August 6th, 2008
The data center cost conundrum
The other day I stumbled across a BusinessWeek slide gallery that shows the comparative cost of the five lowest cost data center towns in the US. Not being an expert on these matters, I passed the baton to my Irregular friend Vinnie Mirchandani who understands these things far better than I will ever manage. His post commenting on the topic makes revealing reading. Rather than riff around it, I’ve unashamedly blagged the ‘meat’ of Vinnie’s post where he asks the kind of questions that all CIOs should be considering:
Such as why do data centers need to be amortized 3 times higher in New York or San Francisco compared to Sioux Falls? Do HP and EMC triple their prices when they sell in Manhattan? Does reinforced concrete cost that much more in New York? Why property and sales tax in San Francisco is just 1/3 that in New York? And heating and air conditioning only 1/5th in San Francisco? I mean there are regional differences but that dramatic?
The two categories of fuel related costs they catalog across the 10 cities only amount to 6.5% of total DCcosts. So, are HP, IBM, Dell etc just hyping up the significant cost of energy cost of DCs in their “green campaigns”?
If you did a bit of web search on similar Boyd analysis from previous years, Sioux Falls has actually become much cheaper since last year (from $ 16.1 million to $ 11.1 million), but New York has almost doubled since 2006. Boyd has over the years modified square footage and DC employee counts so numbers are not as comparable year to year but the numbers are sufficiently scary that Mayor Bloomberg should be worried about all kinds of corporate location business, not just data centers, in his city.
For my part, I’ve extracted the numbers and put them into a comparative spreadsheet which you can share with others. The image is taken from a chart I created that shows the dramatic cost differences between the highest and lowest cost cities.
Dennis Howlett has been providing comment and analysis on enterprise software since 1991. See his full profile and disclosure of his industry affiliations.
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