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The hidden advantages of colocating IT

Colocating IT in specialist colocation data centres has some well-known benefits – power, redundancy, and compute density – but you’d be amazed at the hidden benefits that go well beyond IT alone.

A data centre may be a company’s most strategic asset, hosting the critical infrastructure that connects a business with its data, staff, customers, and suppliers – the essential ingredients to continuing business operations.

For business leaders, finding the right IT solutions and operating models is already a complex task, but it’s made more difficult by the ever-shifting sands of consumer behaviour and market conditions.

Finding the model that suits your organisation now, but importantly, will scale to support future needs is critical to a successful business.

It’s for this reason, CIOs are actively considering whether they keep running their own data centre inhouse or make the move to a colocation facility.

Colocation has evolved dramatically over the last 10 years, but as businesses convert more processes to digital workflows, they are realising that very high availability and reliability of data and applications can no longer be merely a target for IT but instead, it’s an imperative for business survivability.

Just 12 months ago 10% of organisations had already shut down their enterprise and on-premises data centres and moved their infrastructure to colocation facilities. Gartner predicts that by 2025, 80% of enterprises will have moved to colocation.

As businesses start to invest heavily in AI and machine learning to provide insights and optimisations based on their data assets, high performance is essential. Therefore, companies will rely on colocation facilities to provide most of the connectivity services and power-optimised facilities for edge-based AI investments.

The prevalent architecture being deployed in most companies – Hybrid IT – achieves radically improved performance by moving company infrastructure as close as possible to public cloud providers.

When company servers are locally and directly connected to public cloud and the wider IT stack located in the same data centre, hybrid architecture will naturally perform much better.

On top of enhanced performance and reliability, there are significant cost savings that can be made.

IDC predicts, by 2024, over 50% of IT spending will be for digital transformation and innovation, (up from 31% in 2018). The analyst explains in its Futurescape 2020 report: “This is a critical milestone for enterprise. For decades, leaders have worked steadily to increase the portion of IT spend dedicated to innovation, while decreasing the traditionally very large portion spent on maintaining existing systems.

“Over the next five years – as the portion of IT spend on innovation continues to rise – enterprises will shift the ‘keep the lights on‘ portion of budgets to external providers.”

However, while savings on traditional IT CAPEX/OPEX budgets can be significant, there can be major efficiencies in other aspects of a company’s operations that flow from newfound flexibility underpinned by colocation.

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Support high density computing

High density computing loads are on the rise, which poses a major challenge for privately owned data centres.

As workloads and compute grows, organisations are finding they can’t draw the power or provide adequate cooling to equipment within their city buildings, as they manage the increasing demand on their IT load.

Three years ago, an average rack of equipment might have needed 2-3kW (about the amount of electricity needed for a suburban house). That’s now increased to an average of ~5-6kW and in the next 3-4 years it will be more than 10kW per rack on average.

Physical IT equipment today is getting much smaller, more powerful and more efficient. A whole rack of yesterday’s IT equipment now fits into 10% of the space. This allows you to place 10x more computing power in one rack. One thing that hasn’t changed is the power consumption, meaning that while you can now use fewer racks, many on-premises data centres aren’t capable of providing this much power to a single rack.

Meanwhile, data volumes are growing up to 1000% per year, and in some cases, data being accumulated needs to be stored infinitely. Demand is isn’t slowing down either – IDC estimates that the installed base of storage capacity worldwide will grow to 6.8ZB this year, an increase of 16.6% over 2019, but over the course of the 2019-2024 forecast, the installed base of storage capacity is expected to achieve a compound annual growth rate of 17.8%.

The extra power and compute density needed to support this kind of environment simply can’t be supported by on-premises data centres. The only way that businesses of the future will be supported is from within a specialised facility, custom built to support the rising compute requirements of businesses.

Reap the efficiency dividend

Making the move from on-premises infrastructure to colocation presents an opportunity to dramatically improve efficiency.

Just as a cloud migration isn’t simply a ‘lift and shift’ of existing workloads but rather a re-think to take best advantage of cloud infrastructure, the same applies to colocation.

One of the advantages of moving your infrastructure into a colocation provider like NEXTDC, is they will help you right-size your environment, whilst helping you plan for the future.

This includes a re-think of your rack utilisation and investigation of opportunities to best use your rack space and eradicate unnecessary overspend. This is just one example of hidden savings that are surfaced from colocation.

For example, if your company has 20 racks, needing 1-2kW power each, NEXTDC will work with you to redesign your space, condensing your 20 racks into a smaller, higher density footprint.

Given NEXTDC’s business is data centres, your options and outcomes achieved are far greater than where you build and manage these spaces independently.

Specialist infrastructure like NEXTDC’s is purpose built, meaning you’ll never be met with power and cooling limitations. Your rack footprint will be designed with ‘no gaps’ – every space in the rack can be visualised, planned for, and powered and cooled efficiently.

Colocation solutions, by design, are meant to offer enhanced flexibility, meaning you can move your equipment into the data centre now, and expand when you need.

An on-premises data centre comes with heavy sunken costs, with operating expenses that will generally grow over time, whilst the asset continues to age and depreciate.

When you outsource this asset to a specialist whose core capability is data centres, the tables turn – CAPEX becomes OPEX, costs are predictable and planned and amortised over the length of your contract, and you maintain the same exemplary quality and service you signed up to, which is backed by a 100% service guarantee. There is no depreciation of your data centre asset – instead, longer-term gains are made.

Optimise your application costs

After experiencing the initial flush of success with the infinite elasticity of cloud, many organisations quickly discovered that cloud costs can mount up and performance can be impeded for some application types. As a result, many have begun to re-evaluate their cloud strategy and build a ‘fit for purpose’ model, to better support cost and quality objectives.

In some cases, it makes sense to move some of the critical workloads back to privately hosted infrastructure. For example, where applications have high volumes of read/writes, the cost of data being transferred out of cloud applications can accumulate quickly.

Equally, for more data-intense workloads, some achieve better quality of service running it on their own infrastructure.

Regardless of whether you opt for cloud-based workloads or host them in your own infrastructure, running those workloads in a digitally interconnected data centre means your infrastructure is housed literally right next door to the public cloud providers, enabling you to connect directly into them.

Where you are running Hybrid IT workloads, ensuring your entire Hybrid environment is interconnected and performing at its peak across the one Local Area Network alongside your public clouds represents powerful performance and cost advantages.

Meeting today’s needs with interconnectivity

A chain is only as good as its weakest link – and in the case of hybrid IT, the weakest link often proves to be the network that binds a company’s corporate IT infrastructure to its IT services and public cloud platforms.

High performance WAN connectivity is expensive and the ever-increasing production of data, spread across distributed locations and a multitude of applications means it is only going to increase.

Put simply, ultrafast interconnectivity is the plumbing that hybrid IT architecture needs to thrive. It’s a key driver of growth for digital businesses. If the underlying interconnectivity strategy is an afterthought, the downstream effects result in poor application performance, increased carrier costs as you try to buy more WAN connectivity, and a poor user/customer experience.

Technology has been a pivotal driver behind the growth and optimisation of business, and society as a whole. The driving force behind the growth and acceleration of technology, is interconnection. It’s the glue that brings it all together, creating one integrated and interoperable environment all within the same four walls. Without interconnection, technology is just that – individual points of technology.

Once your infrastructure is colocated in a specialist data centre, that issue of constrained WAN capacity across hybrid architecture goes away.

The last thing any company needs are barriers to effective communication, increased network jitter leading to poor user and customer experience and ultimately lost revenue as customers decide to go to someone who can provide a smoother experience.

At NEXTDC, your colocated IT is interconnected to all major public cloud platforms and the wider ICT technology community via a dedicated Cross Connect. This enables more efficient movements of data, at the highest levels of performance and the lowest latency, between your clouds, networks, and ICT services.

Your connectivity strategy is one of the most critical factors to get right, to ensure your business is always moving in the right direction in the most efficient and effective way possible. But when you colocate your IT, it’s one of the easiest challenges to overcome.

Make your business more resilient

Business resilience is essential for your business’ survival through major disruption, whether that’s a pandemic, bushfires, changing market conditions or other unexpected events.

The ability to adapt and respond quickly to business disruptions, protecting your people and assets, while maintaining continuous business operations is what sets market leaders apart.

The flexibility and redundancy of a colocation environment is a key contributor to organisations being able to think and act quick on their feet. When the situation hits the fan and capacity and enhanced connectivity needs to be adjusted rapidly to support the current conditions, it happens almost instantly in a colocation data centre than in a company’s own data centre where lead times stretch to weeks or months (if at all).

Likewise, having on-premises architecture situated literally next to major public clouds means workloads can be ported to cloud infrastructure with elastic capability.

The ability to make these scaling changes quickly supports the workforce in being able to respond with agility to changing conditions. For example, for staff working from home or out in the field who require remote access of applications and collaboration technologies, the response from a colocated IT infrastructure is far greater.

Support for a safety-first workforce

Companies have a duty of care to do everything they can to ensure their people remain safe – despite the circumstances. COVID-19 is a prime example.

Worksafe Australia states, “All currently operating businesses must assess the risks associated with exposure to COVID-19 and implement control measures to manage those risks. They must also assess any other new or changed risks arising from COVID-19, for example, customer aggression, high work demand or working in isolation.”

These factors have led to business assessing their options, to ensure their team work safely, yet successfully and productively.

“One of the biggest changes we’ve experienced this year is the rapid shift of businesses moving to support their IT team and their infrastructure remotely by moving on-premises infrastructure into a colocation data centre. This enabled them to instantly limit physical staff movements and ensure their safety, whilst maintaining optimal business operations 24/7,” explained Martin, Head of Channel and Partnerships at NEXTDC.

The highly redundant infrastructure in the data centre will make it less likely that systems need to be physically touched, but if they do, customers have instant access to a team of specialised data centre technicians to get any work done that your internal team would normally need to do.

Maximise workforce flexibility

With up to 90% of most workforces currently working from home and many organisations gearing up to support remote working on a more permanent basis, workers are reliant on the ability to access the data and applications they need to continue performing their roles.

Until recently, a completely remote workforce was likely never an option for most companies. VPNs are often designed to connect a worker to the corporate network first and then back out to applications running on public cloud. This architecture compounds network latency and leads to poor performance and frustrated employees.

COVID-19 has exposed an unexpected silver lining of proving that the workforce can be productive and work successfully from home full-time. Major companies surveying their staff are seeing eye-opening results: high proportions of staff are saying they are happy to work from home most of the time and only come in to the office to use shared collaboration spaces with their teams.

Even when companies do reopen their offices, the duty of care of employers means that as long as COVID-19 is a threat to safety, the workplace won’t look the same as it has – workers will need to be more individually segregated, and social distancing will mean lower density of staff can be accommodated in the same amount of space.

As a direct result, many businesses are choosing to close surplus office buildings or downsize their office because they’re predicting that 30-50% of their staff will continue to work from home more permanently.

Colocation plays a huge role in supporting this rapid change in workforce needs. If your corporate IT is anchored at your office location it will continue to act as your ‘Achilles heel’, making moving to a different or smaller office significantly harder.

With the rollout of the NBN complete and the rise in online collaboration platforms, many companies are even considering the benefits of tapping into a geographically diverse workforce.

Rather than being limited to the metro workforce in their state, the opportunity now exists to mine the much broader talent pool that includes regional areas across the country – rather than being limited to the highly contested CBD talent pool in their city.

We find ourselves living in a business climate where flexibility is the new norm. And colocated IT means maximum workforce flexibility for Australian companies.

Making the connection

As you look to better align your Hybrid Cloud architecture to enable your business strategy, NEXTDC can help support your objectives of building flexibility, versatility and resilience into your environment, allowing you to save money on the total economic impact of in-house infrastructure.

The money you can save on unnecessary real estate and inefficient network links will free you up to make the final push to complete digitisation of your business.

Talk to NEXTDC to find out how you can optimise your hybrid IT architecture for maximum performance, minimum friction, and improved customer experience.

Contact NEXTDC

Resource Centre

  • DIRECT CLOUD INTERCONNECTION

  • DIGITAL RESILIENCE;
    RE-IMAGINING BUSINESS

  • CUSTOMER STORIES
    CENTORRINO TECHNOLOGIES

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