Tips to Manage Your Colocation Data Center Costs

Are you paying for colo space and/or power you’re not using?

With colocation data center demand soaring, costs are rising, and vacancy rates are at record lows. Limited availability, coupled with increasing power and operational expenses, is putting financial pressure on businesses renting colo space.

To stay competitive, data center professionals need a strategic approach to cost management—one that optimizes resource utilization to control expenses without sacrificing performance or scalability.

In this blog post, we’ll explore the common costs of renting colo space and how, with the right tools, tenants might be able to identify savings opportunities.

Assess Your Current Colocation Costs

Before making cost-saving decisions, start by understanding where your money is going. Colo expenses typically fall into these main categories:

• Space. Customers pay for the physical rack or cabinet space they occupy, which is often billed per rack unit, rack, cage, or suite. Pricing may vary depending on the size and location of the space.
• Power. Power is usually billed per rated circuit or by actual usage. Colocation providers may implement a surcharge for clients whose power usage exceeds predefined thresholds.
• Cooling. Cooling costs are typically included in the overall cost of space and power. However, in some environments, some providers might charge extra for specialized cooling services.
• Connectivity. Customers are billed separately for network connectivity, including bandwidth, cross-connects, and additional network services like cloud connections. The pricing varies based on bandwidth usage and any additional services requested.
• Remote hands. Remote hands services, which provide on-site technical support for tasks like server reboots, hardware installations, or troubleshooting, are typically billed separately on an hourly basis.

Identifying areas of waste is crucial. By leveraging data center management tools, you can pinpoint inefficiencies, make data-driven optimizations, and remotely manage your colocation data center.

Save Colo Costs with DCIM Software

Many colo tenants struggle with underutilized space and power resources, unexpected power overages, and having to create many costly remote hands tickets. DCIM software provides real-time insights to help solve these challenges.

With DCIM software, you can:

• Find stranded capacity. Built-in power circuit intelligence helps you understand the power load and capacity at every hop, stranded capacity charts show you how much power is available at each rack, and automatic device power budgeting helps you safely deploy more servers in your existing racks, achieving up to 40% more utilization of colo space and power.
• Identify ghost servers. A built-in report lists all your potential ghost servers based on the power they draw. Adding up their total energy consumption provides an estimate of the energy you will save by shutting them down. Removing ghost servers also frees up space which can be used to consolidate racks or to improve airflow for other equipment.
• Drive more efficient behavior from customers. Energy reports provide insight into consumption by data center or customer. This information can be used to inform customers of the energy they use and encourage them to seek out ways to minimize their energy usage. Evaluating the energy consumption of your teams and devices may also uncover power hogs and areas where efficiency can be improved.
• Avoid overage charges and validate energy bills. Monitor colo energy consumption to avoid peak demand charges and compare actual usage against billed amounts to identify and discrepancies or billing errors.
• Remotely manage your data center. Remote hands tickets are expensive. With DCIM software, you can perform more routine data center management tasks remotely without having to create a ticket to send someone onsite all the time.

Real-World Example: Cisco Leverages DCIM to Consolidate Colo Cages by 66% and Save $40,000 Per Month

Cisco deploys hardware in thousands of racks in colocation cages, where each site can have anywhere from 3 to 80 cabinets.

Before deploying DCIM software, Cisco faced challenges managing and getting the most out of their colocation footprint due to a lack of easy-to-access information. This led to stranded capacity, underutilized power contracts, and unnecessary operational expenses.

With Sunbird DCIM, Cisco has a single pane of glass and digital twin of all their sites which enables remote data center management and more informed capacity planning, leading to significant cost savings.

“When we pull a contract for 50 kW, but we’re only using 35 kW, then we’re wasting a ton of space,” said Matt Adkins, Cloud Data Center Engineer, Cisco. “dcTrack helps me use that remaining 15 kW inside the cage.”

With Sunbird’s dcTrack, Cisco was able to consolidate three cages down to one in one of their sites. This saves them $40,000 a month.

“We are running four current consolidation and migration efforts all with the same savings,” said Adkins.

Further, Cisco leverages Sunbird DCIM to perform more routine tasks remotely, rather than having to create expensive remote hands tickets.

“Having a digital twin is nice because I don’t have to create a $400 remote hands ticket to measure things or take pictures for me,” said Adkins.

For more information, read the complete Cisco case study.

Other Tips to Manage Colocation Data Center Expenses

In addition to using DCIM software, these strategies can help ensure you're getting the most from your colocation environment while keeping costs in check.

• Optimize space utilization. Consolidating workloads and decommissioning underutilized servers can free up valuable rack space and reduce power consumption. Explore deploying high-density racks and energy-efficient servers to maximize computing power within a smaller footprint. Additionally, consider implementing virtualization strategies to optimize resource utilization and minimize the need for excess hardware.
• Reduce power consumption. Managing power consumption more effectively can help improve energy efficiency and cut costs. In addition to leveraging DCIM software, consider installing intelligent rack PDUs for power data at the device level, and installing more energy-efficient servers.
• Reevaluate connectivity capacity. Tracking port capacity and utilization can help manage network and connectivity costs by reducing unnecessary expenditures and ensuring efficient use of existing infrastructure.
• Negotiate with your colocation provider. Negotiating favorable terms with your colocation provider can help lower costs and provide greater flexibility. You might attempt to negotiate long-term commitments or bulk pricing to secure better rates, as providers may offer discounts for extended agreements or increased usage. It can also be beneficial to obtain bids from multiple colocation providers to strengthen your position, as a competitive market may lead to better pricing or added perk.
• Plan for future growth without overspending. Planning for future growth without overspending requires a strategic approach to scaling your colocation environment. Regular audits of your colocation footprint can help ensure that resources align with your evolving needs, allowing you to identify inefficiencies before they become costly. Additionally, developing a long-term capacity plan enables you to make informed decisions, helping you avoid reactive, high-cost expansions and optimize existing resources effectively.

Bringing It All Together

Containing colocation data center costs requires a combination of strategic planning, careful monitoring, and proactive management.

By regularly evaluating your colo environment and leveraging the right tools, you may be able to get more out of your existing footprint and save money.

Want to see how Sunbird’s world-leading DCIM software can help you manage your colocation infrastructure? Get your free test drive now.