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DATA CENTER FACILITIES MANAGEMENT (DCFM)

New Outsourcing Strategy for Maximizing Data Center Efficiency and Minimizing Risk

Where IT is Going

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INTRODUCTION

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CONTENTS

NEED FOR NEW OUTSOURCED SERVICES EMERGING

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ENTER DATA CENTER FACILITIES MANAGEMENT (DCFM)

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DCFM VALUE FUELED BY NEW LEVELS OF DATA CENTER EXPERTISE

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DCFM – A CLOSER LOOK 6

DCFM BUYING GUIDE 6

THE DCIM CONNECTION 7

WHAT TO LOOK FOR IN A COMPREHENSIVE DCFM SERVICE?

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CONCLUSION 10

As a result, a new breed of IT service provider emerged offering new technologies, ample capacity and connectivity, delivered from mega scale data centers, that has forever changed the economics of IT operations and service delivery. It also led to a bifurcation of large and mid-size enterprises faced with choosing between outsourcing or insourcing their IT infrastructure and operations.

Today, on one hand, many enterprises are choosing the cost and operational benefits of outsourcing their IT to meet business growth requirements. In particular, they are seeking to mitigate the cost of operating a data center by purchasing innovative, infrastructure-as-a-service (IaaS) offerings, which enable these enterprises to enjoy carrier-grade data centers; allowing them to free up internal IT resources to focus on core business initiatives. Some of these data center service providers have gained impressive levels of operational expertise and have developed best practices for data center operations based on years of experience delivering complex, enterprise-grade IT solutions tailored to organizations’ unique business requirements.

On the other hand are enterprises that are required, or have chosen, to keep their IT operations in-house and in their own data centers, while balancing the needs of managing their core business. Typically, these companies have significant investment in their internal data centers and attempt to manage the wide variety of complex IT operations and related vendor relationships internally.

The Internet boom of the late 90s and early 2000s launched a mass migration of enterprises seeking the benefits of IT outsourcing. The emergence of virtualized infrastructure and cloud computing created a new business landscape of opportunities along with escalating challenges in capacity and complexity. Public companies came under increasing pressure to reduce financial exposure to the company and shareholders, while CFOs and CTOs became increasingly focused on ensuring that risk mitigation was in place, with attestation to compliance.

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IT outsourcing continues to evolve today. The cloud is driving increasing demand for data center capacity, while the emphasis on hybrid IT is increasing complexity associated with IT solution engineering. As enterprises struggle to balance IT operations and data center management with the need to drive their core business, they are beginning to evaluate new outsourcing strategies to optimize further, security, compliance and risk.

This need to manage and optimize a data center’s physical infrastructure and processes is now referred to as Data Center Facilities Management (DCFM). These are outsourced services specialized for the needs of insourced data center operations and are delivered by dedicated onsite staff 24x7. They allow enterprises, particularly those managing in-house data centers, the ability to outsource just the business of running that data center

This is particularly true for businesses that operate and maintain their own data centers. Typically, these businesses employ skilled IT operations resources whose primary focus is on monitoring, maintaining and ensuring the availability of IT infrastructure required to generate revenue, and less on the efficiency and performance of the data center itself. This, typically, means the management of the physical data center infrastructure, such as mechanical, electrical and

to companies that specialize in optimizing data center performance.

Simply stated, these are the nuanced, and in some cases, mundane activities of running a data center that often get overlooked by in-house data center managers who are more focused on, and given incentives to meet business goals. DCFM provides the expertise and people trained to run physical systems and manage physical and

plumbing (MEP), is secondary to the IT operations. Although secondary, the need remains for the MEP in the data centers to perform at optimal levels, which are, in themselves, highly complex and often underestimated tasks, especially if managing data centers is not core to the business.

mechanical infrastructure and processes with a holistic and disciplined approach.

Unlike Data Center Infrastructure Management (DCIM), which is the broader discipline that integrates both IT operations and the management of physical environments, DCFM is focused only on the physical management and processes.

NEED FOR NEW OUTSOURCED SERVICES EMERGING

ENTER DATA CENTER FACILITIES MANAGEMENT (DCFM)

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DCFM’S CORE VALUES ENCOMPASS:

+ Expertise to optimize a data center’s physical infrastructure

+ Facilitating compliance

+ Enhancing training and safety processes,

+ Improving energy efficiency and risk mitigation.

DCFM exploits existing relationships in the supply chain, provides professional financial reporting and management, and enables awareness and access to the latest thought leadership in data center technology and operational techniques.

By using a DCFM vendor versus an in-house approach, the DCFM vendor is going

to be equipped to generate economies of scale. For example, one DCFM provider was able to reduce a data center’s annual expenses by 13% in the first year through a combination of lower labor rates, renegotiated vendor contracts and increased self–performance.

It’s interesting to note that there is also a related

market for general “Facilities Management” (FM) services. These are outsourced services specialized for the maintenance of commercial buildings. The FM market is large and continues to grow with a compound annual growth rate (CAGR) of 2.5%. The US market revenue is forecast to reach $118 Billion by 2020.

ANNUAL REVENUE IN US FOR FACILITIES MANAGEMENT

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Reve

nue

in $

Mill

ion

Year

2013

$99,429

2014

$101,000

2015

$103,111

2016

$105,957

2017

$109,507

2018

$112,715

2019

$115,578

2020

$117,843$120,000

$115,000

$110,000

$105,000

$100,000

$95,000

$90,000

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Not surprisingly the FM market is served by commercial real estate firms, construction companies and equipment manufacturers who have expertise either in buildings or a particular facet of the commercial buildings physical infrastructure.

By comparison, the market for DCFM is much smaller, but growing much faster with a forecast to have CAGR of 31% with US market revenue reaching $4.5 Billion by 2020. Currently the market for DCFM is also served by many of the same commercial real estate and manufacturing companies.

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DCFM REVENUE GROWTH RATE

NAVIGANT RESEARCH STUDY

Industry analysts point to the DCFM market being underserved by real estate companies and manufacturers that do not have the deep domain knowledge and expertise of focused service providers. They point to the opportunity for IT infrastructure data center service providers, particularly multi-tenant data center providers, and their experience designing and delivering advanced data center solutions for thousands of demanding enterprise customers.

“There is a growing market opportunity for multitenant data center providers to take a leading role in providing comprehensive DCFM services to the enterprise,” said Andrew Donoghue, European Research Manager, Datacenter Technologies, 451 Research. “DCFM providers with substantial experience of delivering wholesale and colocation are well qualified to optimize the management of critical infrastructure and provide significant business and risk mitigation benefits. The opportunity becomes even more compelling if DCFM solutions can be aligned with a more comprehensive infrastructure services agreement with a leading provider.”

DCFM VALUE FUELED BY NEW LEVELS OF DATA CENTER EXPERTISE

2013 2014 2015 2016 2017 2018 2019 2020

$5,000

$4,500

$4,000

$3,500

$3,000

$2,500

$2,000

$1,500

$1,000

$500

$0$663 $872

$1,146$1,508

$1,983

$2,607

$3,428

$4,508

ANDREW DONOGHUE, EUROPEAN RESEARCH MANAGER, DATACENTER TECHNOLOGIES, 451 RESEARCH

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DCFM Market Trends

+ Technology and the instrumentation of data has raised expectations of data center operators to track and deliver (often as APIs) real-time status of the data center environment measures; such as temperature, humidity and electrical consumption, and are central to DCFM cost optimization strategies.

+ The emergence of hybrid IT is adding complexity to the IT staff workload, distracting away from MEP management.

+ The security focus of DCFM is related to protecting physical data center systems connected to the Internet from IoT vulnerabilities.

+ Automation is growing in importance as it reduces human workload and reduces human error which is central to DCFM strategies.

DCFM – A CLOSER LOOK

DCFM services now go beyond the realm of traditional consulting and are being offered as productized services delivering end-to-end optimization and management of customer data centers and are backed by industry leading service level agreements.

It stands to reason that the best providers of DCFM would be multitenant data center and IT services providers. Data center operators interested in DCFM solutions should distinguish leading providers by:

+ Their ability to demonstrate an integrated approach

+ A proven framework and methodology that brings efficiency, risk mitigation, cost reduction and excellence to an organization’s operations

+ Deep data center domain expertise and a proven track record delivering DCFM services in a productized fashion to multiple enterprise customers with diverse business requirements

Data center operators should be wary of DCFM vendors focused primarily on offering staff resource augmentation and/or commercial real estate services with little knowledge of critical physical data center infrastructure.

DCFM BUYING GUIDE

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The bulk of today’s DCFM “solutions” are typically simple labor services with some additional contract and vendor management services added on. However, the real value of DCFM comes from more comprehensive DCFM solutions designed to support and integrate with larger DCIM strategies.

So how do you take what you are doing today and refine it into a DCFM service that can ultimately support larger DCIM strategies?

Customers looking to outsource their DCFM should focus on service providers capable of running your DCFM functions in a similar fashion to the way you run your IT operations. And since IT operations are typically run in an ITIL construct, it stands to reason that if you also run your DCFM function in an ITIL construct, you increase your ability to manage them in an integrated fashion and as part of a larger DCIM environment.

Data Center operators interested in comprehensive DCFM solutions should identify providers with broader DCFM service offerings encompassing:

+ Labor Management

+ Contract/Vendor Management

+ Governance & Professional Services

+ Remote Operations

THE DCIM CONNECTION

WHAT TO LOOK FOR IN A COMPREHENSIVE DCFM SERVICE?

+ The key to successful DCFM is having a dedicated team of on-site labor 24x7 to manage all elements and processes of the physical data center i.e. power, HVAC, electrical and mechanical systems, cooling, UPS systems, security, fire life safety, environmental maintenance - any systems connected to data center’s physical infrastructure -- everything from the “curb to the cage.” Dedicated on-site staff perform preventative and emergency maintenance on a day to day basis.

+ Look for DCFM services that optimize existing electrical systems and infrastructure achieve optimal power usage effectiveness, provide guidance on power capacity and determine best practices for data center maintenance and testing.

Labor Management

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+ All data centers have a variety of third party vendor agreements. DCFM solutions will provide administration and governance of vendor contracts; however the most comprehensive DCFM providers will educate and advise on the management of those contracts and services and will train employees to specialize in minimizing and consolidating the amount of OEM support that needs to be provided.

+ Look for DCFM solutions that evaluate Base Building contracts i.e. landscaping, janitorial, security guards, card access and pest control, as well as Critical Infrastructure contracts i.e. mechanical, electrical, building controls, fire and life safety, etc.

+ The best DCFM providers will also construct their offering so they are not creating ingrained conflicts of interests to reduce costs – specifically, this means you should avoid DCFM providers that “take over” and become the primary obligor for vendor contracts to obtain top line revenue, and consequently have less incentive to reduce vendor costs; since doing so reduces that DCFM provider’s revenue.

+ Seek providers that will help you consolidate and manage vendor contracts; but will do so by avoiding commercial constructs that create inherent conflicts that might limit the DCFM provider’s interest to reduce vendor costs.

+ The best DCFM providers will also construct their offering so they are not creating ingrained conflicts of interests to reduce costs – specifically, this means you should avoid DCFM providers that “take over” and become the primary obligor for vendor contracts to obtain top line revenue, and consequently have less incentive to reduce vendor costs; since doing so reduces that DCFM provider’s revenue.

Contract/Vendor Management

+ The best DCFM providers will develop and document key data center processes, including tools for training and hiring. More importantly, your DCFM provider should be able to relate to you, in a transparent way, how they acquire and follow best practices and lessons learned from other customers, to your benefit.

+ Look for DCFM providers who are experts in data center management and how organizations have reduced their costs. This will be based on highly relevant experience. DCFM experts understand when, where and how you can run a data center more efficiently. As an example, cooling efficiencies, based on previous experience, may be achievable by getting proven advice on optimizing the use of chillers and water temperature set-points that can make a significant difference in the overall economic outcome (lower electrical consumption).

+ The best DCFM providers will produce measurements for what they manage. This should include availability/uptime, power utilization efficiency (PUE) and financial performance (comparing budgeted expense vs. actual expenses).

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+ Seek providers that will help you consolidate and manage vendor contracts; but will do so by avoiding commercial constructs that create inherent conflicts that might limit the DCFM provider’s interest to reduce vendor costs.

+ Financial Management is a critical DCFM ProServ service that consults data center operators on CapEx and OpEx budgeting, break fix budget, contract spend, and other metrics, such as financial forecast models, controllable vs. non-controllable cost breakdown, managing projects, setting goals and benchmarks and manage to them. The best DCFM providers will share and use their expertise, knowledge and best practices in the financial management processes of the best data center operators.

+ Governance is a key professional services component of a comprehensive DCFM solution. It details and defines for operating a particular data center proven processes, best-in-class training and safety programs, criteria for hiring engineers and processes for engineers, etc. It should include site governance i.e. Methods of Operating Procedures, Standard Operating Procedures, and Emergency Operating Procedures. DCFM Governance will typically provide economies of efficiency and operational savings in all areas of environmental, health, safety, energy and sustainability delivered by a site audit/gap analysis. Eliminating operational inconsistencies between data center locations brings predictability to maintenance and documented visibility into operations.

+ DCFM ProServ should also oversee critical training that focuses on clearly understanding labor requirements and how to train key resources to move up the skill ladder. The DCFM provider should proactively research, document, organize and ensure employees are trained in the necessary skill sets.

The more comprehensive DCFM solutions will showcase professional services (ProServ) expertise that delivers significant differentiation and value. Effective DCFM ProServ will provide an ongoing source of lessons learned, best practices and documentation of processes. This includes strategic business intelligence, knowledge sharing and ongoing enrichment of best practices with industry experts across the nation results in maximum uptime and exceptional performance. DCFM ProServ provides leadership, governance oversight of standards, best practices, lessons learned and innovative programs. This includes performing rigorous testing and establishing new benchmarks and guidelines.

Professional Services (ProServ)

Remote operations encompasses overarching monitoring and consistency of approach that will facilitate efficiency and streamlined reporting. This needs to be orchestrated in concert with IT operations so to complement and support larger DCIM strategies in the future.

Remote Operations

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+ Look for DCFM solutions featuring centralized, remote, element monitoring, event correlation and incident management staffed by skilled personnel and security professionals focused on the data centers operations 24x7. Typically, it will route data center telemetry to DCFM expert engineers who could use the data to perform incident management, change management, and problem management. Following an ITIL framework, supported by ticketing systems, enables historical analysis and artifact production and the ability to go back and to see “who, what, when, and why.”

+ DCFM Online Portal – The portal provides on-demand visibility into the data centers’ operations with consumption, capacity reporting on items such as power and temperature.

CONCLUSIONCloud, Big Data, Hybrid IT, Hyperscale are all converging to create new levels of complexity in the data center. The most astute CFOs and CTOs recognize the opportunity to separate data center management from the critical nature of innovating and deploying mission critical and revenue facing applications and business services. They also recognize that the right DCFM provider can ensure that a data center is managed as well as it can be; thereby reducing that customer’s risk of having a catastrophic problem in the data center.

DCFM is a new area of outsourcing where value

is easily measured and achieved. But, don’t be lulled by commercial real estate companies and equipment manufacturers whose expertise and domain knowledge may be limited and not always aligned with the interests of data center operators For maximum performance and benefits, look for experienced IT infrastructure services providers with a broad offering of IT infrastructure services, including clearly documented and productized DCFM services.

For more information, consider QTS, a leading outsourced IT infrastructure and data center services provider. With nearly

15 years’ experience building, maintaining and managing data centers, QTS’ fully integrated IT infrastructure services platform delivers wholesale data center solutions, colocation and managed hosting, hybrid IT and DCFM solutions. A publically traded company, QTS owns, operates or manages an international portfolio of 24 data centers encompassing more than 5 million square feet and supporting more than 1,000 customers in North America, Europe and Asia Pacific.

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CONTRIBUTORS

QTS Realty Trust, Inc. (NYSE: QTS) is a leading provider of secure, compliant data center, hybrid cloud and managedservices. QTS features the nation’s only fully integrated technology services platform providing flexible, scalablesolutions for the federal government, financial services, healthcare and high tech industries. QTS owns, operatesor manages more than 5 million square feet of data center space and supports more than 1,100 customers inNorth America, Europe and Asia Pacific. In addition, QTS’ Critical Facilities Management (CFM) provides increasedefficiency and greater performance for third-party data center owners and operators.