Total cost modelling and strategic sourcing strategies for data centres in upcoming era

The developing demand for IT resources from organizations that are constantly increasing and improving their businesses adds significant pressure on data centres.
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Total cost modelling and strategic sourcing strategies for data centres in upcoming era International Journal of Management (IJM) Volume 6, Issue 8, Aug 2015, pp. 57-70, Article ID: IJM_06_08_007 Available online at http://www.iaeme.com/IJM/issues.asp?JTypeIJM&VType=6&IType=8 ISSN Print: 0976-6502 and ISSN Online: 0976-6510 © IAEME Publication ___________________________________________________________________________ TOTAL COST MODELLING AND STRATEGIC SOURCING STRATEGIES FOR DATA CENTRES IN UPCOMING ERA Dnyanesh Sarang Sr. Manager – Sourcing Analytics, Global Indirect Purchase Organization Sandvik Asia Pvt Ltd, Pune, India Srikanth Pingali Asst. Manager – Sourcing Analytics, Global Indirect Purchase Organization, Sandvik Asia Pvt Ltd, Pune, India Giri Ganesh Asst. Manager – Sourcing Analytics, Global Indirect Purchase Organization, Sandvik Asia Pvt Ltd, Pune, India ABSTRACT The developing demand for IT resources from organizations that are constantly increasing and improving their businesses adds significant pressure on data centres. Industry predictions show that data centre traffic will increase at a CAGR of 23% till 2018, and their workload will increase by 14%. A certain growth in data centre investments will be witnessed along with the improving economy and increasing demand. For many organizations, it becomes essential to frame a robust sourcing strategy to control their data centre requirements. Depending on the organization’s IT demand, the strategy should help them figure out whether to build a data centre or choose colocation services. In both cases, a number of cost elements add onto the high costs of the facility. A total cost of ownership (TCO) model is a viable tool to estimate the overall costs involved in a data center facility. Additionally, all data centres should be mindful of maintaining a data migration strategy and also plan out the lifecycle of the data centre which could potentially reduce the operating and or remodeling costs of a data centre. The lifecycle strategy for a data center should account for future planning in terms of space, cooling, airflow, electricity planning and next generation equipment. This could be achieved by incorporating key elemental tools and systems for capacity utilization and energy management. A design based strategy that could be helpful for smaller organizations would be modular data centre design, which could adapt and grow along with the growing demand. With a modular design in place, the facility could evolve http://www.iaeme.com/IJM/index.asp 57 editor@iaeme.com Dnyanesh Sarang, Srikanth Pingali and Giri Ganesh into a hybrid data centre that includes cloud, colocation and merged services. This could be developed into a revenue source for the organization with time. Keywords: Data Centre, Total Cost of Ownership, Strategy, Modular Design Cite this Article: Dnyanesh Sarang, Srikanth Pingali and Giri Ganesh. Total Cost Modelling and Strategic Sourcing Strategies for Data Centres in Upcoming ERA. International Journal of Management, 6(8), 2015, pp. 57-70. http://www.iaeme.com/IJM/issues.asp?JTypeIJM&VType=6&IType=8 1. INTRODUCTION Data centre has become an integrated part of IT department operations of every organization. Increasing data creation and operations, with new product and application development is creating a steady demand for data centres within these organizations. In this dynamic scenario, smaller organizations rely on colocation services to meet their data centre needs; however, this is expected to change resulting in many companies trying to set up their own data centres 1.1. Market Growth In 2013, Cisco Global Cloud Index predicted a 23% CAGR growth in global data centre traffic between the period, 2013 to 2018, as shown in Graph 1 1. Global Data Centre IP Traffic Growth 9.5 8.6 8.5 7.5 7.1 Zettabytes per year 6.5 5.8 5.5 4.7 4.5 3.8 3.5 3.1 2.5 2013 2014 2015 2016 ...