Your Data Center Hosting Provider is Stealing Your Money

Well, stealing is a strong word. What is happening however is that traditional data center hosting providers are getting in the way of thousands of small to medium sized businesses as it relates to realizing the true energy based cost savings associated with virtualization. Virtualization has changed many aspects of the traditional IT infrastructure and fostered innovations in all areas of traditional infrastructure service provision. What has not kept pace is innovation and investment on the part of data center hosting providers in facilities infrastructure geared towards delivering services such as power and cooling in a fashion that is aligned with the new realities of virtualized IT computing loads. This is directly limiting the ability of small to midsized companies who host their IT environment in these data centers to fully realize the total energy savings that virtualization can provide. In the following paragraphs I will provide a summary of APC white Paper 118 which does an excellent job of explaining how the total energy savings from virtualization is dependent on a realignment of data center infrastructure to meet the needs of a reduced and consolidated IT load. I will point out exactly where small to midsized organizations hosting there IT load in traditional hosting providers facilities are leaving money on the table as a result of their hosting providers in-action.

The following diagram demonstrates the primary sources of energy consumption in a data center. The support power represents energy that is lost due to the inefficiency of data center physical infrastructure such as power and cooling systems. This is energy that is consumed in the operation of the equipment itself rather than being transferred to the IT load and being used for useful computing work.



After you virtualize your server environment, your IT load will decrease. This decrease will make the PUE of the data center worse due to inefficiencies caused by a physical infrastructure continuing to operate at what is now over capacity for the new virtualized IT load.



So while a decrease in energy cost due to IT load consolidation and virtualization is certainly positive, it is only a fraction of the overall savings possible. The total energy savings made possible by virtualization can only be achieved if the data center physical infrastructure is re-architected to be more allinged with the new realities of virtualized IT loads.



Specific recommendations for changes to data center physical infrastructure to achieve a closer alignment of physical infrastructure services with virtual IT loads can be found in APC white paper 126.

In all fairness to hosting providers, realizing some of the efficiency gains of re-architecting physical infrastructure is a true challenge in an environment inherently designed to provide shared service across many organizations with unique IT loads, peak demand periods and degrees of virtualization and consolidation. Looking from the point of view of a mid-sized IT organization that has diligently virtualized and reduced IT load requirements only to find themselves “trapped” by existing power circuit contracts or by an inflexible hosting provider who has not invested in physical infrastructure innovation reveals a logical degree of frustration. In any market such as data center hosting where the barrier to entry is high due to large capital expenditure requirements, innovation by market leaders tends to be slow. What is needed is a new type of hosting provider built from the ground up to provide modern, flexible solutions such as “pay by the drink” for power services and individualized cooling solutions through innovations like row based cooling while maintaining independence from the overall environment of the data center.



Should traditional hosting providers fail to make these innovations then no doubt, a new breed of more agile competitors, unburdened by large historical capital investments in dated infrastructure will emerge and force fundamental change in the hosting industry. Mid-sized customers may also find the additional value hosting services provide such as physical security to longer be enough to prevent them from investing in their own facilities where they can innovate themselves and keep all the gains. Virtualization has changed almost everything with respect to IT infrastructure service delivery, it is time for hosting providers to catch up.

A Simple Offshoring Model

I recently had the opportunity to travel to India to meet with a large provider of IT services. The purpose of the trip was to understand how best to work with this organization to deliver additional resources and thus business results to my organization. Some of the questions that needed answering where: When does it make sense to utilize offshore IT resources?, What is the best way to run projects using offshore service providers?, What are the criteria for deciding if a particular project is a fit for the utilization of offshore resources? What follows is a model I created based on my observations and peer discussions. This model has in it some implicit lessons learned from this particular trip as well as previous project experiences. The model is fairly self describing. The underlying principals are that projects with a high dependence on institutional knowledge require greater in-house resource involvement whereas projects that involve more standard business processes or technology are better fits for the utilization of offshore resources. Also, larger projects lend themselves better to the utilization of offshore resources due to the inherent overhead involved in managing offshore resources. Most IT managers will likely find this a common sense line of reasoning, the model simply provides a simple and clear representation of this logic.