Finance vs operations: who’s leading who in the data centre world?

It’s no secret that a data centre can represent a huge investment. For example, Apple recently announced an investment of €1.7 billion in new Irish and Danish data centres, as well as further financing in sites across the globe.

Given the scale of investment needed, and its role in the business, every part of the organisation believes they have a stake in a data centre’s success: from the CEO, to the CFO and CIO, right down to the operations team who keep the data centre running.

Yet ultimately, the data centre remains a financial asset for the business; one that is expected to provide a substantial return on investment (ROI). It needs to be treated as such.

Schoolboy errors

Unfortunately, all too often data centres aren’t managed as the financial asset they are. This will swiftly result in three common mistakes, each building on the last.

First, it is easy to see the data centre as an operational asset and treat that as its primary purpose. As a result, IT departments will neglect its core financial role.

>See also: Inside the UK’s first collaborative data centre

Instead, planning and monitoring will be focused purely on ensuring the data centre’s operational effectiveness. While this can be practical on a day-to-day basis, it cannot give the insight needed to ensure that the data centre is providing value to the business.

Second, even if the organisation does recognise the financial value of its data centre, financial planning and monitoring tends to sit completely separately from operational planning and monitoring – making it hard to reconcile the two areas.

Third, an operational data centre provides a huge amount of data for teams to assess. This makes it difficult, if not impossible, for teams to quickly gather and decipher all of the information they need to predict future data centre performance.

This in turn forces operations teams to make a number of assumptions whenever they wish to forecast future data centre performance.

Big issues

These mistakes lead directly to three overarching issues. First, if the organisation focuses on the data centre as an operational asset, the tail will end up wagging the dog. Financial plans and investment decisions will be focused on supporting data centre operations, when the opposite should be the case. Second, keeping operational and financial planning and monitoring separate presents an immediate risk to the organisation.

For instance, an ill-informed financial decision can easily cripple a data centre’s operational capability, while the wrong operational decision at the wrong time can degrade the value of a data centre investment.

Lastly, the more data centre teams rely on assumptions when making forecasts, the less confidence they have of those forecasts’ accuracy. This means any decision made can only be a “best guess” approach, while the time taken to make even these forecasts means that the organisation cannot hope to understand the impact of every choice it makes.

Taking the lead

In order to deal with these issues, organisations first need to ensure they are viewing their data centre in the correct way – as a financial asset. This means that all decisions made should have the ultimate aim of minimising the total cost of ownership (TCO) and maximising the ROI.

Operational decisions should always be made with this focus on TCO and ROI in mind, as this is the only way the organisation can be confident that every action they take is providing the best possible value to the business.

Second, both financial and operational decisions should be made from the same data that provides the same insights into performance and costs. In order to effectively support the organisation, operational teams need to know precisely how their decisions and actions will impact TCO, so that they can always ensure that they are taking the best possible decision for the business, rather than simply what will provide the best short-term benefit.

Lastly, since there will still be a vast range of data produced by a data centre, both financial and operational teams need to be smarter about what data they collect and how it is analysed.

While the average data centre will throw up countless data points that can be measured, recorded and analysed, only a fraction of these will be truly relevant to understanding data centre performance and TCO.

By combining these relevant data points with the correct analytical models, organisations will no longer have to rely on forecasts based on best guess assumptions.

Instead, they can use accurate predictions that both provide guidelines for future investment, and allow the business to measure whether any changes made are having the predicted effect.

>See also: Will public cloud kill the data centre?

The other benefit to using fewer data points is that, when used in conjunction with the correct tools, analysis can be performed much faster, and much more frequently.

This increased frequency means that even relatively minor decisions can be made secure in the knowledge that the business knows how it will affect the data centre’s ultimate value to the business; whether the decision is financial or operational.

Essentially, the secret to success with data centres is not to see them as simply machines that must be kept operational. In fact, they are factories, major financial assets that demand ongoing reinvestment, and should be treated as such.


Sourced from Zahl Limbuwala, CEO, Romonet

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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