Max: 00:08 Hi. I’m Max Clark. I’ve been colocated in data centers and helping companies pick data center facilities for over 25 years. It’s pretty incredible actually think about that. And here’s some things that that I look for and I’ve learned to look for when evaluating and selecting a data center.
Max: 00:21 And if you’re in the process of doing this, some things that you should think about. And let’s actually back up for a second and just say data center and data center locations is a strategic asset for you. It’s not just a place where you put equipment. It’s not just a place where your server sit. It’s not just a place where there’s a generator and a security guard and need conference rooms to give tours with your location of your data centers can drastically improve your operations and give you competitive advantages in your marketplace.
Max: 00:48 So I’ll get into this a little bit. I’m just gonna do this off. I have we have a whole evaluation sheet when we work with companies for this and we help customers through the process of picking data centers. I’m just gonna talk about, like, stuff off the top of my head. Let’s talk about what do people care about and what’s relevant to you.
Max: 01:01 So how far? Where is the data center in relation to your operations? This has a couple of components to it. The first one is if you are on the smaller side and your team is not dedicated to your data center. So as the data center infrastructure increases past a certain point.
Max: 01:14 Right? Let’s say you’ve got a 1,000 servers co located. You have a dedicated team doing hardware maintenance for that for that data center. If you’ve got 30 machines co located and you’re in one cabinet of space, you’re probably using your existing IT team or your existing IT team is responsible for that data center. So having physical proximity to that data center becomes more important to you versus the other side.
Max: 01:34 Other things become more important to you and and we’ll come back to that. So how far is a data center? Now this has some, you know, this has a trade off. If you are a business in Portland, Oregon, there are data centers in downtown Portland, Oregon that are convenient for you to drive to. But all the main data center facilities are in Hillsboro, Oregon.
Max: 01:49 So now you have to consider how far is that drive for your team if they have to get to the facility? And what does that look like for your normal operations within that? Now, by the way, outside of physical work, which you can use the facility for, your team can do a lot remotely. You know, IPAM, Direct, iLO, remote access to the actual server equipment. There’s out of band solutions for everything in the market.
Max: 02:10 Now you can get almost everything done remotely with the exception of physically touching stuff. And then any major data center operator has the ability for you to leverage their on-site team to do physical stuff. So, you know, immediate physical access to your data center, it’s not as high as a requirement as some people actually make it out to be if they’re actually running operations of this. So why are companies in Hillsboro, Oregon versus downtown Portland costs cheaper land, cheaper power, and it becomes cheaper for you as a customer. So this is the other thing.
Max: 02:36 You know, major metros, if you’re in midtown Manhattan and you want a data center in midtown Manhattan, that cost for the data centers is a lot higher than if you went across the river into New Jersey. It takes me to a second point. A second point for data center selection is taxes. And basically, you can either leverage and take advantage of your data center location for taxes for your business, or you can pick the wrong spot and open up a can of worms. And two examples of this, I mentioned New Jersey already.
Max: 02:58 New Jersey is an example of this. Chicago is an example of this. Certain jurisdictions will use physical locations of data centers to establish nexus, and then we’ll use that nexus to tax your operations. And then you get into all sorts of nexus problems. Right?
Max: 03:12 And what are the rules for that jurisdiction and how they actually tax your revenue and your operations? Some jurisdictions will let you apportion your taxes. Hey, we generate this much of our revenue from this spot, so therefore our taxes only apply for that revenue in that spot. Other places will tax you based on the total revenue of the business. Some places want to tax you based on gross receipts versus gross profit versus net profit.
Max: 03:34 You know, we’re seeing jurisdictions now that, of course, are bringing up the digital taxes, the unpossessed property taxes. And again, this is something like Chicago City, the proper and by the way, in Chicago, there’s data centers in the city and there’s data centers outside of the city. So having a data center in one place versus another in the same market has a very different reality for you. What’s another example of this? Los Angeles.
Max: 03:52 Data centers in downtown Los Angeles, subject to LA City versus data centers in El Segundo El Segundo City. Very different realities for how they approach and tax you for your operations on this. And by the way, they will find out and how they find out. One of the ways they find out is if you lease equipment, when you lease the equipment, the equipment gets shipped to your data center. And then the leasing agency files a UCC on that equipment in that facility, which then, of course, is picked up by the taxing authority and then says, hey, we found, you know, there’s this filing for equipment in this facility attached to you as a company name and you owe us taxes.
Max: 04:19 What else do we look at in facility selection? Redundancy. Now there’s a couple of geographies. So Southern California and Florida. Florida, you see pretty consistent hurricane activity.
Max: 04:29 Right? So this is a geography issue that is pretty consistent in Florida. Understand there’s hurricanes at a regular basis. Southern California, the fear, of course, is always that the monster earthquake is gonna hit and take out everything. It’s actually, I guess, true for as well for Northern California.
Max: 04:41 To just try to make this easier. So there becomes a pressure around operations of we need to protect ourselves against these locations. If it’s your only data center and you’re a Southern California business, selecting a data center site in Vegas or Phoenix is not gonna be convenient for you. It does not make sense unless you are quite large. In the Los Angeles example, depending where you are in the city, for instance, if you’re in downtown LA, you’re on LA DWP for your power.
Max: 05:02 And if you’re in El Segundo, you are in SoCal Edison. Or if you go down to Irvine, you can get grid redundancy. You can get utility redundancy. In some cases, just by going a little ways away. And this is true in a lot of metro markets where crossing an imaginary line changes the utility company.
Max: 05:18 And as we look at actual effective redundancy and resiliency for these facilities, you get a lot out of it. So if your push is for, you know, grid and utility redundancy, you might not have to go as far as you think you have to go. By the way, if you’re planning a BCDR and you’re talking about facilities in other markets, make sure you have the people necessary in the other markets to deal with these things. I saw a business continuity plan years ago, and the plan was literally that they had helicopters on standby and key personnel were gonna have to drive to a parking lot and get on helicopters and fly to a different state to execute their business continuity plan. And my question in that presentation was how many of those people have families and are they going to acknowledge the disaster and leave their family to go drive to a parking lot?
Max: 06:00 Can they even drive to the parking lot that’s designated because you’re talking about the end of days natural disaster event and then get on the helicopter and then they get airlifted to a different state in order to run the business. Probably not. The answer is probably not. What else we look at for data centers? Networks.
Max: 06:13 Today, networks are less important I think for selection that they were 10, 15 years ago. There’s been a certain I don’t wanna say homogenization of networks, but the capacity availability and access for tier one backbones is just massively better than it was even 10 years ago. We still see pairing disputes. I thought these days were over. When I’m recording this, NTT and Cogent are in a spat, you know, actively deep hearing each other.
Max: 06:36 So depending on what network you’re actually on, there’s some network resiliency and redundancy that you need to plan for. So we look at and we think a lot about data center selection, who is actually there. Now pro tip. Here’s a big secret. This is not who is in the building.
Max: 06:47 This is who is actually on the data center floor or in the actual carrier cage for that data center. There’s lots of buildings where there are a lot of data center operators inside of that building on different suites, different floors, and they do not have connectivity with each other or they’re not friendly with each other. So if you’re trying to do business and you need access to a network that is maybe in the building info or in, you know, register to an address at that building, you can’t assume that network is actually where you need it to be. You need to make sure it’s actually on the floor in the data center you’re talking about doing business with. Otherwise, you’re in for a world of hurt trying to get that network to you.
Max: 07:16 If you have to have a competitive data center provider authorize a cross connect to their competitor in that building across building conduit infrastructure are just better off assuming that that network doesn’t exist. What else do we care about? I mean, nowadays, cloud on ramps, you know, if they’re trying to call themselves network as a service providers, but these are the companies that provide easy type to transport between locations in Megaport, Pack of Fabric. The carriers are finally getting this game. You know, Zayo is probably gonna be making a big push down this.
Max: 07:44 We’ll see what they end up doing. But, you know, what’s your kind of connectivity? What’s your access? Are you trying to interact with a CDN? Are you trying to interact with the cloud?
Max: 07:51 Are you trying to interact with the eyeball networks? Do you have other facilities to bring online? What’s the actual infrastructure? So, you know, what’s the rest of the evaluation? We look at this.
Max: 07:59 Let’s talk about cost for a second. There’s, lots of ways a data center company can price and deliver a quote to you. You’re gonna see things like, oh, it’s a a cage of this size and, oh, it has this many cabinets or it has this, you know, this many power whips or we’re gonna charge you for your cross connect structure with whatever we’ve branded that service. When you’re looking at and evaluating data center floor space, what you want to figure out is what your power allocation is in kilowatt. Okay.
Max: 08:25 So next thing. Right? You can do kilowatt. You can do k v a. They’re different.
Max: 08:29 Understand what you’re being quoted normalize it it’s usually best to normalize it to kilowatt and figure out what your cost per kilowatt is and do this all and do this for the cost per kilowatt for the floor space and do that for the power and combine the 2 and combine the 2 and get yourself a total number because when you do it this way you’ll actually be able to compare 2 different facilities in a much more like for like standpoint situation trying to figure out and correlate you know cost for your floor space your cage your facilities, mechanical charge, and HVAC charge on top of your power based on your POE. Like, all that stuff is just extra lines in the spreadsheet. When it really comes down to what you’re really just trying to figure out is what are you paying per kilowatt of power assumption. This gets hard if you’re going into meter power. You have to do this a little bit different when you start talking about metered power.
Max: 09:10 And then in the metered power space, you really wanna pay attention to, are you getting a panel? How many breaker positions are available to you in the panel? How does those breaker positions in that panel actually equate to circuits in the floor space? And what’s that comparison against your density if you were just to take critical circuits, you know, critical power versus metered power? I love the conversation around watts per square foot in data center.
Max: 09:31 And look, when you buy data center space, if a facility is selling you a 100 watt per square foot and you want density of 300 watts per square foot, what do you wind up with? You went up with an empty cage space. If the facility is selling you 300 watt per square foot, you have less cage space. You really wanna know is on a dollar per kilowatt basis. What are you being charged for at the 100 watt per square foot density versus 300 watt per square foot density?
Max: 09:52 And is one charging you more or less? Because what you might find out is even though that the other facility is technically less dense at only a 100 watt per square foot, the power’s 60% cheaper or whatever it is. And it’s way better for you. And then you just have to get over the fact that the optics, you walk into a cage and the cage is 2,000 square feet, and you’re only using, like, a little corner of it. You know, like, put a ping pong table in there.
Max: 10:10 Do something fun with it. I don’t know. And facilities, by the way, as you walk through a data center, you’re gonna find white space within the facility floor. And what that is is that they’ve sold a higher density. You know, if a floor plate comes on and it’s 10,000 square feet.
Max: 10:23 Right? The facility operator is designing that 10,000 square feet at some density, 100 watt per square foot. So if they sell you 200 watt per square foot, right, there’s blank space that has to come into it. And what the data center operator, what the facility operator knows is they already have blank space because they need space around their air handlers. They need space around their switch gear.
Max: 10:40 They need space for walkways and aisles. Right? There’s already a density to considerations coming in that creates blank space. You know? So the data center can sell you 3 100 watt per square foot cage and just have blank space on the other side of the floor and maybe you just never associated with it that you’re paying for that empty space.
Max: 10:55 So now do you want that empty space to be over on the other side of the floor or do you want it to be in your own cage where at least you can have, like, desks and a ping pong table or whatever else you do with cross connects are important. It depends on density. You know, does the facility offer blended bandwidth or not? If you’re a enterprise operator, you’re not trying to be a network service provider, you know, blended versus non blended bandwidth doesn’t matter so much for you. If you’re a network service provider running your own BGP AS with your own network selection and network, you know, redundancy, it’s an important differentiation based on the business model.
Max: 11:24 But as an enterprise side, you need stable, redundant, resilient network. Right? So blended bandwidth becomes more important. Some facilities offer it now. Some facilities don’t know what you’re getting yourself into what are your contract terms what’s the structure of the contract is it a lease probably not it’s most likely a license is an MSA with a service order attached on it does it have accelerators based on CPI if you’re looking at a facility that has a 5% CPI on it, are you probably wanna negotiate?
Max: 11:49 You don’t want you probably don’t wanna have a 5% renewal term built into that. Maybe you wanna go to somebody that can resell space in that facility that has better CPI terms on it. We do this all the time. You know, there’s premier branded data centers that want a 5% CPI by default. And you can go to a reseller, and you can get a 3% CPI and a much easier, gentler renewal terms as opposed to, like, you know, a 150% increases when your initial term expires.
Max: 12:12 And that becomes an interesting kind of strategic shift you can make and how you purchase. So what else in data centers? You’re not gonna see inert gas basically anywhere anymore. Building code requires there to be water for fire. So the FM 200 systems are messy and expensive and toxic and dangerous to people.
Max: 12:28 And if the facility is still required to have a traditional sprinkler system, you know, adding the expense of doing FM 200 versus having inert gas plus a water just just do water, all the water systems of pre action. If the facility is new and new construction, it’s going to be raised floor. It’s going to have forced air in the floor. If it’s designed for high p u e, it’s going to have a plenum with a hot air return in the ceiling to recirculate cold air under the floor, hot air through the plenum to get better efficiency through their air conditioners or their air handlers. If you’re in an older facility, you’re probably gonna see shorter ceiling heights and concrete floor concrete slab, which is forced air ducted around.
Max: 13:02 Probably doesn’t matter. The difference between one versus the other comes down to the amount of density, and what kind of density you can get. But the really, really crazy kind of density numbers that we’re seeing now in the market as relates to GPU and AR farms are pushing users into liquid cooling anyways so if you’ve got a race floor versus a concrete slab that doesn’t have any real impact in what your liquid cooling solution is for your equipment oh and by the way maybe it does because you have a weight limit for most raised floor versus a concrete slab can be much higher. So concrete floor versus concrete slab versus raised floor, all different weight loadings and what you can do with it. So these again become, you know, like these nuances difference.
Max: 13:40 Cross connect costs, you know, how much does it cost to get access to your network? If you’re only going to a couple of cross connects or doing blended bandwidth with the provider, not a big consideration. If you’re trying to do lots of cross connects, the difference in price for a cross connect could add up really quickly. So these are, you know, just off the top of the head. Maybe you care if there’s a shower in the facility or not.
Max: 13:56 I’ve slept in data centers. I never felt compelled when I woke up after sleeping in a data center to go take a shower in the data center. It’s nice that they’re there, and maybe that’s important to you and maybe it’s not. I don’t know. Anyways, any questions, comments, things I’ve missed, things you wanna talk about, comment below.
Max: 14:08 Love to hear what your thoughts are. Feeling.
