Data Center Costs

Data center costs are the total expenses associated with designing, building, operating, and maintaining a data center. These costs include capital expenditures (CapEx) and operational expenditures (OpEx), both of which contribute to the total cost of ownership (TCO) of a data center.

Understanding these costs is crucial for organizations planning to build, expand, or optimize their data center operations. The costs can vary depending on many factors including geographic location and whether a company operates an on-premises data center, leases colocation space, or uses cloud-based infrastructure.

Common Data Center Costs

Facility Construction and Real Estate Costs

• Land acquisition and leasing. This includes the cost of purchasing land for a new data center or leasing an existing property. Locations near major fiber routes or energy sources may be more expensive but provide strategic benefits.
• Building construction and retrofitting. These costs cover building a new facility or converting an existing structure into a data center. Expenses include materials, labor, engineering, and ensuring compliance with local building codes.
• Colocation leasing costs. Renting space in a colocation facility instead of owning an enterprise data center incurs costs based on power usage, rack space, and additional services.

Infrastructure and Equipment Costs

• Servers and IT hardware. This includes the costs of purchasing and upgrading compute, storage, and networking hardware such as servers, storage arrays, switches, and routers.
• Rack infrastructure. These expenses cover the cost of racks, rack power distribution units (PDUs), and cabling needed to support IT equipment.
• Backup and redundancy systems. Investing in uninterruptible power supply (UPS) units, backup generators, and redundant power and network paths ensures high availability and disaster recovery preparedness.
• Monitoring and management tools. Implementing DCIM (Data Center Infrastructure Management) software, automation tools, and remote monitoring solutions helps track performance and optimize operations.

Power and Utility Costs

• Electricity for IT load. This refers to the energy consumed by servers, storage, and networking equipment, typically measured in kilowatt-hours (kWh).
• Cooling energy consumption. A significant portion of power usage goes into cooling systems to maintain optimal operating temperatures for IT equipment. Other systems such as lighting also incur energy costs.
• Water consumption. Data center water usage is a growing concern, particularly for cooling towers in water-cooled systems. Some facilities use reclaimed or recycled water to reduce their dependence on freshwater.
• Renewable energy adoption. Some data centers invest in solar, wind, or hydroelectric power to lower energy costs and reduce their carbon footprint.

Security and Compliance Costs

• Physical security. Data centers invest in biometric access controls, security guards, perimeter fencing, and video surveillance systems to protect against unauthorized access.
• Cybersecurity investments. To protect sensitive data, data centers implement firewalls, intrusion detection systems (IDS), and encryption.
• Regulatory compliance. Data centers must meet industry-specific regulations, such as HIPAA (healthcare), PCI DSS (payment processing), GDPR (data privacy), and SOC 2, which may require additional investments in security and auditing.

Maintenance and Operational Costs

• Routine hardware maintenance. Preventative servicing and repairs are necessary for IT equipment, cooling systems, and power infrastructure.
• Software licensing and upgrades. Subscription costs are incurred for enterprise software, operating systems, and security tools.
• Vendor support contracts. Extended warranties, service agreements, and emergency response contracts with equipment providers are often required.
• Incident management. Costs arise from unplanned outages, troubleshooting, and

Staffing and Personnel Costs

• On-site IT staff. Salaries are paid to system administrators, network engineers, and support personnel responsible for maintaining IT operations.
• Facilities management. Engineers oversee HVAC systems, power distribution, and physical security within the data center.

Disaster Recovery and Redundancy Costs

• Backup data centers. Maintaining a secondary data center for failover and disaster recovery purposes ensures business continuity in case of primary data center failure.
• Off-site and cloud backups. Storing backups in geographically diverse locations helps mitigate risks from natural disasters, cyberattacks, and power failures.
• High availability infrastructure. Investing in redundant power supplies, network connections, and load balancing supports uninterrupted service and high uptime.

Colocation and Cloud Service Costs

• Colocation costs. Leasing space in a colocation facility may include charges for power, cooling, security, and bandwidth usage, which can vary depending on the size and location of the leased space.
• Cloud vs. on-premises costs. Some organizations migrate workloads to public, private, or hybrid cloud environments to reduce capital expenditures (CapEx) and shift expenses to operational expenditures (OpEx), which may offer more flexibility and scalability.

Managing and Optimizing Data Center Costs

To control costs while maintaining efficiency and reliability, organizations should consider:

• Energy efficiency initiatives. Improving cooling efficiency, virtualizing workloads, optimizing server utilization, and using energy-efficient hardware can lower power costs and improve overall operational efficiency.
• Hybrid IT strategies. A mix of on-premises, colocation, and cloud computing helps optimize spending by balancing workloads across various platforms based on cost and performance needs.
• Negotiating vendor contracts. Evaluating multiple suppliers and negotiating better pricing on hardware, software, and colocation services can lead to cost savings and improved terms.
• Data center consolidation. Eliminating underutilized data centers or migrating workloads to high-efficiency facilities can reduce operational costs and improve overall resource utilization.
• DCIM software. Implementing Data Center Infrastructure Management (DCIM) software enables real-time monitoring, management, and optimization of resources, leading to better visibility, reduced downtime, improved capacity planning, and greater productivity, all of which help reduce overall operational costs.

How DCIM Software Can Help Reduce Data Center Costs

Leading data center professionals are increasingly leveraging modern DCIM software and getting a significant return on their investment, including:

• Better uptime. The cost of downtime varies greatly by organization, but it’s almost always expensive. With real-time power and environmental monitoring that lets you know of potential issues before they become bigger problems and accurate asset and connectivity documentation that enhances planning and troubleshooting, DCIM software can mitigate the risk of costly downtime.
• Increased efficiency of resource utilization. DCIM software enables more informed data center capacity planning to get more out of your existing facilities and defer the need for costly expansions. For example, Comcast found 40% stranded capacity in their data centers and Cisco consolidated 67% of their colo cages in one site saving them $40,000 a month.
• Higher people productivity. By providing a 3D digital twin that enables remote data center management and automation via integration that recues manual effort, DCIM software can dramatically improve the productivity of people. One customer reports that without DCIM software, they would need four to five additional team members which saves them about $500,000 every year.

Want to see how Sunbird’s leading DCIM software can help you reduce your data center costs? Get your free test drive now!