Enterprise CIODecisions - TechTarget

ENTERPRISE CIO DECISIONS • SEPTEMBER 2010 1

INSIDE

ConferenceRooms asData Centers?

One on One:Data CenterDesign Lesson

To Ownor Rent?

Lock inColocationPrices Now

Public vs.Private Clouds

SEPTEMBER 2010 VOLUME 4

Data Centers:Owning vs.OutsourcingMany factors are causingCIOs to wonder whichis better: Colocation,cloud computingor maintaining yourown data center?

EnterpriseCIODecisions

Guiding technology decision makers in the enterprise

UNLESS YOU ARE Google and have theresources to build your own giganticdata centers, you probably wrestlewith the same questions as everyoneelse: What’s the best way to run mydata center? Where is the best placeto put it? The decisions aren’t easyones in this post-meltdown economy,rife with lingering uncertainty.

Data center colocation became anattractive option as markets fell andbudgets disappeared in recent years.Now, as the economy is emerging—albeit slowly—from the downturn, it’sturning out that colocation is still agood option, according to CIOs andexperts we talked to in this month’sEnterprise CIO Decisions Ezine.

Inside, SearchCIO.comSenior NewsWriter Linda Tucci reports that de-mand has not slowed, forcing somecolocation providers to get toughwith service plans and prices. “Weare seeing organizations that neverlooked to colocation before, such ascity governments, in the market,” saidBrooke Guthrie, manager of productand business management at CDWLLC. “A lot of organizations that pre-viously would have preferred to spendtheir own capital and build a $10 mil-lion data center are opting for coloca-tion because they are not able tomake

those investments themselves.”One course of action: Lock in

prices now or opt for a higher level ofservice, which makes the providershappy and is still a bargain for grow-ing companies that have no plans tobuild out infrastructure themselves.

Colocation services are not forevery company, to be sure, as ROIcan be elusive. In a state the size ofTexas, Tom Gainer, CIO at FirstBankSouthwest, based in Amarillo, saysit’s hard to be close to anything.“Colocation for us did not have theROI that made it a compelling case,”Gainer told Tucci.

Also in this issue, read LauraSmith’s article about how some CIOswho choose to build their own datacenters are moving toward moremodular solutions. In addition, pri-vate clouds are becoming the modelof choice for companies that wantthe flexibility of the cloud, but not themanagement headaches that goalong with it. �

SCOT PETERSEN

Editorial DirectorCIO/IT Strategy [email protected]


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Whose Data CenterIs It, Anyway?

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1 NEWS, VIEWS AND REVIEWS FORSENIOR TECHNOLOGY MANAGERS

UpFrontNews, views and reviews

for senior technologymanagers

OONN TTHHEE JJOOBB

conference roomsas data centers?IT DEPARTMENTS looking to provideself-service cloud provisioningwould do well to remember thebeast unleashed with virtualization.Although virtualization was intend-ed to cut energy and capital costs, it actually increased administrationcosts “because virtual machinesmultiply like rabbits,” said DanWeiss, director of IT managementadvisory services at Unisys Corp. in Blue Bell, Pa.

Automation brings administrationcosts back to earth, according toWeiss. “IT automation will recoupup to 97% of management costs,”he estimated. With 95% of requeststo the IT department relying on astandard build, he said, the key is to create software assemblies thatpush the fine-tuning out to users.

However, it’s critically important thatmetrics be built into the softwareassemblies so IT can properly chargeback business units; this will temperthe inclination among business unitsto overprovision, he added.

“Hand over the controls … changewhat you’re doing,” Weiss advised.Provide self-service applicationdeployment to the business users,

building usage rules into the envi-ronment to guarantee fit and func-tion. Provide a self-service environ-ment that allows the business to seethe applications in business terms.

Automation relies on policies, thebedrock of business technology andcloud provisioning. James Houghton,chief technology officer at Charlotte,

UF

Automation bringsadministration costsback down to earth.


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1 NEWS, VIEWS AND REVIEWS FOR SENIOR TECHNOLOGY MANAGERSUF

N.C.-based Adaptivity Inc. (a cloudservice provider of Blueprint4IT,which executes cloud programsbased on set practices and disci-plines), described how one cus-tomer’s CIO had instituted self-pro-visioning and caused an explosion inthe number of virtual machines.Conference rooms were beingturned into data centers, and “theCIO needed a life-changing experi-ence,” he said. “You don’t wantdevelopers doing stuff internallywithout governance in place.”

Experts recommend that organi-zations establishing policies think of business technology as “IT as a

Service.” Analysts advise deploy-ing infrastructure services based on real-time demand, because ademand-driven model optimizes the data center, technology, ITprocesses, people and skills.

“This is not a fad,” said ScottBurgess, director of EMC Consult-ing. “Gartner says that by 2013,cloud computing will be a $65 bil-lion industry globally. Today, it’s inthe single digits.” In addition, Gart-ner Inc. has said that while virtual-ization remains the most pressingtopic on CIO minds, cloud comput-ing jumped from No. 16 a year agoto No. 2 in 2010. —LAURA SMITH

“Cloud computing has the potentialto significantly influence the outsourcing decision. As cloud computing matures, applicationdevelopment and delivery maybecome more cost effective in thecloud than in the data center andmore cost effective than colo-cation and managed hosting.”

TED RITTERsenior research analyst, The Nemertes Research Group Inc.


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OONN TTHHEE AAGGEENNDDAA

powering down? How important is reducing power consumption for your data center?

BBYY TTHHEE NNUUMMBBEERRSS

3In 2009, 40% of U.S. data centerswere facing budget cuts, and 20% of respondents were facingbudget cuts greater than 10%. 3In 2010, only 20% of data centersare facing any budget cuts. 3In fact, 46% of shops are gettingdata center budget increases.

SOURCE: SEARCHDATACENTER.COM PURCHASING INTENTIONS SURVEY OF 430 IT ADMINISTRATORS, 348 IT DIRECTORS, 271 CONSULTANTS, 115 IT EXECUTIVES AND 79 DATA CENTER FACILITY MANAGERS, CONTACTED BY EMAIL BETWEEN APRIL AND JUNE 2010.

pppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppp

20.4%Not a priority


45.45%Somewhat important


34.15%Very important

SOURCE: SEARCHDATACENTER.COM PURCHASING INTENTIONS SURVEY, 2010

OONNEE OONN OONNEE

data centerdesign lesson:maintain controlNAME: Stuart LeckyTITLE: Data center program managerTIME IN THIS ROLE: Two years

NAME: Michael JohnsonTITLE: Data center enterprise architectTIME IN THIS ROLE: One year

COMPANY: Commonwealth of MassachusettsHEADQUARTERS: BostonEMPLOYEES: 75,000 employees andcontractors

IN LATE JUNE, as President BarackObama was directing federal agen-cies to consolidate their data cen-ters, the commonwealth of Massa-chusetts broke ground on a $110million facility in Springfield, Mass.,that will help it do just that: consoli-date 183 data centers down to twomirrored facilities housing a total of4,000 servers at full capacity.

In early 2009, Massachusetts ITand business leaders determinedthat the commonwealth’s massivepatchwork of technology—with 100phone systems, 24 email systemsand 15 data networks—was unsus-tainable, and named IT consolida-tion as the No. 1 priority in its strate-gic plan. Supporting the

consolidation is the new 145,000-sq.-ft. Springfield data center, whichwill be paired for backup and disas-ter recovery with an existing Massa-chusetts Information TechnologyCenter data center in Chelsea, Mass.Stuart Lecky, Springfield data centerprogram manager, and MichaelJohnson, enterprise architect,shared their vision and strategy for the dual data center build-out:

Why did the commonwealth decideto build and maintain its own datacenters and not work with a coloca-tion or cloud provider?JOHNSON: The main reason is forsecurity. With your own data center,you can control access carefully andcompletely. Some agencies and [ourCIO] secretariats also have regula-tory requirements for physical sepa-ration of data, even from other stateagencies. Secondly, one of the pri-mary aspects of the two-data centermodel is disaster recovery. In thecase of a disaster, the remainingdata center needs to have the ability


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DYNAMIC DUO: Stuart Lecky (left) and MichaelJohnson helped Massachusetts consolidate 183data centers down to two.

UF

to restore and present all data fromthe site that is no longer available.Our infrastructure is very complicat-ed, with many systems that have tobe replicated. It would be impracti-cal to work with another party todevelop recovery scenarios for thesystems and meet the recovery timeobjectives that need to be support-ed. We need to control the infra-structure in order to create andmaintain the redundant systemsrequired.LECKY: Also, we are under way withExecutive Order 510 to consolidateIT resources. The key is the consoli-dation. We received capital fundsthrough an IT bond, issued by Mas-sachusetts, so the IT organizationsare not paying back lease costs orcapital debt payments compared toprivate industry. The selection ofSpringfield satisfied the geographicdiversity requirement of the fundinglegislation, which called for a site inwestern Massachusetts, with a sep-arate network, power grid and ITinfrastructure.

Michael, in your blog, you mentionthat the Springfield data centeruses Energy Star servers. Couldyou describe other ways you planto increase energy efficiency?JOHNSON: In addition to the facilityinnovations, the technical infra-structure will help support the ener-gy-efficiency goals. By using newtechnologies such as 10G Ethernet,we can significantly reduce the

amount of cabling, network portsand network devices within the datacenter. Innovations in storage, suchas solid-state drives and auto-tier-ing, will also contribute to energyefficiency.LECKY: The facility is designed withmany energy-efficient technologies.One of these technologies, air side

economizers, utilizes cooler outsideair to cool the indoor spaces. Thestate’s division of capital asset man-agement and information technolo-gy division have also been workingwith Western Mass. Electric Co. tomaximize potential rebates availablethrough the utility, to lower front-end costs. We expect to cut energybills by 50%, saving $2 million to $3million annually. The Springfield sitewill be one of the state’s top con-sumers of electrical power, at 6megawatts at full capacity—that’s15% to 20% of the current state-wide contract for office buildings.We are working with the green con-


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“We need to controlthe infrastructure in order to createand maintain the redundant systemsrequired.”—MICHAEL JOHNSONenterprise architect, commonwealth of Massachusetts

struction industry and have postedour plans on our wiki.

How is virtualization used in thestrategy?JOHNSON: Virtualization will be themain contributor to energy efficien-cy. We plan to drastically reduce thenumber of physical servers throughvirtualization. By using features ofthe virtualization software, such asresource scheduling and powermanagement, servers can be pow-ered off and on automatically, asrequired, while performance can beguaranteed. These features will helpachieve high rates of utilization andefficiency.

How will automation play a role?JOHNSON: We’re working on anenterprise automation tools strate-gy that brings together all the areasof the enterprise that need businessservices management. This includesevent management, asset manage-ment, monitoring and more. TheSpringfield data center will be alights-out facility, with minimalstaffing, so the need for automationis critical. Our long-term goal is toprovide services and resourcesthrough a virtual private cloud. Thiswill only be possible through carefulintegration of our tools strategy.

What are the challenges of theconsolidation?JOHNSON: We had to start thinkingand planning more from an enter-

prise perspective. Although we planto implement best-practice newtechnologies at Springfield, we haveto assure that those systems will beinteroperable with systems at ourexisting data center in Chelsea. Weare currently working on our enter-prise virtualization project to assurewe are ready for things such asreplicating virtual machines andother data between data centers.This requires a great deal of plan-ning and coordination. Other enter-prise initiatives under way are stor-age and backup and recovery.

Do you have advice for otherorganizations consolidating thatmany data centers?LECKY: Get an excellent inventory,and develop a repeatable processfor your migrations to a virtual envi-ronment, from physical machine tophysical, physical to virtual, and vir-tual to virtual.

What aspect of the consolidationare you working on now?LECKY: [We’re] looking at lots ofstandards for server, storage andnetworking. We haven’t determinedall of those, but Fibre Channel overEthernet is a good one.JOHNSON: We’re working on devel-oping a long-term enterprise storagestrategy, exploring and procuringbackup and recovery technologies[which comprises a lot of products].And we’re working on the virtualiza-tion strategy. —L.S.


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DRIVEN BY THE need to consolidateafter massive build-outs in the mid-2000s, enterprises are investing inmore modular and energy-efficientdata center designs. The question,more than ever, is whether it’s betterto own or rent.

For Angelo Valletta, senior vicepresident and CIO at Sun NationalBank in Vineland, N.J., the issuecame down to control, flexibility andtime to market. Valletta has workedin data centers all his professionallife, at one time in a full outsourcingmodel. His mind is open, but whenSun National ran the ROI, it decidedto keep its data center and corebanking application in-house.

Renting space in an external datacenter would have been more of achallenge, requiring navigation

through an architecture that SunNational didn’t own. “Keeping ourcore banking application in-houseallowed the bank to achieve costsavings and the ability to deliverproducts and services that our cus-tomers demand and require,” Vallet-ta said.

By creating a mobile bankingapplication that links to in-housesystems and leverages the cloud fordelivery, the bank was the first com-munity bank to deliver mobile bank-ing to its customers in the markets itserves, according to Valletta.

The bank also leverages its in-house model to build workflowapplications aimed at loan origina-tion, for instance, which requiresdata input from inception to book-ing. Not only did this give Valletta


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ToOwnorRent?

CIOs are seeking more modular, green data center designs and considering outsourcing as data center

consolidation takes precedence. BY LAURA SMITH

greater control over cloud connec-tions, but it also freed him up tothink about the business.

“We’ve been able to dive into truebusiness process re-engineering,”he said, “going into a departmentand having a conversation to elimi-nate manual redundancies andautomate full end-to-end opera-tional processing.” Sun National ispositioned to sell these types of

products, built in-house, to othercommunity banks, which are cur-rently underserved in this area, hesaid.

One thing is certain: “There is nouniversal right or wrong answer tothe rent-or-own question,” saidDouglas Menefee, CIO of Schu-macher Group, a medical informat-ics company in Lafayette, La. “Thisforces us to constantly explore

Technologies En Route to a Mega Data CenterMODULARITY IS PARAMOUNT in the next generation of data centers, experts say.Many IT departments are ordering preconfigured racks of equipment with inte-grated cabling and switching. Because virtualized servers run at higher utiliza-tion levels, they require more bandwidth. Connectivity options are evolving, withGigabit Ethernet, 10 Gigabit Ethernet and Fibre Channel over Ethernet.Also fundamental are green initiatives to reduce the heat generated by com-

pressing circuits into ever-smaller units of computing power. Data centers areadopting advanced power management hardware, water-based cooling systemsand denser server configurations, making these facilities much different thanconventional air-conditioned server rooms.Server virtualization enables businesses to provision new services more rapid-

ly, storage virtualization is critical for thin provisioning, and on the horizon areautomation and management tools that can scale to manage a larger environ-ment, said Bob Laliberte, a senior analyst at Enterprise Strategy Group (ESG) in Milford, Mass. It’s still early, “not everything is automated, but companies areputting the pieces together—software, hardware and management—so insteadof managing silos, they have an integrated view.”The goal is to build dynamic data centers capable of rapid change to meet

market needs. Some enterprises are consolidating into mega data centers thatare typically paired and mirrored to a backup site in close enough proximity tomaintain data synchronization. With today’s bandwidth, that would be about 150 kilometers, Laliberte estimated. —L.S.

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options.”Schumacher has two data centers,

one in Lafayette and another in Dal-las, both of which house more than150 servers. The company, whichprovides medical informatics to

2,500 emergency room physiciansnationwide, is considering an officerelocation in Dallas and has beenexploring colocation options.

“At this time, we are leaningtowards keeping the data center in-house. It is very much a dilemmathat I continue to grapple with,”Menefee said.

“The value proposition of coloca-tion [is] centered on environmentalconditions,” such as electricity andheating, ventilating and air condi-tioning systems, Menefee added.“Doing a colocation solution meansthat we are paying a premium forthose services and eliminating oneset of headaches … while introduc-

ing a whole set of new headachesassociated with vendor manage-ment.”

Four years ago, Schumacher wentwith a dedicated managed hostingservice provided by CedarCrestoneInc. for its PeopleSoft environment.“We utilize CedarCrestone for thisservice and continue to see positiveuptime and patch managementvalue,” he said.

However, it comes at premium.“With the strong support I have forcloud-based solutions, I’m not see-ing the same cost and performancevalue associated with moving ourdata center into a colocation solu-tion. It seems to make more sensefor us to maintain the data centersin-house and continue to look forcolo or cloud-based solutions on acase-by-case basis, rather than shiftour existing infrastructure to a colo,”he said.

MODULAR REPLACES MASSIVE BUILD-OUTS“There are a lot of different factorsat play,” said Bob Laliberte, a senioranalyst at Enterprise Strategy Group(ESG) in Milford, Mass. “When youown, you have a lot more control. To a lot of people, that’s crucial.They can restrict who gets into thephysical space as well as the fire-wall.” The financial industry, forexample, is consolidating fast due to all the mergers post-meltdown—but because of sensitive data,


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“At this time, we are leaning towards keepingthe data center in-house. It is verymuch a dilemmathat I continue to grapple with.” —DOUGLAS MENEFEECIO, Schumacher Group

prefers to maintain control.For the most part, however, the

days of building 300,000-square-foot facilities that cost hundreds ofmillions of dollars and years to com-plete are over, Laliberte said. “By thetime you’re in it, the technology isobsolete.”

That’s one reason why modular,point-of-distribution-based datacenters are gaining steam, withofferings from IBM, Sun Microsys-tems Inc., Hewlett-Packard Co. andothers. Instead of a build-out thatlasts months (or years), you canorder one and plug it in six weekslater. Plus, they’re rapidly scalable,Laliberte said. “When you need toscale, you add another pod.”

For service providers in particular,the ability to scale is going to bevery important. With a modulardata center, “You bring it in and boltit in,” Laliberte said. Businessessometimes put them in a warehouseor other enclosed space, but theycan also be placed outdoors.

OUTSOURCING OPTIONSIn late 2006 and 2007, massivedata center build-outs were stillunder way, but “by the middle of2008, it was done,” said DrueReeves, vice president and directorof research at Burton Group in Mid-vale, Utah. The recession forced theneed to consolidate, with server vir-tualization helping enterprises re-duce server count and floor space.

By early 2009, data center consoli-dation was the No. 1 issue for ITdepartments, according to a BurtonGroup survey.

Of 515 senior IT professionalswith enterprise and midmarketcompanies in North America andwestern Europe, one in three isaggressively consolidating data cen-ters, according to an ESG data cen-ter and construction trend survey inwhich data center consolidationranked as the third most importantenterprise IT initiative for the next12 to 18 months.

ESG also found that there is stillhealthy interest in building out newdata centers. Nearly one-third ofrespondents are constructing newfacilities, though most are buildingonly a single new data center. Near-ly half of the organizations currentlyreducing or consolidating data cen-ters are also building at least onenew data center, Laliberte said.

At some point, CIOs will find abalance between owning and rent-ing, with next-generation data cen-ters likely becoming internal clouds.The trend then will be to buildhybrid clouds to augment internalcapacity, Reeves predicted. “It’s notsimply a matter of building new datacenters versus buying a bunch ofservices, but rather to spend [onoperations] and focus on the inte-gration.” �

Laura Smith is features writer for SearchCIO.com.Write to her at [email protected].

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THE RECESSION HAS been good forcolocation providers. The perfectstorm, if you will. A scarcity of capi-tal, the rise in high-power-densitycomputing and a need for high-qual-ity redundant data centers haveboosted demand for colocationspace, according to experts.

“We have not seen a slowdown in interest and growth in colocation.If anything, the recession is drivingCIOs to look more closely at coloca-tion,” said Ted Ritter, senior researchanalyst at Mokena, Ill.-based TheNemertes Research Group Inc.

Faced with the worst fiscal crisisin a half century, businesses thatunder ordinary circumstances wouldhave built their own data centersscurried to find alternatives. Now,colocation space is at a premium,

ranging from $700 per month for alow-density power-utilization rack,to as much as $4,000 per month for a high-density rack. And if youwant to reserve additional space for growth, expect to pay for it upfront, experts said.

In fact, in some markets wheredemand is high, there are reportsthat colocation providers aredemanding that CIOs move to themore expensive managed servicesarrangement—or move out. The surprising upshot? For businesseswhere profits are rising but there are no plans to hire, some industryexperts predict the answer will be,“Where do I sign?”

Nor do industry watchers expectthe demand for colocation space towane, at least for the near future.


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Demand for colocation is up, and so are the prices, prompting a debate over whether investments

in colocation services match the ROI. BY LINDA TUCCI

REDUNDANCY IS ONE of many factorsthat CIOs need to consider whenresearching colocation space,according to Ted Ritter, seniorresearch analyst at Mokena, Ill.-based The Nemertes ResearchGroup Inc.—cost can’t be the onlyissue. In a trend report on data cen-ter outsourcing published in thespring, Ritter and colleagues urgedcompanies to weigh eight factors:

1. RiskThe risk tolerance of your organiza-tion weighs heavily on a decision touse colocation services. Complianceand privacy concerns are the majorreasons enterprises are not movingin droves to cloud computing as aservice, according to Nemertes. “Ifcompanies are extremely riskaverse, they will not even go to colo-cation. They want complete con-trol,” Ritter said.

2. LatencyThe challenge is balancing the costof the provider against the latencyrequirements of your company.Colocation can help with latencyissues, as it does for the companythat does business in New York butwhose main data center is in Wash-ington, D.C.

“Putting servers in a colo right in Manhattan gets the apps muchcloser to end users,” Ritter said, but it also costs a lot. An extremeexample at the other end of thespectrum is Iceland. Verne Global, a new data center facility in Iceland,has fixed energy costs (geothermaland hydroelectric) that are wellbelow those in the United States or Europe. The latency cost, how-ever, is 20msec—too high for real-time trading applications butacceptable for many business applications.

(Continued on page 16)

Eight Colocation Factorsfor CIOs to Consider

“We are seeing organizations thatnever looked to colocation before,such as city governments, in themarket,” said Brooke Guthrie, man-ager of product and business man-agement at CDW LLC, a Vernon

Hills, Ill.-based technology solutionsprovider and a major reseller ofcolocation space.

“A lot of organizations that previ-ously would have preferred to spendtheir own capital and build a $10


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(Continued from page 15)

3. CapitalCompanies with lots of it tend tobuild their own data centers. For the 85% of organizations that sawflat or decreasing budgets last year, capital expenses were the first cut.

4. Skill SetBuilding your own data centerrequires a complete range of skills,while colocation generally requiresfewer. Given the job cuts of the pasttwo years, however, companies maynot even have the personnel or abili-ty to hire people with colocationskills. Many colocation providersoffer managed services and somenow offer operating system andapplication support.

5. PowerYour company may have the spaceto expand but not the power. About30% of organizations with data centers that range from 5,000 to50,000 square feet are running outof power, according to Nemertes. By

2011, one-third of organizations with50,000 to 500,000 square feet willbe power-starved.

6. LocationThis is mainly a cloud issue, but itcan be an issue even in colocation if your company winds up in a colofacility in the U.K., where data issubject to European data protectionrules.

7. RedundancyIf your organization does not haveextra data centers to use for disas-ter recovery, colocation can be anattractive option, as long as it meets the above criteria.

8. TimeAlong with risk, this is the maindecision factor. “If organizations canget over the risk, then they have toask if they have the year to wait tobuild a data center and put their ITcrew through the ringer, or sign acolocation agreement that wouldallow them to be up and running in30 days,” Ritter said. —L.T.


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million data center are opting forcolocation because they are notable to make those investmentsthemselves,” Guthrie said.

Indeed, California currently uti-

lizes private data centers for coloca-tion, disaster recovery and manageddata center services, according toBill Maile, communications directorfor the Office of the State CIO.


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But whether California will contin-ue to use its colocation space isunclear. The state is currentlyengaged in a significant data centerconsolidation and modernizationeffort that will result in a reductionof data center floor space, to the

tune of 150,000 square feet, by2011, Maile wrote in an email.

That said, “the state regularlyassesses its capacity requirementsand will continue to consider colo-cation and other data center servic-es (e.g., cloud, managed services) aspart of this planning process,” hewrote.

If your organization is leaningtoward colocation, don’t delay. In a2010 report on key trends in datacenter outsourcing, Nemertes’ Ritteradvised companies to “lock in pricesnow” for colocation because they“can only go up.”

The appetite for colocation space,

however, is not driven solely by theeconomic downturn.

“I am in the process of signing acontract for colocation right now,”said Ted Maulucci, CIO of TridelCorp., a condominium builder basedin North York, Ontario, Canada,where the recession was milder andshorter than in other nations.

Tridel recently contracted for newtelecommunication services and ismoving to a Multiprotocol LabelSwitching (MPLS) infrastructure.Price was a consideration, but virtu-alization was the “tipping point,”Maulucci said.

“Given that we have pretty muchvirtualized and are making theinvestment in MPLS, the colocationwas almost a no-brainer, and itcould give us many disaster optionsthat we previously did not have,” hesaid, adding that it’s also a soundinvestment for creating a level ofredundancy.

A BANK DECIDES AGAINST COLOFor Tom Gainer, CIO and senior vicepresident at FirstBank Southwest, aregional bank based in Amarillo,Texas, the price of the ticket wasultimately not worth it. FirstBankexplored several colocation optionsbefore deciding to build its own datacenter.

“Colocation for us did not havethe ROI that made it a compellingcase,” Gainer wrote in an email.

The bank was looking to consoli-

“Given that we have pretty muchvirtualized and are making the investment inMPLS, the coloca-tion was almost a no-brainer.” —TED MAULUCCICIO, Tridel Corp.

Kick-starting ColocationNEED SOME GUIDANCE on how to get started on researching colocation? Here are the top questions to ask, courtesy of Forrester Research Inc., a Cambridge,Mass.-based consultancy.

1What types of colocation services are available in my area?

2What is the pricing structure of colocation services?

3What is the typical term of a colocation contract?

4Will I have the option to renew my lease at the end of the term?

5What additional services do colocation vendors provide?

6What is the minimum amount of equipment I can colocate?

7Will I be able to choose which network provider I use?

8Will colocation vendors “build to suit” my specific needs?

date its operations into a singlefacility. When Gainer factored in thecost of adding a data center to theconstruction of the corporate build-ing, plus the efficiencies expectedfrom deploying the latest infrastruc-ture in that center, “the numbers didnot add up,” he said.

Gainer said he also had the bank’slong-term strategy to consider.FirstBank plans to grow throughacquisitions, and having control ofits data center operations in theevent of a quick turnaround time formerging was an important factor indeciding to build its own facility.

And, yes, location was a factor.

“Being located as we are in the pan-handle of Texas, travel time andaccessibility to a colocation site …these two factors are a cause forconcern.”

As for his personal preference,Gainer said he has run operationsusing both models. For startup com-panies where capital is at a premi-um and the footprint of the actualhardware is small, colocation cer-tainly makes sense.

“In a mature organization, youhave to run the numbers and youneed to understand what is bestfrom an overall strategic standpointfor your organization,” he said.


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THE NEW POWER PLAYERFor colocation providers, demandhas remained strong during the pastfive years, with the exception of2009, according to Tom Wye, presi-dent and CEO of Santa Clara, Calif.-based colocation provider Bay AreaInternet Solutions. The companyhas recently built out 30,000square feet of an 85,000-square-foot facility.

In his view, connectivity hasbecome a “commodity item.” Top-ping the list of his customer con-cerns is access to the power densi-ties they require for their computinginfrastructure. Ten years ago, anaverage customer wanted 50 W persquare foot. Today, a large customerwith a high-density infrastructure islooking for something more like 300W per square foot.

“What you built 10 years ago ver-sus now is different. A lot of olderfacilities can’t keep up with thedemands,” Wye said, noting that it’sa seller’s market for facilities like his.

Customers adding 10 to 20 racksa quarter usually must “carve out adeal” that accounts for expansionduring the next two to three years—a “guaranteed ramp.” A very large“wholesale” customer that needshalf a megawatt of power is allocat-ed the space required for that

amount of power. “They pay for the critical infra-

structure for that half a megawatt,and then pay for the power as theyuse it,” Wye said.

CDW’s Guthrie agreed thatpower, not space, is the currency incolocation. “People are charging forpower. You are going to pay by theamount of power, not by the rackspace,” he said.

And that currency is variable. “It’slike buying a plane ticket: You can’tget the same price every time.” �

Linda Tucci is senior news writer for Search-CIO.com. Write to her at [email protected].


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“In a mature organization, you have to run the numbers and you need to under-stand what is bestfrom an overallstrategic stand-point.”—TOM GAINERCIO and senior vice president, FirstBank Southwest


ENTERPRISES ARE USING public cloudservices and starting to experimentwith private clouds to capitalize ontime-to-market and efficiency gains,prompting IT executives to focus oninvestments and strategy aroundtwo service delivery approaches.

By now, most enterprises havebegun to use some form of Softwareas a Service, such as email or cus-tomer relationship management,according to Drue Reeves, a vicepresident and research director atBurton Group in Midvale, Utah.

“They’re already doing that, andare rapidly interested in Infrastruc-ture as a Service, which is thefastest-growing segment of themarket,” Reeves said.

There’s less interest currently in

Platform as a Service, as pain pointspersist at the lower levels of thestack in identity management, inte-gration and service-level agreements.

Despite these adoption painpoints, new cloud services continueto pop up, such as Business Processas a Service (BPaaS). ForresterResearch Inc., for one, has extendedthe cloud stack to BPaaS as outlinedin a new report on the evolution ofcloud computing markets.

The most dominant users of pub-lic cloud computing services don’twork for IT, but for other depart-ments such as marketing and prod-uct prototyping, Reeves pointed out.Yet, CIOs and IT departments mustformulate a strategy to help guidethese users of external services, and

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3 PUBLIC VS. PRIVATE CLOUDS

PUBLICVS.PRIVATE

CLOUDSPublic and private clouds have penetrated

enterprises, forcing IT to develop a plan for managing two distinct service delivery models. BY LAURA SMITH


0 5 10 15 20 25 30 35

BBYY TTHHEE NNUUMMBBEERRSS

WHAT MATTERS MOSTWhat are your organization’s most important IT priorities over the next12-18 months?

• Increased use of server virtualization: 33%

• Upgrade network infrastructure: 27%

• Data center consolidation: 23%

• Business continuity/Disaster recovery programs: 21%

• Desktop virtualization: 18%

develop an overarching strategy formanaging public and private clouds.

“By circumventing IT, [businessdepartments] get their job donefaster. If IT continues to ignore this,they’ll be circumvented more often,”he said. His advice? Help and en-courage use: “As with children, it is not effective to say ’don’t touchthat.’”

MAD (COMPUTER) SCIENCEIT executives are indeed formulatingplans and taking action. “The publiccloud forces us to have more com-pelling services than [users] wouldfind elsewhere,” said Dr. MarcosAthanasoulis, CIO of Harvard Med-ical School (HMS) in Cambridge,Mass.

“HMS is like the land of 1,000CIOs,” he said. “We cannot mandatethat people use IT services.”

Most people at HMS are trainedin life sciences but not IT best prac-tices, he points out. They write theirown software but don’t know aboutsource control, or they buy a serverand stick it under a desk withoutrealizing the power and coolingrequirements. Athanasoulis wasable to bring the mad computer sci-ence under control by articulating avision for a private cloud that pro-vides measured storage and CPUservices.

The nature of biomedical researchmatches the elasticity of cloud com-puting services, so Athanasoulisstarted with a small private cloud,and says it’s growing by orders of


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PERCENT OF RESPONDENTS: N=515, MULTIPLE RESPONSES ACCEPTED; SOURCE: ENTERPRISE STRATEGY GROUP, 2010

magnitude. The process has un-earthed best practices, such as iter-ation and constant communication.

“How do you monitor that youhave enough capacity? Check inwith folks along the way a lot,” hesaid. “IT leaders don’t hear whenthings are going well, only whenthey aren’t—and sometimes noteven then. If users aren’t happy, yourun the risk of them doing their ownthing.”

The truth is, “it’s actually very

hard to create a cloud internally,”said said James Staten, a principalanalyst at Forrester Research Inc. inCambridge, Mass. Staten comparesthe IT department with a testkitchen in his latest research onconverged infrastructures: Enter-prises have the basic ingredients tocook up a cloud infrastructure, butthere’s no recipe and many of theingredients don’t combine well.“Complicating the story are tradi-tional infrastructure silos around


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(Maybe Not So) Expert HelpTHE COMPLEXITIES OF setting up a private cloud and integrating public cloud com-puting services have created a market for consultants who claim to know allabout it.Don’t be fooled, analysts say.“Often, these are traditional consultants using traditional approaches and

methodologies. Most don’t have enough direct experience building clouds,” saidJames Staten, principal analyst at Forrester Research Inc. in Cambridge, Mass.“They’re going to be learning on your dime. If you’re OK with that because youwant to be leading edge, go for it.” At the very least, know exactly what kind of cloud you are seeking, Staten said.

Perhaps you want automation, but not self-provisioning, for example, or to shareacross business units, with or without chargeback.Along with consultants and system integrators, a new category of cloud bro-

kers has cropped up, prepared to come into the enterprise, figure out the rightservice and provider, then broker the contract with a better price or terms suchas high availability or quality of service, said Drue Reeves, vice president andresearch director at Burton Group in Midvale, Utah. “But even those guys are not focused on integration so much as management. It’s not a turnkey solution,”he said.

THE TAKEAWAY: Look at the resumés of the consultants who are going to bebrought in. If you want something that really is a cloud, find a consultant whoworked at companies that have clouds. —L.S.

servers, networks and storage thatmust work together in a new, trulyintegrated way,” he said.

The most important point is tounderstand the value of the cloudover the existing virtual infrastruc-ture, Staten said. One difference isputting new workloads in the cloudand automating maintenance.Another value is self-service, sousers can bring things to marketquickly. “[The cloud is] a step wellbeyond the traditional virtual infra-structure,” he said. How to get start-ed? “Step away from the high bar,and figure out what to let go.”

PUBLIC AND PRIVATE CLOUDS: DIFFERENT BEASTSPublic cloud computing services are more valuable the less often youuse them, according to Reeves, whosuggested that people think aboutclouds as they would a rental car on a business trip to Miami. At yourdestination, you’re likely to rent acar, even though the cost far ex-ceeds the daily costs of your vehicleback home. “The reason for that iswhen you’re not in Miami, the bill iszero,” Reeves said. With an internalcloud, you’re always paying for thewhole thing. “To save money, publictrumps internal every time,” he said.

Even internally, some depart-ments—such as engineering, humanresources, marketing—can taketheir bills to zero, but central ITnever can. That’s why it’s so impor-

tant for internal clouds to be multi-tenant and as highly utilized as pos-sible, he said.

“If you set up clouds for individualunits, you’ll always be investing in acloud with no elasticity. Say the

engineering cloud operates at 80%to 90% capacity: If you can con-vince them to share the resourceswith marketing and HR on a usage-based metric, the IT delta is solvedby other departments,” Reeves said.

Because they aim to serve thewidest possible customer base at anattractive price point, public cloudsare highly structured and automat-ed. In most cases, enterprises don’tget to set terms of an SLA. Publicclouds have an SLA, take it or leaveit. “I always tell clients, ’You adapt tothe cloud, the cloud does not adaptto you,’” Staten said. It’s a big dis-connect for enterprises that are


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Because they aim to serve thewidest possiblecustomer base,public clouds arehighly structuredand automated. In most cases, en-terprises don’t getto set SLA terms.

used to solutions being tailored totheir needs, he said.

For example, public clouds estab-lish a standard means of securitythat meets the needs of as manycustomers as possible, Reeves said.It’s a matter of mastering the

uneven handshake, and enterprisesneed to determine what to add tomeet their definition of secure.What may be negotiable are termsof service that are more business-oriented, he said, such as being ableto sever the service at any time.

As enterprises are forced toembrace the public cloud, the ques-tion becomes which applicationsshould be kept internal. The answerdepends on an organization’s risktolerance, according to Reeves.

“The more critical the data, themore important it is to keep in-house,” he said. “Offload the mun-dane, not part of the core business.” �

Laura Smith is features writer for SearchCIO.com. Write to her at [email protected].


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Enterprise CIO Decisions Ezine is producedby TechTarget CIO/IT Strategy Media,

© 2010 TechTarget.

Jacqueline BiscobingManaging Editor

[email protected]

Rachel LebeauxAssistant Managing [email protected]

Scot PetersenEditorial Director

[email protected]

Linda KouryArt Director of Digital Content

[email protected]

Christina TorodeNews Director

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Linda TucciSenior News Writer

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FOR SALES INQUIRIES, PLEASE CONTACT:

Theron ShreveSenior Product [email protected]

(617) 431-9360

“I always tellclients, ’You adaptto the cloud, thecloud does notadapt to you.’” —JAMES STATENprincipal analyst,Forrester Research Inc.












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