Factors Affecting the Cost of Owning a Data Center

A very common misconception is that companies would be able to save a lot of money by hosting their own data centers rather than outsourcing them. If you are a multi-national conglomerate that legitimately needs acres of data center space, this might be true. However, unless you are that big, the costs that are required to build a properly-functioning data center add up much quicker than you think.


Factors Affecting the Cost of Owning a Data Center


There is a significant number of items in a data center that require a significant amount of energy. From computing resources, to keeping equipment cool, energy costs are one of the largest costs incurred by a data center throughout it’s lifetime. A December 2015 study by the US Energy Information Administration found that commercial rates ranged on average from $6.85 per kilowatt in Oklahoma to $15.26 per kilowatt hour in Rhode Island. Consider these numbers we found in a blog on Life Line Data Centers:

For a small business: consider the following equipment:

  • One rack of server equipment
  • 2 UPS systems
  • router
  • firewall
  • 2 switches
  • 30 workstations
  • 10 printers


All of that equipment would average roughly 9 KW/hr per month. Cooling that amount of equipment would require another 18 KW/hr per month. That brings the total to roughly 27 KW/hr per month to manage this set of small business computing equipment.

Take those numbers, and apply them to the numbers we mentioned earlier about energy costs. At 27 KW/hr, that means that a small business in Oklahoma (at $6.85 per kilowatt hour) is spending $184.95 per month to just get the lights turned on in their data center and run the equipment. In Rhode Island, that number is $412.02. That is a pretty hefty up front cost, especially if you have to replace any of the servers.


The actual cost of the facility itself is another important distinction to understand when assessing the size of a data center. For one, the size of a data center is determined slightly differently than other areas of real estate. Where the common standard of measurement in real estate is centered around a certain number of “square feet,” data centers are measured more on the size of their usable space. Here are some key terms:

  • Total Space – this would be the actual square footage of the building
  • Whitespace – this is the amount of space within the data center that is on the raised floor and is able to be used for server stack development
  • Effective Usable Space – This refers to the amount of space that will be available once racks and other support mechanisms are installed.

Each of these terms represents an important aspect of buying a facility to build out as a data center. It is important to do that math and make sure you know up front how many servers the building will hold.

If you are only planning on building out an office or unused space that you already have, instead of purchasing a stand-alone, then you need to consider these terms as well. Building out the space to make it a functional data center is not as easy as “finding somewhere to shove a server.” You will have to rewire electrical, provide cooling, raise floors, and make sure the facility is properly prepared for your equipment.  


Redundancy is one of the biggest factors affecting the cost of owning a data center. Redundancy is measured by the number of independent back up components each individual component has. This requires extra rack space, extra servers, extra switches, and can require an extra facility all together if off-site is a requirement.

While redundancy is a huge contributor to costs, it is absolutely critical that it be built in to site design. Downtime is a huge expense to an organization. In fact, a recent study by the Ponemon Institute, sponsored by Emerson Network Power, quantified the average cost of an unplanned data center outage at slightly more than $7,900 per minute. What’s crazy is that this number keeps going up, This is a 41% increase from the $5,600 Emerson and Ponemon first tracked in 2010.


Keeping a data center secure is not a good practice suggestion, for any subjected to regulation it is a requirement. Some of the biggest compliance regulations that affect data centers are:


There are many others, but this is a general list. Each of these has requirements around controls, access, monitoring, all of which add to your total cost.

Staffing and Management

Staffing and management are also huge cost implications of owning a data center. You will need some sort of security staff off the bat. This is not a one-guy, 9-5 position. Data centers must stay operational 24/7/365. That means security guards, and at least enough technicians to help keep everything operational when the system goes down, must be onsite day and night.

Just by looking at these factors, it is easy to see how expensive a data center can become. Colocation through a trusted partner, like Orion, provides you all of the benefits of a fully operational data center, without having to take on the upfront cost. For more information about our colocation solutions, contact our team today.


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