Build, Lease or Collaborate?
April 2008

IPP Consulting Pty Ltd is Australia’s leading consulting firm specialising in data centre strategy, concept, design, tender and commissioning – including specialist packages such as security, cable and EMS.

As such, some of our most commonly asked questions include those involving the concept of whether to build, lease or collaborate on provisioning a new data centre.  When you combine the requirements for high availability computing with the complexities of planning to meet aggressive energy consumption growth (due to rapidly changing technology), businesses face some very large capital and operating cost decisions.  Hence, the decisions around procurement methodologies for Data Centres are very important to all organisations.

So which of three available options is the right choice for your business - a Purpose-Built Solution, Leased Space or a Collaborative Venture? Of course the correct answer must consider the complexity of technology support requirements, closely coupled with level of ICT process maturity in your business. Careful analysis of these factors will allow you to minimise both capital outlay and operating costs, while providing the appropriate service levels to meet business needs.

Consider the following ICT operational attributes that support the selection of a particular approach:

Purpose-Built Solution

• Allows for specialised organisational facility design requirements (e.g. super-computing, security, developmental, experimental etc.)
• Requires a sound technology roadmap indicating future projected ICT infrastructure requirements, particularly in terms of likely future space, power consumption & heat generation parameters
• Requires mature in-house operational capability
• Requires an available capital budget
• Usually requires a long lead-time arrangement and major project capability from organisational properties/facilities departments
• Allows options for sub-leasing space to recoup some initial investment or recurrent operating costs

Leased Space

• Fills short-term or interim needs
• Provides for flexible DR requirements
• Allows a gradual migration to a centralised IT Infrastructure
• Often provides levels of service and redundancy above that affordable by the organisation
• Does require an organisation to work within a set of pre-agreed “site rules”
• Can potentially be a security risk due to shared tenancy arrangements
• Replaces capital and operational budget with operational lease fee only

Collaborative Venture

• Can allow for economy-of-scale to come into play (i.e. one large site may be cheaper to establish and run per sm than three small sites)
• Requires some compromises, which may be expensive (i.e. the highest common denominator may become the minimum accepted design parameter)
• Provides for much more flexibility over time than either Leased Space or Purpose Built solutions usually can
• Requires an available capital budget
• Usually requires a longer lead-time arrangement than either Leased Space or Purpose Built solutions, due to the complexities inherent in arranging inter-organisational agreements
• Can leverage advantages from one partner to the next (e.g. one organisation experienced at developing large capital projects partnering with another that has sound operational management expertise).

IPP’s approach to establishing a suitable technology accommodation environment begins with a detailed requirements briefing process, which leads through to concept and detailed design phases, tender process management, construction-related consulting services and data centre relocations project management.

About IPP Consulting

IPP Consulting is a dynamic Australian consulting firm, specialising in information technology, risk and security solutions.  Founded in 1986, IPP Consulting today is a leading independent consulting firm in several global markets. IPP is headquartered in Melbourne, Australia with projects throughout Europe and Asia. For more information, visit http://www.ipp.com.au/.

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