Data centers and digital transformation: A two-part ServerFarm blog series.

Considering a different approach to how your existing data center is used will create opportunities to accelerate the digital transformation of your business. In the digital transformation era, it will also change how the rest of the C-Suite view the role of the CIO and the IT function.


How can enterprises use existing data center capital investment to drive Digital Transformation?

 

The upper end of the data center construction market is dominated by the ‘Super Seven’ hyperscale cloud players. These cloud giants issue regular notices announcing large scale multi-megawatt data center projects. These are to be welcomed and point to continued demand for data centers and add to the health of the sector.

Hyperscale players tend to look at 30MW+ 10 to 15-year takedowns of data center capacity. However, for enterprises whose core business is not providing global cloud services, the top end data center requirement is more likely to be in a 3-5 MW range over a five-year term.

Many enterprises will have existing facilities in play where initial investments extended to 10 or 15 MWs of capacity. In some cases, these assets were underutilized.

Is there anything more depressing than an empty hotel? Probably not. But how about paying all year round to operate a half empty data center? In the era of digital transformation this is not sustainable, necessary or acceptable.

So, the question becomes: What happens in a situation where a 15 to 20-year asset with tens of MWs of power is operating under capacity?

The key for enterprises is finding flexibility.


Data centers and digital transformation


Businesses are facing the pressures of digital transformation because once loyal customers have experienced digital interactions and they want more.


For those waking up to the realities of digital transformation keeping data center capacity in reserve is no longer an option. The good news is that they are no longer constrained by old style approaches to the data center. There exist new and exciting flexible solutions in terms of contracts and technologies.


A new response to market needs
Where a company is sitting on thousands of sq. ft of spare white space and MWs of available power in an existing data center, the answer is to optimize its current occupancy while retaining the flexibility to expand when necessary.

The ServerFarm approach helps customers with existing data center assets do exactly this through a better type of sale leaseback deal. One where the enterprise becomes the wholesale tenant within the data center while retaining flexible options.

These options can include provision of a base requirement for wholesale space while allowing the enterprise to upsize or downsize based on its digital transformation strategy. For example, where digital transformation means accommodating evolving edge requirements or large-scale AI and ML projects the enterprise can expand or contract as necessary at short notice.

An operator such as ServerFarm specializes in exactly the type of flexible deals that others in sale leaseback probably can’t. It provides a base to meet particular requirements with a flexibility founded on a long-term view of customer value executed through contracts which vary on a case by case basis.

A supply side decision-making process unencumbered by quarterly revenue reporting enables such creative deals. Being agile and flexible plays to this advantage while retaining the benefits of having access to capital and the backing of a big organization. This means deals are done to suit all parties.

How is this be delivered?
Under a flexible sale leaseback arrangement which converts an enterprise facility into a Multi-Tenant Data Center an enterprise data center owner can realize many benefits.


Entering into a strategic partnership with a specialist market player such as ServerFarm with its extensive experience in structuring sale leaseback deals opens all the options outlined above plus new revenue opportunities.


 

The structure of the engagement means all parties participate in freeing up locked space within the existing data center. This capacity becomes a revenue generator.  This can often be achieved quickly. The freed space can be made attractive to prospective third-party tenants as it can be offered on attractive terms. ServerFarm has a long experience of structuring such sale leaseback contracts which make freed up space available.

For too long the commercial data center industry supply side has been telling enterprises: “Here’s what we have take, it or leave it.” Today, more flexible approaches are based on, “Tell us your requirements and we’ll find a solution to meet those needs.”

ServerFarm turns legacy data centers into modern facilities. Combined with structuring flexible deals it brings new market opportunities for clients and partners. It is a successful approach which has already been proven over time.

ServerFarm has taken a pioneering approach to rescuing stranded capacity and turning it into a business asset. This is built on commercial, operational and technological expertise through years of retrofitting shell space.

ServerFarm does not specialize in vertical markets. It specializes in technology and the types of deals it chooses to do. It does not seek to supply the largest, flashiest data centers. It focuses on data centers that do exactly what they say they’ll do. It operates according to a simple philosophy. Engage with enterprises by buying existing good value data centers, optimize for maximum efficiency and pass the benefits to the customer.

As enterprises embark on the digital transformation journey, ServerFarm drives value by providing them with robust mission critical facilities with the flexibility, connectivity and operational excellence to suit their needs.


Missed the first post of the Data Centers and Digital Transformation Blog Series? Click on the link below.

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