Evaluating Data Center Colocation Options: Expert Tips

If you're in the market for new or additional data center space, I have some advice that can help you make better decisions, save money, and avoid some pitfalls. 

For example, a company found what at first seemed like the one of the most affordable spaces around, but after I asked the colocation provider a few pointed questions (actually, it was more like 70), it turned out to be one of the most expensive. Once the provider was pinned down and the customer's true requirements were taken into account, it turned out that all the power charges were vastly underestimated and the simple, 1,000 square foot / 120KW facility would have cost the customer about 250 percent more than he originally thought, amounting to an extra $1.6 million over the first five years of tenancy.

That's a lot of money.

So my advice has two parts:

1. Try to keep more than one target space in the mix until the deal is done.  Even if you are actively negotiating with your first choice, it pays to have a backup option.  At minimum, this will allow you to negotiate without feeling trapped and provides a solid plan 'B' plan should the preferred space become unavailable -- or too costly upon full discovery. 

2. Go into negotiations armed with a trusty sword of skepticism.  As Ronald Reagan said many years ago, "Trust, but verify."  And since you and your company will be living with this decision for at least 5 to10 years, it's very important to understand the details and long term impact of your agreement with your data center provider. It's always a mistake to view them as IT consultants who are there to help you.  Their goal is to get you to commit to their space and lock you in while they retain the flexibility to increase their rates over the long term. This is not because they're bad guys. This is simply their business. You'd do the same.

Here are some of the colocation gambits that will end up costing you:

The Shell Game: As you know, total facility fees include rent, power (utility) and a power surcharge that covers cooling, humidification, UPS (to avoid spikes and dips), etc. An inefficient facility will look very expensive and risky based on this surcharge, which could amount to one-to-two times as much as the cost of the actual metered power usage.  So as not to scare off prospective customers, some operators may try to hide a percentage of this cost (that comes from their own inefficiency) by burying it in your lease charge.

This would not be an issue were this a fixed cost, but more often than not the lease is subject to annual escalations. So you need to make sure you understand your provider's true operating expenses, pass through charges and cost escalation terms in order to have some degree of cost predictability going forward.

Convenient Laziness: I've seen this happen this way: You put out an RFP with very specific questions, such as, "Does your proposal include redundant power feeds?" The bidder provides a one page summary of its expected charges and then replies to your question about backup power by writing, "See quote."  When you look at the quote, you see a line item for redundant power. So does that answer your question? Maybe yes, maybe no. The quote may refer only to the UPS battery backup on the primary line and not to the second power feed into the building that's required for Tier 3 facilities.

So, at best, it takes a lot of digging and hard work on your side to interpret the

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