How to Calculate Data Center TCO

While a data center provides business-critical support to an enterprise, cost is still a factor. Of course, you don’t want to skimp on quality and reliability, but budgets still need to be respected if a business is to be profitable overall.

Data center TCO or total cost of ownership can include many items with a mix of initial/fixed costs and ongoing operational charges. For many organizations, a spreadsheet model is the way to tackle the issue. So, what should go into such a TCO spreadsheet?

Are You Sure You’ve Included Everything?

It’s not always easy to be certain that your model of your total cost of ownership of a data center contains all the necessary information. When the bills come in afterward, you can adjust and refine your model, but it’s better to avoid surprises in the first place.

Some IT equipment vendors offer Microsoft Excel models to show how new technology can reduce overall costs. These can help as part of the solution but may focus on specific aspects, rather than telling the whole story. By comparison, a more general list of cost drivers includes:

• Cooling equipment
• Electricity
• Engineering and installation
• Power equipment
• Project management
• Racks
• Service
• Space
• System monitoring

These costs may also vary individually according to whether you are constructing your own data center or buying one that has already been built. However, they do not include the costs of IT compute, meaning your systems, servers, data storage solutions, and staff to look after them.

What Really Makes Data Center TCO Go Up or Down

Spreadsheets are good tools for trying out different assumptions and scenarios (‘what-if’ modeling.) However, some major factors are sometimes ignored because ‘spreadsheet myopia’ is a common ailment.

Oversizing, for example, can significantly inflate a budget. Because of the dire consequences of having too little capacity, businesses often err on the side of caution and start by spending considerably more than they need.

Time is Money Too

The time you and your colleagues spend on figuring out all the ‘stuff’ required to design, dimension, and run data center facilities correctly is already a cost. It can be accounted for in your calculations, but other important time-related factors may be more difficult to model.

For example, the delay in building a data center can significantly impact an enterprise as a whole if current IT capacity is already stretched.

Do You Really Want to Do This?

Understanding data center TCO, even at a basic level, can be helpful because it allows you to compare with other solutions, such as data center colocation.

Whether or not you then choose to dive into the details of a do-it-yourself solution will depend on your business requirements. On the other hand, a colocation service provider has already done the costing and spreadsheet analysis in order to present a customer with a pricing schedule that should make sense for both of them.

Which spreadsheet have you used to evaluate TCO for your own data center needs? Share your experience with us in the Comments section for this article!

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