 50 servers, skipping the requirements gathering and criteria definition phases altogether.Result
• After 2 years of outsourcing, the organization has been very dissatisfied with the co-location facility. While the facility has been “okay” in keeping the power, lights, and network on, the organization has a significant spend with the co-location facility - as they don’t just house their servers there, but the subscribe to a higher level of service that includes help desk ticketing, server management, network monitoring. These services have been done poorly according to the organization’s standards.
• The organization has decided to move out of the co-location facility and build their own data center, incurring significant switching costs, lost time, and effort.
Evaluate Vendor Offerings
Info-Tech Research Group 43
Evaluate Vendor
offerings
Align vendor offerings with
business requirements
Evaluate vendor proposals
Vendor Site Visits
Determine if a Co-location Strategy is a fit with the Business
Gather facility requirements and baseline cost information
Validate the Build vs. Buy Decision
Understand the market and vendor offerings
Review the Market
Basic Co-
location
Managed Services
Recovery Services
Engagement Practices
Manage the Relationship
Constructing Service Level Agreements
Assess the collocation relation on an annual basis
Co-location Vendor RFP Document
Future Facility
Requirements
Current Facility
Requirements
Established Service Criteria
Use an RFP to align co-location vendor offerings with
business requirements• 33% of organizations that
solicited vendors through an RFP process were more likely to experience success in their vendor selection and co-location engagement.
• Smaller engagements may only require an RFI; however, even if the size of the project does not warrant an RFP, it is still beneficial for the organization to go through the process internally to help further define their engagement requirements.
Info-Tech Research Group 44
The size and scope of the co-location RFP document sent to vendors should be consistent with the size and scope of the engagement to ensure vendor effort and participation.
Info-Tech Insight:
“ “The duration of the RFP process was about 2 ½ months. It took us a bit longer because of the co-ordination with the purchasing department. We had to negotiate and get them up to speed on what co-location was. It was those kinds of complications that took us longer. Source – IT Director, Semiconductor Manufacturing
Issue an RFP to gather required information from vendors & make a more informed decision
Info-Tech Research Group 45
After determining data center co-location selection criteria for the business, organizations embarking on the final selection process for a data center co-location vendor should issue an RFP to ensure they receive all the required information to make a final decision.
Use Info-Tech’s “Data Center Co-location RFP Template” to narrow down the search for a co-location vendor.
This Co-location RFP template includes:
– Terms and conditions of the RFP process.
– Co-location selection criteria. – Managed Services selection
criteria. – Recovery Services selection
criteria. – Vendor-Customer engagement
selection criteria.
Co-location vendor proposals should be evaluatedbased on a common scoring method
When the organization has received completed proposals back from co-location vendors, a common scoring method should be used to compare and evaluate each proposal to determine a short list of vendors.
Info-Tech Research Group 46
Use Info-Tech’s “Data Center Co-location Proposal Scorecard” to compare proposals and determine a shortlist of co-location vendors. The scorecard should align exactly with the RFP.
Use this Tool to:• Gather co-location
vendor proposal information in one document.
• Score each vendor based on proposal responses.
• Determine which vendors should move on to the next stage of vendor evaluation.
The devil’s in the details: Perform due diligence by conducting site visits
When a shortlist of co-location vendors has been determined, the organization should add an extra layer of due diligence, and conduct site visits to potential facilities to ensure they are both internally and externally secure and to validate vendor claims.
An organization can tell a lot about how the co-location engagement may end up by how well the facility is laid out and maintained.
62% of organizations conducted site visits to vendor locations before entering into an agreement, which results in a more successful co-location arrangement.
Info-Tech Research Group 47
Environmental Surroundings
Before the Visit
Facility & Maintenance
During the Visit
Reference Checks
After the Visit
Evaluation of the site should be conducted:
Mini-Case: Co-location Facility in Disaster’s Way
An organization about to move ahead with a co-
location vendor decided to visit the site before
solidifying the contract. The site visit revealed that the facility was located at the end of a small municipal
airport runway.
Do the homework before the site visit to ensure the location is stable and accessible
Researching the vendor’s site location ahead of time can uncover potential issues that may arise.
Any concerns regarding this site location may be a quick way to discard a vendor from the shortlist and can be addressed before the visit.
Info-Tech Research Group 48
Economic Stability• Financial Stability• Political Stability
Environmental Risk• Natural Disasters
Accessibility• Travel Infrastructure
Before the site visit, understand the facility’s surroundings:
• Is the city or country the site is located in economically stable?
• Is the city or country the site is located in politically stable?
• Is it in an area susceptible to natural threats? (i.e. severe winter storms, floods, hurricanes, tornadoes, and earth quakes)
• Is there a permanent FEMA presence in the geographical location?
• Is there unobstructed access to the location?
• Can the organization’s personnel and vendors get to the facility easily?
• Are there train stations, airports, and hotels nearby?
• Are fuel supplies able to get to the facility?
Evaluate the following before the site visit:
Be prepared & understand what to look forduring a co-location site visit
After a shortlist of co-location vendors has been determined, IT must still take the next steps to ensure that all due diligence has be covered.
Ensure that vendor claims are valid, and that facilities and surrounding areas are adequate for the organization’s data center co-location needs by conducting an evaluation of the site before, during, and after the site visits.
Use Info-Tech’s “Data Center Co-location Site Visit and Evaluation Checklist” to track and record impressions during the site visit.
The co-location site visit and evaluation checklist covers areas such as:• Physical security of the co-location site. • Facility upkeep and maintenance. • Facility Requirements
Info-Tech Research Group 49
For additional explanation of what to look for during a site visit, refer to the Info-Tech research note, “Data Center Co-location Vendor Validation & Site Evaluation.”
Manage the Outsourcing Agreement
Info-Tech Research Group 50
Evaluate Vendor
offerings
Align vendor offerings with
business requirements
Evaluate vendor proposals
Vendor Site Visits
Determine if a Co-location Strategy is a fit with the Business
Gather facility requirements and baseline cost information
Validate the Build vs. Buy Decision
Understand the market and vendor offerings
Review the Market
Basic Co-
location
Managed Services
Recovery Services
Engagement Practices
Manage the Relationship
Constructing Service Level Agreements
Assess the collocation relation on an annual basis
Negotiate SLAs carefully to ensure thatservice expectations are clear within an outsourcing relationship
Info-Tech Research Group 51
The development of an SLA must be based on performance standards and measurements already being met by the provider.
Co-location service providers should not be expected to adapt their standard in scope performance and monitoring processes to individual clients.
• If the provider does adapt standard processes; they may guarantee service levels beyond their actual capability, and will either reduce their penalties for missed targets or increase their price to provide themselves with insurance.
Most vendors will have a standard SLA, which reflects actual performance as the basis of negotiation.
• Because the customer cannot expect to negotiate major changes in performance targets without incurring additional costs, targets contained in the vendor’s basic SLAs must be examined closely to determine if they are adequate for the enterprise.
The opportunities in negotiating SLAs lie in improving performance reporting and increasing the penalties for missed targets. At the extreme, if the service provider falls too far behind in meeting the contracted SLA, it may be considered cause for terminating the contract, with significant penalties to the service provider..
Info-Tech Insight:
“You want that to be as smooth as possible by ensuring those relationships are in place but not just a handshake and a wink and a nod; but things like service level agreements; previously negotiated contracts; those types of documents that spell out roles and responsibilities. So there is not confusion or ambiguity when an event occurs. Source – General Manager, PMP, Air Transport Security
“
Co-location SLAs range from very simple to the very complex
Typical SLAs include the following components:• Service category (availability, response
time, throughput).• Acceptable range of service quality.• Definition of what is being measured.• Formula for calculating the measurement.• Credits and penalties for achieving targets.• Frequency and interval of measurement.
Info-Tech Research Group 52
The Higher the SLA Performance Levels
The Higher the Cost
The simplest form of SLA is the one that defines a service simply by availability or non-availability. More complex SLAs that require greater management overhead are also likely to be more expensive.
Objectives
• Match to the strategic needs of the business, including its everyday operating environment and risk factors. The service for which the agreement is being set should also be matched to the company’s strategic plan, so that it includes any necessary provisions for change.Requirements
• Set according to operational objectives, which may include cost savings, increased security, or improved efficiency. This will help to define specific performance needs and the level of service that must be available.Measurements and Metrics
• Must be clearly defined and matched to objectives and requirements.
Accountability• Defines the management structure in which
the agreement will operate. Clear statements of penalties and rewards must be provided.
A manageable SLA will determine objectives, refine requirements, set measurements, and establish accountability.
The customer & vendor must be clear about theirexpectations within a co-location engagement
Info-Tech Research Group 53
A Service Level Agreement (SLA) provides a definition of performance for a negotiated service. SLAs ensure accountability on the part of the service provider and also determine the price of the service.
In essence, the SLA defines the “product” that is being purchased, permitting the provider to rationalize resources to best meet the needs of varied clients, and permitting the buyer to ensure that business requirements are being met. The terms of a well-negotiated SLA will be balanced between defining the service expectations of the customer and limiting the liability of the provider.
Use Info-Tech’s “Co-location SLA & Service Definition Template” to understand and develop expectations on co-location vendor SLAs.
This Template provides:• Aggregated real world examples of a co-
location SLA and service definitions documents.• A basis to compare and negotiate vendor SLAs
Measurements & metrics used in defining a co-location SLA can vary widely
Depending on the service being provided and the required result, SLAs can be either quantitative or qualitative. Qualitative metrics must have a measurable component.
Info-Tech Research Group 54
• Availability of the service.• Access and response times.• Installation lead times.• Maintenance and support
response and resolution times.• Availability of dedicated support
staff.• Capacity, or volume handled
before performance degradation.• Reliability, or number of outages
over time, and how long it takes to recover.
• Efficiency, or increase in output or performance using the same resources.
• Strategic impact or impact on overall business objectives.
• Repetitive process rates, including error rates.
• Delivery, or timeliness and conformity to specifications.
• Billing dispute resolution time.• Account management
responsibilities.• Call answering, including wait
time, percentage of calls resolved on first contact, user satisfaction, and specific business relationship goals.
• Vendor resources, including turnover and improvements in service performance.
• Risk management, including control of volatility in buyer’s cost.
Specific metrics to define and include in an SLA are:
Co-location SLAs should be reviewed & managedat the very least on an annual basis
Info-Tech Research Group 55
The customer’s ongoing management of the SLA must go beyond strict performance measurement, and ensure that adequate communications are maintained between both parties.
There are four phases of ongoing management:
Measurement of the outsourced activity against agreed upon service levels
Examination of the results of measurements to identify
problems and pinpoint causes and areas of
potential failure
Remedial action to correct potential problems before
they occur, as well as handling any service lapses that fall within the scope of
the SLA
Continuously monitor the activity and performance
levels, maintaining adequate communication with the provider and providing
regular feedback
Ensure that the SLA, and any penalties it might impose, is contractually enforceable. Provisions for ending the relationship must also be included; these also generally have associated penalties.
There must be a contact point for problems related to the agreement, ongoing communications, service review. • 64% of organizations engaged in a co-
location agreement have a dedicated vendor resource responsible for managing their services.
The outsourcing service agreement and SLA require executive level buy-in, and a supporting management structure within both organizations.
• Establish regular communications channels
• Establish a reporting structure• Establish frequent meetings to ensure
that the service is moving in the desired direction, that problems are foreseen, and that any changes to the SLA or contract can be anticipated and agreed upon in advance.
Track & review the relationship with anannual contract assessment
Info-Tech Research Group 56
The customer’s ongoing management of the SLA and co-location relationship is essential for an ongoing successful engagement. The organization should conduct an annual contract assessment to review the co-location agreement and track vendor performance.
Use Info-Tech’s “Data Center Co-location Annual Contract Assessment Checklist” to review and manage co-location vendor performance.
This checklist provides review points for:• Primary co-location site availability• Monitoring & technical support of ;the
primary facility• Facility access• Hardware configuration• Software configuration management• Server availability• Change management processes• Facility maintenance
Understanding the two typical SLA management models
Info-Tech Research Group 57
SLA management by the vendor is most common, because it is applied to IT and network outsourcing, where service levels can be set according to well understood and standardized metrics.
The service provider may have a variety of different service levels at different costs, which serve as the basis for an SLA; individual or custom provisions are then added through negotiation, according to specific needs, or the base level SLA may be acceptable without change.
As SLAs and services become more complex, the tendency is shifting toward client management.
Even if the vendor has a management system in place, the client should perform some internal monitoring and establish management procedures. This can be further facilitated by the vendor providing the client access to the vendor’s monitoring software or portal.
Management involves monitoring performance levels and the vendor’s situation on an ongoing basis, periodically reviewing performance against objectives, and measuring performance against specific metrics agreed upon in the contract.
There must be a structure in place for regular reporting, and procedures for problem resolution need to be in place, including notification procedures and tools and procedures for analysis.
Finally, the SLA itself should be reviewed on an ongoing basis to ensure that provisions adequately respond to business process needs, account for changing technology, and meet financial goals.
Management by Vendor Management by Client
Financial penalties are a twig, not a stick
Info-Tech Research Group 58
The customer must hold vendors accountable for failure to meet performance targets. • The typical remedy for failure to
meet service targets is a refund of charges. A common approach seen in other customer agreements has a penalty defined as a percentage of current monthly costs.
Avoid seeking financial penalties for non-performance and focus on issue resolution. • Info-Tech recommends that
organizations avoid seeking specific percentage service credits for non-performance since experience shows that these do little to change vendor behavior. Instead, establishing a periodic review with the vendor will help to ensure that the service remains on track and that the two parties continue to be in agreement as to what is required. There must also be structures in place to resolve issues as they appear before the need for penalties are raised or the relationship goes sour.
Define relative impact on the organization
Determine relative impact score
Business Impact Assessment
Infrastructure funding and prioritization
Cost and services review
Assess the business impact resulting from any SLA non-performance by the vendor and avoid a time consuming exercise of defining penalties:
Case Study: Financial penalty for non-performance isnot worth the downtime
Info-Tech Research Group 59
Vendor primary site availability SLA. The approach might yield the following:
Any site/facility caused outage over 30 minutes in a given month the Vendor will refund 5% of the then current monthly ‘co-location’ fee. For any site/facility caused outage above 5 hours in a given month the Vendor will refund 30% of the then current monthly ‘co-location’ fee.
While that, at first glance, looks fairly reasonable it has no relationship to the actual impact on customers’ business. While a 30% service credit may seem like it could garner needed attention from a vendor, a $1,400 penalty would not be significant to the vendor or representative of the overall financial cost to a vendor. Further there would be no methodology for the customer to defend or extend the calculation to the other SLAs in the relationship.
• Customers specifically assess the business impact resulting from any SLA non-performance by the vendor and approach the ongoing management and governance with that weighted importance in mind.
• With most SLAs, the customer has the responsibility to make claims for financial rebates when performance targets are missed. The typical remedy for failure to meet service targets is a refund of charges.
• Carefully assessing whether the financial penalties for the provider are adequate and reflective of the relative impact on the enterprise is a straightforward impact assessment analysis.
Info-Tech recommends:
Summary
The decision on whether to co-locate all or part of the data center facility should be based on cost. If the organization decides to co-locate the facility,
time and effort are required to plan properly to ensure co-location engagement success.
Info-Tech Research Group 60
Use Info-Tech’s tools & process to ensure success in your co-location engagement:
Establish abusiness need
Gather facility requirements
Conduct a cost comparison
Establish a set of service
requirements
Develop an RFP
Score & compare vendors to
determine a shortlist
Conduct site visits
Negotiate SLAs
Manage the SLA and engagement
Appendix – Co-location Strategy Tools & Resources
Info-Tech Research Group 61
Evaluate Vendor
offerings
Data Center Co-location RFP Template
Data center Co-location Proposal Scorecard
Data Center Co-location vendor Validation & Site Evaluation
Determine if a Co-location Strategy is a fit with the Business
Data Center Power and Cooling Requirements Calculator
Data Center Facility Build versus Buy Tool
Understand the market and vendor offerings
Basic Co-location Criteria Selection Checklist
Managed Services
Criteria Selection Checklist
Recovery Services
Criteria Selection Checklist
Engagement Selection Checklist
Manage the Relationship
Co-location SLA and Service Definition Template
Co-location Annual Contract Assessment Checklist