CFO Crunch: Analysts Say Modular Makes Sense, Cents

A number of well-regarded analyst organizations have recently published reports assessing the costs and benefits of traditional raised-floor versus modular data centers. Specifically, recent reports from Forrester (Build Or Colocate? The ROI Of Your Next Data Center) and DCD Intelligence (Assessing the Cost: Modular versus Traditional Build). In both cases, analysts conclude that across the lifecycle, modular data centers provide more benefits – and lower costs – than traditional data centers.

Why data center cost effectiveness matters for the CFO: The digital universe is growing exponentially as we all rely more heavily on data in every aspect of our lives. That means that the data center plays an ever-larger role in enterprise operations. From the perspective of the CFO, who has to figure out how to fund this expansion without significant increases to the IT budget, the cost-effectiveness of the data center is critical.

“Be honest: What other technology investment will cost tens to hundreds of millions of dollars to provision and maintain over its lifetime? Unfortunately, technology and business leaders do not fully understand the true costs and risks associated with building and operating a data center before they commit to that path.”

–Forrester

Is there a solution that allows CFOs to fund huge expansion in IT without huge increases in budget?  Yes. We call it Data Center 2.0: software defined, standardized data center modules (IO.Anywhere)  that can live on any premise, and are controlled by a true data center operating system ( IO.OS).  Analysts look at it this way:

Analysts’ top 5 benefits of modular data centers

1.      Faster deployment times and lower deployment costs – Whereas a traditional data center deployment might take 2 years, according to Forrester “The total procurement time of [modular] units usually can be measured in weeks to months.” In addition, DCD Intelligence finds that deployment costs are 13-14% lower for modular data centers (IO Singapore moved from concept to operation in less than six months, and we can tell you that deployment cost savings can be even greater when you’e working with a standardized product).

2.      Reduced risk (CapEx become OpEx) – The modular data center, according to Forrester, represents a “flexible and risk-adverse capital expenditure model.” According to DCD Intelligence, “Modular facilities can be deployed quickly and incrementally in response to rising demand for additional IT resources. This reduces the amount of capital which needs to be spent upfront. For example, rather than allocating US$80 million upfront to a new data centre deployment project – a scenario common to traditional build approaches – organisations can choose to purchase ten US$8 million modules as their requirements grow.”

3.      Greater energy efficiency – According to DCD Intelligence, the energy costs associated with operation of a 1 MW modular data center are 18.5% lower than energy costs for a 1 MW traditional data center—and this is an absolute minimum, because by definition,  thinner-sliced deployments  use less energy. Forrester cites the “more predictable power usage and better PUE” associated with modular data centers as drivers of lower energy costs.

4.      Customizability – Forrester also cites “the option to customize by module” as a significant benefit. Indeed, a modular data center worth its name should permit a high level of customization. IO.Anywhere modules can be configured with custom cooling, resiliency and utilization levels, all provisioned as needed by application.

5.      Management flexibility – Forrester references the “easily outsourced management of the module” as a source of lower costs associated with modular data centers. DCD Intelligence explains that, in addition, “Unlike maintenance [of] traditional data centres, whose many hardware and software components are supported by different suppliers, the fully-integrated nature of modular solutions makes it easier for operators to identify the vendor responsible for specific issues. In some cases, modular vendors strengthen their ability to provide maintenance support by working with a network of partners.” .

Considered in aggregate, the greater benefits and lower costs that analysts associate with modular data centers over traditional data centers are quite substantial. Measuring aggregate costs across 15 years, Forrester found that the total cost of a 2 MW modular data center is $77.1 million ($46 million NPV). The total cost of a 2 MW traditional data center is almost double: $127.4 million ($89.9 million NPV).

At the end of the day, the discussion about modular v. traditional costs and benefits is about stretching your IT dollars and making wise investments that will allow the enterprise to stay ahead of burgeoning data demand. But there’s a longer-term view at play as well: the more cost-effective the data center is – the more IT can do with less – the more money available for recruitment, R&D, product development…other activities that drive your enterprise forward.

In other words, the real potential of the data center will be realized when software truly defines the hardware; we’re not talking about the monitoring that DCIM provides…we are talking about a true data center operating system that moves beyond monitoring to control—of components, of workloads, of expenditures.   We are talking about IO.OS, which is already achieving these aims.