Data Center Space in the Northeast

Yesterday I wrote my personal blog for the week, so today's blog is a return the typical issues of a CIO - building and renting data centers in the Northeast.

I was recently asked about a report being published this week on health care data center costs in Boston compared with other U.S. metropolitan areas. The report claims that, although huge opportunities exist for data center providers to house growing amounts of health care data, the high costs of running a data center in Boston and other Northeast cities will drive providers to house their data in low-cost areas in the Midwest.

Here's my view of the needs of healthcare CIOs for data center space in the Northeast.

My sense is that most IT organizations are embracing virtualization which reduces server space needs. However storage needs are increasing 25% per year, consuming more space.

Thus, the demand for data center real estate, on average, will experience modest growth. Healthcare data center space is not likely to cost much more than typical data center space.

The choice of build/owned verses co-located data center space is mostly a function of network connectivity and capital availability.

The breakout of BIDMC data center expenses, not including the operating and capital needed to suppport our applications is roughly as follows:

Space and Utilities 15%
Salaries & Benefits 29%
Elect Wiring/KVM/LAN Cabling/Racks/Etc. 5%
Storage 18%
Tape/Backup 4%
Servers 14%
Monitoring Software 3%
Network 1%
UPS/PDU/CRAC 11%

Moving the data center to the Midwest MAY save on space cost and would likely save on energy. Most of the other costs would be the same whether we were located in Boston or Lincoln, Nebraska. Some costs may actually be higher in the Midwest as we are within driving distance of engineering support centers for some of our OEM's such as EMC. We currently have a favorable space rental rate compared to the square foot cost of hosting facilities in Boston. Consequently, savings for us is not going to be as great as it may be for other companies who use hosted space. Moving the data center MAY also reduce computer operations salaries, but that's questionable and assumes the labor pool is readily available in the Midwest.

I estimate the annual savings for space, utilities, and salaries, in our case, would be $150k to $300k per year. Offsetting this would be increases in wide area networking expenses and, given the distance, there would need to be dual paths for redundancy which would increase the expense. There would be a significant one time expense for the relocation cost. The combination of these could easily overwhelm any projected savings.

Relocating the data center would also require a major project that would absorb much of IT's time thereby causing us to halt or slow down other, more pressing requirements of the Medical Center. There would also be a risk element in that we would be placing our IT assets in the hands of a party we do not directly control except through contract terms and conditions.

Unlike some companies that have national or international presence, we are limited to metro-Boston. The incentives to relocate the data center to the Midwest are not compelling for us.

I predict Boston and Northeast data center space will continue to be well utilized.