Datacenter Knowledge published an interesting article today entitled Data Center Leasing: It’s All About the Megawatts. The article discusses how electric power, or the lack of it, is changing the business of data center leasing:
“The growing importance of electric power is remaking the business of leasing data center space, with megawatts replacing square feet as the primary benchmark for real estate deals.
“Our business is all about leasing access to power,” said Michael Foust, the CEO of Digital Realty Trust, the largest data center developer landlord. “The square footage is almost secondary in some cases.”
The consumer perspective:
“If your company isn’t measuring whatever the widget is by kilowatts, you need to,” said Chris Crosby, VP of business development at Digital Realty. “Power is really the key element for measurement. The clients that understand things in these terms make the best decisions.
“If you talk about square footage in the data center, you’ll get confused in your buying decision,” Crosby added. “Getting an understanding of your kilowatts will give you a lot of insight into your costs.”
The article then describes a leasing decision scenario for Currenex:
“An example is Currenex, an electronic trading platform specializing in the foreign exchange markets. The company’s business was growing quickly, but its two third-party data center providers had limited capacity.
“We were operating in data centers that were out of power,” said Chad Parris, VP of technical operations at Currenex. “We’re not big enough to build our own facility, so it became tempting to buy cage or cabinet solutions (in colocation centers).”
Instead, Currenex performed a detailed analysis of the power required to execute its trades, and then used those numbers to convert daily volume of foreign exchange trades into kilowatts. This allowed the company to model its future power needs based on estimates of its future trading volume.
Currenex wound up leasing 2,500 square feet space in a Digital Realty data center in New Jersey, with an option for additional space as its operation expands. The wholesale data center model “was the cheapest way to buy a long-term position in kilowatts,” Parris said. “In year four, our cost per kilowatt a month is about a third of what it would have been.””
——
Why is this interesting? After all, data center leasing doesn’t equate to cloud computing. As the economy recovers, there will be greater demand for all types of energy, which will raise all energy prices, including electricity. Understanding the kilowatt component of your workloads will enable better financial analysis on transaction run costs across computing environment destinations: traditional datacenter, outsourced datacenter, internally owned and managed clouds or third party owned and managed clouds.
Additionally, if the cloud computing environment providers start breaking out kilowatts as a pricing factor, you will be prepared.
Related posts:
