Five data center questions every CEO should ask when developing growth strategies.
This is the first article in a new series where we’ll explore the IT and data center considerations that leaders should keep in mind as they grow and expand their businesses. In part one of this series, we’re starting at the top – summarizing five important IT and data center considerations for the chief executive officer (CEO).
CEOs have a number of duties and responsibilities within their organizations, but none are more important than steering the creation and overseeing the execution of corporate growth plans. For CEOs of hyperscale companies and large enterprises, those strategies invariably include digital infrastructure, the underpinning foundation that will enable the growth and scale of their businesses.
Any decision that a CEO makes regarding the growth and expansion of his/her business requires consideration to be paid to how they’re going to scale their digital infrastructure to meet the demand that will be generated by new and expanding customers. CEOs will need to work with their teams to understand the best technology stack, and ultimately, where that technology stack will reside – whether on-premise, in the cloud, in a third-party data center or some form of a hybrid model based on the different workloads.
If CEOs deem that outsourcing their data center requirements, in part or in full, is the right decision for their businesses, here are five important questions to consider when outlining the growth strategies for the near term and well into the future:
How will the infrastructure choices I make today support my company’s long-term growth model?
As a company scales its operations, the right digital infrastructure needs to be in place to support that growth. For those CEOs who have opted to leverage data centers as part of their growth strategy, there are three choices to consider.
First, companies can build data centers themselves. Second, they can buy data centers that are already built. Or, third, they can go the route that many choose to take and lease space from a third-party provider.
Leasing is an attractive alternative to building or buying for hyperscalers and large enterprises for several reasons. Leasing gives companies more immediate access to data center space in multiple, in-demand markets. If a company finds itself needing to scale quickly to meet a sudden increase in demand, or should a company need access to a new geographic market to reduce latency or meet requirements like GDPR, leasing is the fastest route.
Whether looking for a data center in a Tier I or Tier II market, CEOs are likely to find an option available, which will speed their time to market considerably. Finally, working with data center providers who are building facilities as part of large campuses gives growing companies the opportunity to scale to meet increases in demand.
In addition, the decision to build, buy or lease can drastically impact the amount of capital needed to fuel expansion plans and the speed in which a company enters new markets, which makes it an essential consideration for CEOs when constructing company growth strategies.
What is the financial impact of my data center decisions?
As we discussed previously, CEOs WHO are weighing the option to build, buy or lease data center space needed to fuel growth must consider the financial impacts on their balance sheets.
Purchasing or building data centers requires a significant amount of upfront capital (CapEx). Companies looking to build must account for buying the land, conducting environmental studies, and financing design and construction costs. Those looking to buy will need to be prepared to outlay the intensive capital needed to purchase the facility. Both options then require the additional investment of recruiting knowledgeable staff to manage and maintain those data centers, as well as paying their salaries and other related expenses over time.
Leasing breaks that initial CapEx into a recurring operating expense (OpEx) that delivers both the desired data center space and the knowledgeable staff needed to operate it. For many CEOs, this is the more fiscally responsible option and one that enables them to focus on their core business while letting others focus on running the data center.
Am I looking for a partner or a vendor?
CEOs who have decided to outsource their data center infrastructure to a third-party should think about what they’re looking for in the data center provider that they choose to partner with to enable their growth.
CEOs should consider if they’re looking for a company that will simply lease them data center space, or one that will serve as a strategic partner that can scale – that is agile – that can sit at the planning table and strategize about capacity needs well into the future.
Predictability, flexibility and transparent management are key. A strategic partner will have the right team in place. They’ll be financially sound, and they’ll have access to capital to continue developing in the markets that are key for future and continued growth.
What markets are critical to my business?
Location is everything in the data center world. And there are several reasons why a company would want a data center in a specific market.
There could be data sovereignty or data management/storage regulations which require any data generated in one country or one region to remain in that country or region. Or a company may be concerned about latency and wants to ensure the disparate applications and microservices that are running in their data centers are operating as quickly and effectively as today’s advanced solutions require.
As CEOs think about the future of their business, it’s essential to consider the locations and markets that are critical for their operations – not just for today – but as the company grows in the future.
How does the data center partner align with my corporate social responsibility goals?
Many companies are pledging to fight global climate change, embrace sustainability best practices and become more environmentally conscious. If a company is going to invest in green initiatives and other corporate social responsibility efforts, it’s essential that their partners share these principles and have similar programs within their own organizations.
CEOs who are looking to embrace environmental sustainability programs and goals in their organization should look for a data center partner who can work with them to decrease carbon emissions, reduce water usage for cooling, and take advantage of clean and renewable energy whenever possible to help lessen the environmental impact of their data center operations.
As CEOs build out and execute on their corporate growth strategies, digital infrastructure must be a foundational part of their strategic thinking and planning. By keeping these five considerations in mind when planning, CEOs can ensure that they’re making the appropriate IT and data center choices for their organizations that will help drive their businesses forward.
Success will ultimately depend on identifying the best way to scale their digital infrastructure to meet increasing demand, choosing the right data center providers, and establishing key performance indicators in which to measure IT choices and strategic partnerships.
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