What is Colocation? – Data Center Fundamentals

all right on mic nets are here with David Leggett this is Haq podcast 29 we're continuing our series through data center fundamentals this is part 2 talking about what is collocation next [Music] our day well before we get started I thought it'd be fun to share with our listening audience one of the things we've been doing here with the team is every week we have a competition and there's a category and whoever wins the previous week is to be the judge for the current week that's right it would be fun to share what what those contests have been and specifically your entry into each of those contests Oh specifically mine yes specifically your entry because I think it gives some good insight into the mind of David Lee I love that and so yeah we have a competitive I'm I like competitive environments and you know we try to do that in some really great ways and also some really maybe light ways and so this is I was call this light competitiveness yeah sometimes think of it as like although it brings if you had I kept comparing me full of starving hyenas and you just like took a big hunk of meat and chucked it in the middle of it that is what you do is our team you give the Amazon giftcard very generous of you you incent people to reveal embarrassing things about really just anyways so okay so first let's start easy favorite food and let me just say one more thing the intent of these conversations is to foster it's to foster team together nests and there's a there is a legitimate beneficial purpose yes good okay and we appreciate you taking lean on us by the way okay so favorite food that wasn't the category actually remember it was like most oh yes yes yes I was gonna preface that by surprising food that you eat yes and so some of these are we did like favorite movie yes I've been there but the part of the intent is that it's it reveals something about you yeah you bet favorite food chocolate milk or or or pizza yes so so some of it is those things that it make you let us know something about you yeah all right so the favorite food that you like that you don't think a lot of other people like thanks green beans green beans okay next moving on Thank You meryt favorite movie and I really would like to have part of if you could recreate the impassioned promotion that you gave this movie in the actual competition one of my favorite my favorite movie ever is Braveheart and I think it has a story for everyone in there so I think there is the the guy side of me like I like I like the long I don't know hair what's that hair the long hair and I like the historical I like that it's based loosely on a true story I like that he's fighting for an ideal for his country I like that accidents are pretty cool too that's right there's a love story for the lady so anyway I just that was that would be my I'm sorry work I will tell you there's one person on our team that has never seen this movie actually leave it and I have asked this said person I have I've said hey will shut down work for a day so that you watch it was screaming yes and still that person will not watch it so if she's I can't think of a better way to watch that movie then on our poorly lit projector with computer audio that's radically that they intended that's resumption all right favorite band oh yes yeah so I dare you to move that's right here but a hit song from 2099 yes all right your favorite t-shirt do you remember this one I don't remember what you had yeah that's right yes v-tex BBQ waco they produce the gut pack if you're from billing exactly what this is and I think Mike was the judge on that one and I said to Mike I would use part of the proceeds to drive him to Waco to eat some of that and I still did not get as tempting is that was we do need to say why rat one rat half I can't remember the exact phrasing of it but it said my favorite type of leg day my kind of leg day it was a turkey leg yes and then what in it so it was a it was a CrossFit joke point one it was about eating point two and had a pun point three so read gist I mean that's that's an all-time we're sure it was the back say oh yeah feast my that is one of the greatest shirts maybe ever yeah I think it's time for Rhett to either wear a microphone on these guys are talking about conversations that you add that for yourself okay all right okay yeah favorite drink I'd agree a lemon-lime Gatorade lemon-lime game for a lot of reasons we don't get into sure a favorite vacation spot I did st. Bart's oh yeah so that was that's a little busy it is you word had have been drinking taupe oh that's good I mean I don't know but I don't know if - it was around this is where I went on my honeymoon so this is 1718 years ago and I don't know if topo was around them all right so give you a pass there thank you sure I'm sure I was drinking by the way I've got busy yeah grapefruit spindrift this is delicious yeah it's like it's a good solid not too bougie drain water all right last one our second glass candy favorite candy uh I did sour patch kids that is such a neat I think most people will find of all those facts the most interesting about you is that you are a Sour Patch Kid I love sour candy yeah yeah yeah I love it getting good for you all right in the last we're gonna really try and get Rhett to bring this in to the to flash this up and then final version is awkward high school photo this is one that I won apparently you wanted you know but I think it's more just because it was like a picture of kind of it was an awkward picture it was a good story and it was an awkward picture it was my senior year of high school and I had longer hair and it was like bleached blonde and the consensus amongst the team is that you looked like a cross between the two older brothers from home improvement Jonathan Taylor Thomas J says he everybody knows JT T and then the older one who everybody for always forgets his name but they kind of like to Kumasi between you two everyone had it was kind of he did had the hair that was like parted middle mark you a I'm gonna I know it's it's a we're contractually obligated to mention CrossFit despite all the controversy but you and I both share mine started he'll you have kettle bell finger I've got scandal Afanasy finger yeah right there rash from all the kettle bells we did whatever Monday something yeah I got that and yes get all sorts of ailments and formalities yes all right so that's fun again it's just a little thing we can do to keep fostering team together Ness yeah this is actually yeah I would say if you're leading a team this has been really fun it's probably been a highlight you know maybe some people have a lot of highlights from like working from home in this season I think this season now has obviously been hard and a lot of different ways so this has been a fun way for our team to stay connected you know share things that are appropriate about one another they're fun fun to know and and you know I've certainly have enjoyed it it's been fun it has but any it does underscore the fact that you have to you know I'm just gonna fall and you got back into this you have to be intentional yeah a little bit time and thought and and again it seems silly but pick even picking the categories is fun it's kind of a challenge because you want it to be again something what you're learning somebody's favorite favorite book very book I'm the judge alright so again Before we jump in substituted a we're talking about what is collocation and just helping people understand the concept of collocation before we do that one fun little data center of fact this is again if you're new to the industry these these things are fun if you've been in a while you probably take them for granted but it's still really cool it's talking about some of the history of some of the more iconic or important buildings in the data center industry so this one you know is 60 Hudson Street which is one of the main internet connection hubs in New York City not an East Coast as a whole I mean it's really one of the most well-connected buildings in the entire world but it got its start you know as you know built back in 1930 it was built by Western Union and it was gonna be like their main Telegraph hub so in some ways the data center of the 30s yeah you're really interesting some fun facts about the building is like it's it's built with 19 different shades of brick so it goes from darker to lighter as you go up just a fun little fact anyway so then they move down the 70s and Telecom started to move in and then after that you know the data center company started to move into today again it's yeah it's a huge interconnection yeah carrier hotel you know this yeah these these facilities and we've done a podcasts on it and talked about it before but these facilities are because they're historical ecosystem are just they're so unique and so important to your point in the data center landscape as a whole so these are fun and they all have a very like interesting they do they do and like we talked about like the Nabisco Building yes also in New York City go back like the 1880s and yeah first Oreo ever made there is now at the good Google Data Center anyways but you're right in a lot of these they'd 111 East a nobody set out to make a Kerry Hotel 30s they didn't know what it was just it just had and some of these by the time anybody realized how valuable they were they're so ingrained and the you know ecosphere yeah they're just nearly impossible that to dislodge yeah and if you're you know jumping into the industry right now I mean these are buildings that traditionally have you know a lot of telecom and connectivity to them a lot of different network cloud providers there and also you know colocation providers will want to have presences in these buildings so that that so that their customers can connect specifically to that you know infrastructure in that facility so yeah so really cool Western Union Building in New York 60 Hudson Street it's a weird it's like a trapezoidal also the architecture backstories also focus all right so today we're in part two of our podcast series that is a companion to our blog series that we did on data center fundamentals yes last time I did what is a data center yes great to be able to answer that question with a sure knowledge today we're talking about what is colocation so just explain the concept of how come an easily spaced from other companies for their digital infrastructure so off the top of your head what is colocation yes it is when a company leases digital infrastructure from a data center operator and there's a history behind it I mean the the basic understanding of this is companies did this for a long time by themselves and there's inherent challenges when you do that technology changes you acquire company I mean there's all these different things that create issues with doing it yourself and so back in like oh seven oh eight oh nine the market really shifted and and data center owners or operators started doing this in a in a much more mature fashion so this was not just a cobbled together hey we've got four facilities that we've just kind of bought and we're offering colocation it was a very like structured business model they were building it in a very industrialized fashion so it looked the same and felt the same in all these different markets and that really that really created this colocation market that we're in today all right so let's talk about you know company a they've got some digital infrastructure in-house maybe a couple different servers spread across the country talk through that just that the tie level timeline that would they would go through to from the first time they decide hey we need to move this to an off-site we're an outsourced this through the final move in with the colocation facility yeah the first thing those companies have to understand is what do we have which is a process you have to run internally to understand really like what you're using that for cuz because if you go to relocate or consolidate data center infrastructure from one to five how many locations into one the first thing that a great data center operator or provider will ask you is hey what are you using this for because they have done this it might be your first time second time third time to do this they do this every day all the time with financial companies healthcare companies technology can all these so so you gotta know what you have and then - it's probably a on the on the faster side for six months on the you know longer side of TUI 12 to 18 months to really go through the process well so that your company set up you know in the future for success so it takes time it's not it's costly and it's not something you want to get wrong you got to get it right because if you don't do it right you'll pay the price not just then but years from now sure so they've got once they kind of have an understanding of what their current setup is needs etc you know what next steps are yeah so you'll typically you know figure out a geography you want to be and if you decide that cloud is not for you which we'll talk about in one of our future podcasts as it relates to this fundamental series but but if you decide that it makes sense to have physical servers and racks of gear in a data center facility you want to figure out where you you needed to be from a geography perspective it does matter based on what what the applications are serving so you're gonna have to find out hey who are the people or the businesses that I could do this deal with and what facility you know makes sense for me to go and what am i the compliance and infrastructure requirements that we have to meet to make sure that this meets our business needs and our chief information officer our chief financial officer can get comfortable with the money that we'll spend and the security needed all those things so you've got to go out and kind of define the universe figure out who you want to do that with and then you know move forward from there and then it's a it's a sales process on their side you know so there you are fps and you get proposals back and you compare apples to apples what they're offering which is a process and a challenge and then you you know down select from there and figure out who to go with it so talk about the the the bids or the quotes process as far as what what's on those that's gonna be different than maybe if someone's used to an office lease or an industrial lease that they're you know that's gonna be unique to a colocation Li yeah I mean one is just I mean it very simple is just like site access and understanding how you know are you in a if you're a smaller if you have five cabinets are you in a caged environment that's just yours or you in a locked cabinet environment that's open to everyone that walks into a data hall so just understanding things like that understanding redundant whips and you know or redundant infrastructure this is something that one if you're joining the industry one of the things you'll hear some people talk about is retail colocation and wholesale colocation and all that there's some you know different ways to define on that but just think retail colocation smaller requirements wholesale colocation bigger requirements and all smaller companies have different requirements and bigger companies have different requirements now we there's a whole other section section of the colocation market which has to do with hyperscale requirements and these are really big power requirements that are being done in markets across the world so but you will see things back like hey what is the infrastructure what is the redundancy of the UPS systems the generators the cooling equipment within the data center facility you'll see things like a service level agreements to be communicated what is the data center operator telling you that they will guarantee to you and what are your what are the ramifications if they don't guarantee that you'll see a price per KW per month typically people need to know if that's is is the electricity cost included in that or is it in addition to that these are all real costs that companies will have to pay so just understanding the financial and economic agreements that you're making is is really important in different providers have different costs they're willing to you know to communicate on those on this proposal so it's economics its infrastructure it's legalese and that typically comes in like more of the lease or the master services agreement than it does in the proposal but those are all the type of things that you're looking to understand yeah and take a step back for a second and talk about you know what's typically the triggering event that's gonna cause a company to make the move from insource to outsource digital infrastructure outdated technology so you know Hardware refreshes can cause company go you know what do we want to buy all this again or do we want to do this in another format so that's so just technology change so that's one thing to any type of like service disruption network outage power outage internally all eyes are looking in going hey why did this happen and do we have an environment that it makes sense to continue to do this within or wait a minute we have fortune 500 companies and fortune 1000 companies that are doing this with other people so that so so an unfortunate event can cause that to happen you know I would say company changes acquiring other companies so as an example if you have you know three office locations across the US and you have a small data center component in each of them and you acquire another company that has one data center location and you can consolidate those three into that or do something else that's more effective you know that can happen to you so just general business changes but all those are good examples of why companies are evaluating this I mean your IT in first company's IT infrastructure plan has to be like constantly evaluated because things are always changing and if you put a plan in place and you think it's gonna last you five ten fifteen years of business either you have a very definable business for a long period of time or you're you're not looking at the changes that could impact the market and impact your solution to your customers all right so you know you mentioned a second ago price per KW per month yes being how these leases are typically defined so I think it's important to understand what does that mean and when you sign a lease for 10 kW or 180 or a megawatt what does that mean as far as you know that the potential versus actually used you know power etc yeah this is one of the biggest challenges for people coming over from the traditional commercial real estate side of things into the data center industry commercial real estate side of things everything is based off your the square footage you know if you're doing an office lease its square foot per year if you're doing every month and I think we've talked about this in other podcasts but this is when you sign a lease with a data center operator for colocation you are signing to have access to a certain amount of the infrastructure that you can use and so there is a price per KW kilowatt per month charge that you will pay for that infrastructure that is how the lease or master services agreement is going to be set up if the deal so but I think that there is a loose analogy to an office space where you're gonna lease one floor of a building 10,000 square feet and if you put two people in there or a hundred people in there you're paying for that absolutely so there's some there's some of an analogy that makes sense ISM yes yeah and there's also with your electricity so that's that that what I mentioned before that price per KW per month that's one thing then you have your electricity that traditionally as you get bigger and like the wholesale deals is on top of that so that is a combination of how many hours are in a month the PUA the efficiency of the facility and the electricity cost that the data center operator has contracted with whoever the power provider is and those three Turing those three things get you the price that you're going to pay for the electricity that you use so your lease could be for 100 kW but you might only use 25 kW which is what you would pay on the electricity sure so that's the way that the the general breakdown takes place as it relates to like leasing infrastructure it's a very interesting believe me it's not rocket science but it's a very interesting component to this market and how it's changed over time yeah and that's a piece that I'm probably a little bit less familiar with so you know your your needs mmm if you look at you know again part of the taking inventory is your understanding you know what are our needs gonna be throughout the month and they're gonna go up and down right so if you sign a hundred kW lease what would that reveal about what they think their actual usage is gonna be because they probably don't think it's gonna be at a hundred it can't be they want to go over yeah I can't be that's getting a whole nother sure yeah something you got to solve for in the lease agreement but you know so if yours if you're signing 100 kW lease what do you think their actual usage is typically gonna be typically the data center operator will ballpark when they when they let someone sign 100 K to be least they'll ballpark that from anywhere from like 60 to 80% of utilization so there are some providers out there that are probably laughing because they know that they've they've there's been users that have over provisioned themselves they might at least honor kW but they're only using 20 and and that's one of the strange things about our space it is hard to add more over time for different reasons and so you want to make sure that you are looking at the future enough from a power perspective that you have that capacity basically reserved so that you can use it so anywhere from 60 to 80% I would say is a appropriate planned utilization rate even though that's probably not what most groups utilize I'm trying to find I think it was podcast 13 yes it was podcast 13 where we talked about challenges facing the end user yeah 16 podcast ago unplanned if we come so far go what are gone we're on yeah you spend some more time on that specific peas in that so I guess 13 check it out alright so great so that's very helpful I think to understand how these things are signed in but at the end of the day can be a little bit of a guessing game and and I think we talked about that last podcast about how you want your own end user you want to write as much flexibility into the least as you can if you're the operator you want them to sign 120-minute okay so talk about you know the different sizes yeah of leases from retail wholesale hyperscale and in kind of how those are typically operated or signed or structured yes okay these are generalizations so there's a lot there's people on here that if you've been listening our podcast and you're we talk about like in the weeds of the space like we are you know just fundamentals this is a 101 level course but okay they don't get the HSS by all means just drop them in the comments well they will respond to them passports pinions that's what they so reach so think this retail colocation small wholesale colocation bigger hyper scale largest convenience store and Costco what's the biggest I know warehouse actual warehouse sure forklift yes so the retail side I would say let's say 0 to let's say 0 to 50 cabinets just to be you know so 0 to 250 kW of power that is used in that requirement you know the wholesale space you could say is 250 kW to you know I would say 2 3 4 megawatts ok and this is the space that back in oh wait oh 9 2010 really started to grow because of some of the capital market challenges companies decided they did not want companies with big needs decided they didn't want to do this themselves anymore and there was a financial equation that you could look at over a 10-year period that it just made more sense to lease this infrastructure than it did to do it yourself and then what we've seen in the last four or five years is large companies so let's say five megawatts plus five to ten Meg plus deals out in the market that have redefined the industry and you've had a lot of focus on about 20 companies that are doing work in this like hyper scale space and this would be the big at companies international companies that are growing social media brands I mean these are the type of companies that have these big needs and that's the hyper scale category so from a size perspective that's where it would be from a power standpoint yeah if you can just kind of understand would would be a get typical customer in each of those bands you start with retail you know you mentioned the hyper scale yeah I would say on the retail side think of like a small healthcare company it's a good example I would say in the wholesale range think of a mature financial company they go say I have security needs I need autonomous Empress I need infrastructure that only I control or only is allowed you access to me and then in the hyper scale side you know large tech companies that are doing massive things globally yes it's the scale of some of these deals are pretty mind-blowing oh you're talking like 20 30 Meg deals yeah you know again that's megawatts yeah so and it's an hour that's you know it's small cities worth of power yeah that just so we can watch our cab here yes sure data gotta have the cat videos any so again you know this is probably its own it's entirely its own podcast but you know talk a little bit about colocation versus cloud and and what what those things mean and and then you know how companies are splitting up workloads yeah I mean typically like think colocation I actually have like a physical presence in a specific data center I know exactly where that is cloud I have a presence in a region you know with a data center with a cloud provider that I don't I don't have to you know I have not physically bought a server cabinet and servers that I've actually put into you know a data center like basically leasing that infrastructure in a way that I don't have to you know that's not a Nichole location facility it's in a with a cloud provider so from an infrastructure perspective that's an easy hopefully understanding of you know you can get you know more detailed on the technical side but that's that's like an infrastructure understanding of the difference between colocation and cloud but you the the advantages of colocation are you know there's more flexibility there today than there's ever been before but some of the disadvantages of or are that like you do still have to buy the gear yeah so there's a bit of a capex you bet you know in there yeah so less than you owning it because you're not owning the UPS systems and the things that you need own to produce that for your own company but there is there is people that are still in that middle zone of we can't just put everything into cloud it just doesn't make sense for what our business needs are cetera and that's one of the things that we've you know we we certainly have seen the cloud market grow but you know I think it's not taking all the colocation market away and in fact it's only adding to the to the larger colocation market so it's an interesting cloud and colocation have an interesting relationship and I think one of the if I think about what are they gonna be the biggest stories in our space in the next five years will be how that relationship grows yeah yeah I think you know what we've heard or maybe I've heard you surely you've heard is what again this makes me think back to the end-user podcast we did about how a good you know like CIO or whoever's running the project will get all the stakeholders involved as a financial decision yeah that's a technology it's a strategic decision I think you know since seem the cloud has really good sales people I think you might have seen is like the CIA was like hey we gotta be in the cloud yeah and it may be that's not the most informed position but they just think they've gotta be the cloud makes most sense connectivity everywhere and like you said it's gonna be a pendulum swing yep over the next few years yeah we will watch with bated breath our table great thoughts as always again if you are new to the space check out the fundamentals blog series and we're gonna continue to do these podcasts as well so if you got you know topics you want some covers shoot us a note I'm sure you can find us if you're watching this you can get us on social media here what have you so stay tuned for the next one [Music]

Channel: datacenterHawk

Views: 6,411

Rating: 4.814815 out of 5

Keywords: data center, what is colocation?, data center fundamentals, colocation data center, data center colocation, colocation data centers, what is data center colocation?, colocation data, colocation company, data centre colocation

Id: GaOwEfjX5w0

Length: 29min 22sec (1762 seconds)

Published: Tue Jul 07 2020