To Insource or Outsource Data Centre Services?

To Insource or Outsource Data Centre Services?

The impact of cloud computing on decision making in 2011

Thursday, June 09, 2011 | Patricia Escarcega

Questions of whether to outsource or in-source data centre services are today heavily influenced by the allure of cloud computing, which has transformed the way businesses now think about outsourcing. In light of today’s complex, hybrid, and multifaceted data centre services landscape, how should organisations approach the critical decision of whether to outsource or insource data centre services?
All good data centre infrastructure evolves from careful analysis to determine how and where data centre services should be sourced. "Cloud, Managed Hosting, Co-lo or In-house?,” a white paper based on a recent webinar from Gartner (‘Best Data Centre Sourcing Model: Cloud, Host, Co-lo or Internal?’), explores the specific considerations and actions organisations need to take when selecting data centre services. One important consideration is to look closely at business units and to identify their basic role within the organisation—strategic or tactical—in order to determine whether the corresponding IT functions are best served by an external provider or kept in-house.. Today, many organisations are tempted to squeeze everything into the cloud, but this one-size-fits-all approach may not always prove the best fit. In many cases, hybrid solutions may prove a better option.

The paper also highlights another aspect of the data centre services decision process that deserves special attention: who controls different aspects of the infrastructure? Organisations need to develop a clear understanding of who controls data, applications, services, servers, storage, networks, and all other infrastructure components. Although sometimes overlooked, it’s also important that organisations cultivate a strong understanding of the capabilities of their in-house IT department.

Costs are another major factor when deciding on data centre strategy. For organisations that are comparing in-house data centre infrastructure with outsourcing to an external hosting provider all the costs of internal facilities must be calculated, including maintenance, licensing, security, power, connectivity, cooling, property costs, and staffing resources, and then compared to the annual contract costs of external hosting.

Organisations should also consider the less obvious costs associated with both internal and external hosting. These may include costs associated with loss of flexibility, the opportunity costs that come with allocating staff resources to data centre maintenance, and efficiency costs related to economies of scale. Improvements in technology have had a major effect on internal and external hosting costs, with more organisations reassessing their outsourcing strategies to take advantage of the muscle of cloud computing and virtualization. But migrating to the cloud has its own set of special considerations that should be weighed carefully before an organisation outsources all its data centre services.

The final goal, of course, is to ensure the ‘data centre’ whether in-house, external, or a hybrid, becomes a seamless extension of the organisation. The white paper outlines the specific criteria that need to go through a business impact analysis to determine the value of each business process to the organisation. Service reliability, performance, and incident response times are all important and highly relevant aspects of evaluating an external service provider, but there are other factors, often overlooked, that should be considered when calculating the real costs of in-sourcing or outsourcing data centre services.
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