Tips to help select and manage your co-location vendor

As companies rely more on co-location, cloud and other off-premise computing models, enterprise IT needs to improve how it selects and manages vendors

Tips to help select and manage your co-location vendor

The percentage of IT processed at in-house sites has remained steady at around 70 percent, but data points to a major shift to co-location and cloud for new workloads in the coming years.

Half of senior IT execs expect the majority of their IT workloads to reside off-premise in the future, according to Uptime Institute’s sixth annual Data Center Industry Survey. Of those, 70 percent expect that shift to happen by 2020.

+ Also on Network World: 10 tips for a successful cloud plan +

It is hard to predict what percentage will go to public cloud, but a significant portion of those workloads will be shifting to co-location providers—companies that provide data center facilities and varying levels of operations management and support. 

Many co-location suppliers have been growing rapidly in recent years. Survey respondents listed the following as top drivers for co-location adoption:

  • Reduce churn of noncritical workloads into critical space
  • Mergers/Acquisitions activity
  • Disaster recovery site off the same power grid
  • Executive directive to divest owned data center infrastructure
  • Global expansion
  • Avoid large capital expenses of new site build
  • Not core business
  • Lack of confidence in staff/resources

To be clear, there will not be an exodus of enterprise data centers’ workloads to co-location or the cloud. Sunk investments, human nature and organizational resistance will sustain many traditional enterprise IT roles into the foreseeable future.

Yet as business lines demand agility and transparency, enterprise IT will need to emulate service providers, as they will increasingly be competing with them. Additionally, IT and data center teams can reorient to provide corporate governance, advising and assisting business lines with service provider procurement and managing vendor relationships.

Despite increasing adoption of cloud and co-location, the outsourcing model is not a panacea. According to 2016 Survey Data:

  • Forty percent of enterprise respondents pay more for co-location contracts than they had initially planned or expected
  • Nearly one-third of respondents experienced an outage at a co-location vendor site
  • Over 60 percent of respondents said the penalty clause in their Service-Level Agreement (SLA) would not adequately offset the cost of that outage to the business

Enterprise IT organizations pay a premium for a third party to deliver data center capacity, and they should hold service providers to higher standards than their own organization. There is significant room for improvement in vetting, negotiating and managing those relationships.

3 ways to improve vendor selection and management

Companies need to become much savvier about defining their requirements. The following recommendations can help enterprise IT organizations improve vendor selection and management:

  1. The site: Availability is at the forefront of all co-location discussions. Ask for industry certifications and documentation. The vast majority of major suppliers claim to build to Uptime Institute’s Tier III standard. Which ones can provide verification that the site was built to that specification? If your IT workloads are critical to your business, can you afford to take their word for it? Look for trusted third-party validation: Uptime Institute Tier Certification Constructed Facility or Management and Operations Stamp of Approval can shorten the due diligence cycle.

  2. The operations: The biggest risk of an IT outage is due to operations failures. If you want to see how a data center really runs, ask to review the last five years of incident reports. Demand to inspect maintenance records. Ask to see commissioning reports. Negotiate increased control and transparency with your provider to ensure operational excellence.

  3. The business: A data center that has been operated by the same team with the same vendors and clients for several years will likely be very stable. But if that provider is bought by another company, or if it is conducting a consolidation project, changing operations programs or installing new equipment, you will have a higher risk of failure.

    Ask about the current occupancy rate. If you are the first tenant in a shared space, every other person coming in is an opportunity for your equipment to be de-energized, for a technician to make a mistake. Ask about turnover of staff and average tenure with the company. Turnover can be a red flag. Is the equipment infrastructure at the end of its lifespan? The company is likely planning on upgrades that you should be aware of before signing.

Write better SLAs and RFPs

Many problems with co-location providers can be avoided by setting more effective terms up front, by writing better requests for proposals (RFPs) and SLAs.

To that end, Uptime Institute conducted a panel with its user group, the Uptime Institute Network, including participants from large enterprise organizations and co-location vendors, to come up with the following recommendations for writing better RFPs and SLAs:

Don’t use the RFP for due diligence: Twenty-page RFPs are expensive and time consuming to write and evaluate. Don’t waste your or your potential providers’ time with a huge document. Focus on your business requirements and must-haves in a short two- to three-page RFP. 

Customers are not a substitute for due diligence: Large companies renting space in the facility is not an indication of whether the site will meet your business requirements. You have no way to find out if that workload is business critical.

Avoid overprovisioning: Common mistakes include relying on IT equipment faceplate data to calculate power draw requirements and underestimating the impact a hardware refresh could have with increasingly efficient equipment.

Worst-case scenario: In the instance of multiple outages, do not focus on increasing financial penalties. SLA penalties will not cover your cost, but will in fact make your contract worth less and less to your provider and would likely drive down service levels. Rather, structure your SLA in the case of multiple outages toward an exit. Negotiate your move-out costs and free rent while you find a new space.

As companies increasingly rely on co-location and other off-premise computing models, enterprise IT and data center staff will need to develop the planning skills, expertise and coordination to play an importance governance role in their organizations going forward.

Join the Network World communities on Facebook and LinkedIn to comment on topics that are top of mind.

Copyright © 2016 IDG Communications, Inc.