4 Cs: A General Framework for the CIO’s Build v. Buy IT Infrastructure Decision

IO Phoenix Colocation Data Center

From an infrastructure perspective there are broadly four models by which a CIO can meet the enterprise’s IT needs:

1. With an on-premises, custom-built legacy data center

2. With an on-premises, modular data center

3. With owned IT infrastructure colocated at a provider’s data center

4. Through Cloud IT infrastructure located with and managed by a Cloud provider

One of those (#1) is a “build” option; the other three (#2, #3, #4) are “buy” options. So the first step in the IT infrastructure decision making process is to answer the question: Build or Buy?

An increasing number of CIOs are opting to buy instead of build. According to research conducted by Nemertes Research and published by Data Center Knowledge, in 2012 roughly 8.75% of total enterprise data center space was in colocation; that total was projected to increase to 14.11% by 2015. And that doesn’t include the other “buy” options: the on-premises modular data center (a “buy” option because it is largely standardized and delivered in manufactured units); and Cloud. CIOs are choosing those options at an increasingly fast pace as well.

Of course, what’s good for one is not good for all. Each Build v. Buy decision must be made with consideration of the enterprise’s current IT infrastructure, and its needs for the future. So how, broadly, does a smart CIO go about making the Build or Buy decision? The decision may be influenced by four factors (as detailed in To Build or Not to Build, Part IIby 451 Research and excerpted here).

1. Choice

Outside of the top markets, is there suitable data center capacity (power, space, network connectivity) available? If so, do those data centers have the necessary security or compliance (e.g., HIPAA, PCI) to accommodate the needs of the business, its applications, and users?

2. Capital

Does the business have access to the capital required to build a data center? Does investing that capital in building a data center provide a greater benefit than investing in other equipment or activities that could more directly boost revenue? While an on-premises, modular data center — infrastructure option #2 above — does require capital, the considerations are quite different than they are for an on-premises, custom-built legacy data center. Over the life of the data center, modular is a more efficient, less capital-intensive decision for all the reasons DCD Intelligence identified when coming to the same conclusion.

3. Connectivity

Is low latency a requirement? How important is network speed to the end user? Is resiliency and access to multiple network carriers required? The high cost of establishing and building in robust network connectivity often leads organizations to buying IT capacity from a provider that has access and availability built in.

4. Cloud

Being able to consume the compute and applications on demand and only pay for what is used is increasingly appealing to enterprises. Evaluating whether to utilize public cloud services or build out private cloud capabilities, the CIO must consider the capabilities of existing staff and appetite for the business to procure, license, and manage IT infrastructure as technology continues to evolve.

When considering whether to Build or Buy (and *how* to build or buy), the CIO must sit down with the CFO and CEO and consider Choice, Capital, Connectivity, and Cloud as a framework for the Build or Buy decision making process.

DISCLAIMER: This document is for reference purposes only. The information contained herein should not be relied on and neither IO Data Centers, LLC nor any of its affiliates makes any warranties or representations as to its accuracy.