Hard numbers that prove colocation works

When you ask a vendor to list its biggest competitors, you expect it to list several other vendors.  What you don’t usually expect is for the vendor to name the CIO or the IT staff of prospective client organizations.

However, in the colocation market, there is a widespread assumption in many organizations that outsourcing their server inventory will lead to existing IT staff becoming redundant and eventually laid off.  This fear of job loss has made many CIOs and IT decision makers reluctant to suggest colocation as a data center solution.

The reality though, is that most in-house IT departments simply do not have the specialized knowledge necessary to effectively run a data center, and by attempting to do so, they are making a costly mistake. Info-Tech Research Group’s recently published Vendor Landscape: Canadian Co-location/Managed Services, shows that over 64% of organizations currently engage insome form of colocation – and instead of this leading to job loss, it allows IT to re-focus their attention on other projects.

Additionally, Info-Tech found that 81% of organizations that did not colocate had concerns about privacy and security in the colocation facility; however, 84% of organizations that successfully colocated infrastructure stated that the facility security standards exceeded the current security capabilities of the organization. So CIOs and IT staff need not fear colocation, but instead, consider it something to augment their existing IT capabilities.

Most small to mid-sized organizations are following a particular logic in their colocation trajectory.  They start out by relocating several of their servers into a colocation facility, but they still retain control of the management. Depending on how this experience goes, they often begin to outsource more and more of the management of their servers, until they are entering the territory of managed services or IaaS (Infrastructure as a Service) offerings.  The relationship is, therefore, an evolving one that usually begins with simple colocation, and leads to a hybrid of offerings. Vendors that do not provide this hybrid approach to their services are missing the mark for Canada’s mid-sized enterprises.

The colocation relationship is a long-term one in which the customers become more and more entrenched, and switching vendors becomes more difficult – and costly – as time goes by.  Customers choosing to engage in colocation or managed services should be particularly diligent when choosing their vendors.  Info-Tech has found that those customers who carefully gather facility requirements, do cost comparisons, model expected costs over six years, define their business expectations, send out RPFs, and conduct site visits are more likely to experience positive relationships than those who make quick decisions.

When working with a vendor, remaining engaged and managing the relationship is an incredibly important part of the process, as well as a big predictor of success.  Those customers who ‘set it and forget it’ often complain about disappointing results, so starting out with a well-negotiated Service Level Agreement (SLA) and performing an annual assessment of vendorperformance is essential.  Engagement needs to consist of more than just lunch with the account manager, review changes that have been made, how they worked, and address future plans on both the vendor’s side and the customer’s side. Info-Tech has found that the governance process takes at least 0.7 FTEs to manage the engagement and to ensure that the relationship moves in a positive direction. How engaged you are, and in turn, how engaged your vendor is, will determine the direction of the relationship, so choose wisely and include engagement practices in your vendor choice.

Continue the colocation conversation by downloading the free white paper, ‘Improving Operational Efficiencies  Through IP Managed Services.’

Image by Telehouse America