Exploring Data Center Space Leasing: Benefits And Considerations For Tenants

For most businesses, even corporations, leasing data center space makes a lot more sense than building and/or buying data centers. For some, it may be the only practical way they can access data center infrastructure. With that in mind, here is a quick guide to what you need to know about data center space leasing.

Understanding data center space leasing options

The two main data center space leasing options are colocation and dedicated hosting. Colocation involves renting space, power, and cooling infrastructure within a data center facility. Dedicated hosting entails leasing entire physical servers within a data center. Here is a quick overview of how the two options compare in practical terms.

Flexibility: Colocation allows tenants to customize hardware and software choices, offering greater flexibility in infrastructure management. Dedicated hosting offers high flexibility in server configurations and software but less flexibility in physical infrastructure.

Control: Colocation tenants retain full control over their IT environment, including hardware and software management. Dedicated hosting tenants have complete control over server configurations and software but rely on the data center for infrastructure management.

Cost: Colocation generally involves lower upfront costs due to shared infrastructure. Operating costs may be variable or fixed depending on the tariff. A fixed-price tariff may come at a relatively high price but is likely to be cost-effective for large volumes of data. Dedicated hosting typically incurs higher upfront costs due to dedicated resources. Monthly expenses are usually predictable although not necessarily more economical than colocation.

Points to consider

Regardless of whether you opt for colocation or dedicated hosting, there are five key factors you should consider. Here is a quick overview of them.

Data center location

Location is usually the single biggest factor that influences general real estate costs. It’s therefore vital to undertake a robust cost-benefit analysis on any location.

As a rule of thumb, the more time-sensitive your applications and services are, the more benefit you will receive from using a data center that is close to your users and vice versa. There is, however, a potential caveat to this.

It may be possible for you to use an edge data center for your most time-sensitive applications and services and a centralized data center for everything else. As edge data centers are small, they are more economical to implement. They may therefore be cost-effective options in areas for which you might not otherwise be able to afford.

Infrastructure

When you lease data center space, what you are really leasing is access to infrastructure. It’s therefore crucial to check that you’re getting the quality of infrastructure you need.

Power: You need to check the level of redundant infrastructure. You may also want to check the source(s) of power to assess both their reliability and their sustainability.

Cooling: Data centers that invest in modern, precision-cooling systems have significantly lower running costs than data centers that use traditional cooling solutions. They are also more sustainable.

Networking: The quality of a data center’s network connectivity can make a meaningful difference to your users’ experience of your applications and services. In addition to checking the quality of the infrastructure itself, check if the facility is carrier-neutral and evaluate its interconnection ecosystem.

Scalability options

Scalability is vital for growing businesses to adapt their IT infrastructure to changing demands efficiently. Infrastructure and equipment can be scaled vertically and/or horizontally.

Vertical scalability involves increasing the capacity of existing hardware components, such as servers or storage devices, to handle additional workload or data volume. Horizontal scalability involves adding more identical hardware resources to distribute the workload and handle increased traffic or data processing requirements.

In colocation, scalability is typically achieved through vertical scaling, and in dedicated hosting it is typically achieved through horizontal scaling. With that said, both leasing options can usually support both scaling options.

Service level agreement (SLA) terms

In the context of data center space leasing, the most important SLA by far is the uptime guarantee. This is usually expressed as a percentage figure. The current industry standard is “five 9s” or 99.999% although some vendors go above this. As is often the case, however, details matter.

Check exactly what is covered by the uptime guarantee and what happens if it is breached. Also, think about how enforceable the guarantee is in real terms. In other words, if you had to force the vendor to honor it, how would you do so?

Similarly, look at any other SLAs that matter to you such as support SLAs. Make sure they meet your needs and ideally, your wants and really are clearly enforceable.

Tariff and contract terms

Before you sign anything make sure you clearly understand what you are signing. The vendor’s pricing structure and contract terms should be transparent. In particular, they should clearly set out the process for making changes including leaving completely.