Build a Data Center or Contract Hosting? 31
bbsguru asks: "Our Government agency has around 100 independent divisions that share a dozen national applications and a private WAN. We are working to consolidate some of these applications (e-mail, SQL databases, specialized web services), and are facing a familiar choice. One option is to contract out data hosting, e-mail server hosting, and so forth to various vendors (with negotiated SLA's and all the best guarantees, of course). We have already started doing this for our private WAN-to-World gateways, VPN management, and one major SQL application, each with a different vendor, so far. Others are advocating the creation of a national agency-owned facility, where employees would perform these functions instead of contractors. Network management, IDS, data replication and so forth, for all the consolidated applications under one umbrella. Is a series of contractors really the way to go, or are there real benefits to keeping it in house?"
The costs are always a factor, but the one-way nature of the contractor choice is also weighing in this decision. Some are concerned that if the expertise to create and manage these highly custom databases and services is farmed out to contractors, there will be no other choice in the future. Trouble is, as we evaluate our options, the process of contracting out bits of the whole is already underway. With each new contract, one more service to be brought into a datacenter is lost, making the whole thing less practical. Are we swimming upstream here?"
Bring it in house (Score:5, Insightful)
I used to work for a 100,000+ employee consulting company, and I saw SLAs and contracts broken time and time again
And since you're working for a government agency, you probably won't even be able to achieve any significant cost savings by outsourcing (since most contractors save money by offshoring resources, which I believe is still a no-no for government work).
goverment = wasted money (Score:1)
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We're doing both (Score:5, Informative)
Contracting is attractive because the lawyers have this idea that you can sue the hosting service for failing to deliver services as promised. Of course if they fail to deliver, you have roughly three days before your company is permanently crippled, and seven before you are out of business, so that ultimately means only the vultures and the lawyers will get paid; but it sounds like a good idea to management. As a government agency you'll get yelled at and fired, and a few members of Congress won't get re-elected, but you won't go out of business.
One advantage to hosting is that they keep us current with hardware. Our contract stipulates an upgrade schedule for both hardware and operating systems, so we're constantly shuffling in the latest and greatest technology.
I don't know what the price difference is, as I don't ever see those kinds of numbers. But a new data center is mind-bogglingly expensive after you factor in generators, fuel tanks, chillers, security, alarms, power, fork-lifts, flooring, racks, cubes, offices, operators, guards, etc. With a hosting service you're sharing some of that overhead with the other customers of the host.
Running your own data center is good if you have a good team that knows what they're doing, and enough depth to survive the inevitable turnover. We do. But knowing how to successfully run a data center is different than knowing how to build one from scratch -- you need both kinds of knowledge before embarking down this path.
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It also depends on the SIZE of your data center. If it's small, being a room or 3 in a building, in-house management can be cost-effective. When you build it, you use suppliers that fu
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Why put all your eggs in one basket? (Score:2, Informative)
Really, though, I suspect you've created a false dichotomy. Among the vast soup of tasks you're looking at, some are probably done best by vendors, some by
The choice isn't about hosted or not (Score:5, Insightful)
You mention contracts with Service level agreements. If you want to do this "in house" you will need to create these same contracts with the business units that you need. This will give the higher ups the same finger pointing trail that they would have with a hosted solution, as well as the same assurances of reliability. Quite honestly, you would basically have to treat this new "group" as a separate company within the company. I have yet to see a case when it is cheaper over the long run to have a hosted solution, but hosted is much faster to setup and get working. Not to mention, it is awfully hard to re-negotiate, or terminate a contract when a company is holding all of your crown jewels.
I manage a financial data center (Score:5, Informative)
We found that for accountability reasons and, in related issues, reliability and reputation issues, we had to bite the bullet, build the data center, expire (domestically) outsourced (er, contractor) contracts, and take it all in-house.
If you're not a financial services company it might be a less dire necessity. If you're a public company of any type? Between you and me, I'd take the data center. For many reasons requiring about a megabyte sized post, SOX will inevitably bite you on the butt when your data is "elsewhere" - elsewhere being anywhere except right there in the data center where you can control its usage in a highly draconian matter. There was also a recent law that came into effect regarding keeping all internal emails.
Contractors don't necessarily screw up, but there's an old war term my pappy taught me that applies here... don't let your supply lines get too numerous or too thin. Too many pipes tend to spring one leak, and nowadays one leak is very bad news. Keep it all in-house and you're statistically guaranteed to have less drama.
Oh and before someone says it, yes, have two data centers. In case the first one becomes the real life setting for "Destroy All Humans" or something.
A couple of points. (Score:2)
(0) Before all, ensure you have someone in charge with common sense, and who has enough power to take decisions (that is, if it's not yourself). If not, you're targeted as scapegoat before you even start. Finding a way to deal with the politics is crucial or you'll be fighting those bat
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PS: Well said!
Perfect Market vs. Real World (Score:4, Insightful)
In a perfect market, outsourcing is the main way of taking advantage of economies of scale. You don't run your own national telecommunications network, you outsource it to the national network. You end up paying (cost - economies of scale + profit). The trick is, if you can reach those economies of scale with your datacenter, and you're a competent bunch, you end up paying (cost - economies of scale). So you can save money. There are obvious security and accountability advantages too.
That's the perfect market. In the real world, these folk charge far more than (cost - economies of scale + profit). They cater to inept organisations who couldn't collaboratively tie their shoes up without a contractor to show them how to do it. So you end up paying (cost_of_incompetents_doing_the_job - economies of scale + profit). The profit part of the equation is miniscule compared to the differences between "cost" and "cost of incompetents doing the job". If the home-grown data center would be big enough (I don't know that it would be, given the brief description in the post), and if it was competently-run, then you can save huge amounts of money by doing it in-house (again, aside from all other benefits).
This post has dealt exclusively with cost. Personally I would consider the other factors (security, accountability) to be the deciding factors, assuming that both options implemented services competently.
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http://dedasys.com/articles/webhosting_market_lem
Security? (Score:2)
My professional opinion (Score:2)
Calculate what you pay up-front and the general cost of maintaining. With a decent crew, you should be able to manage the data center with 3-5 people. Also calculate in the cost of the ground, power, cooling,
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Your costs can only change at any time if you have a really shitty contract. Contract negotiations can take longer than implementation in some cases. There are so many colo companies out there that you really can dictate your terms if your are persistent. Yes, moving from one data center to another is VERY expensive and a
other gov't nets (Score:1)
It might be beneficial for you to
a) See if an umbrella agency has a national
A datacenter? (Score:2)
Build your own (Score:2)
For a large gov't project, you have to have two for disaster recovery. Selecting the sites will be a political mess but the real issues are "1) where is power and air conditioning cheap?" and "2) where can we get staff"
For this I would propose you put your main data center near a major hydro dam and have your secondary site near where most of your existing staff is. That way when your main site goes down, your peopl
3rd Option (Score:2, Informative)
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Think about pay rates (Score:1)
consider EC2 (Score:2)
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The obvious (Score:2)
That alone should argue for you keeping all data in-house and relatively under control.
First step - what do you really need? (Score:3, Informative)
- Identify your business, and what the basic requirements are.
- 100 different divisions / private wan, virtual lans, vpns / disaster recover, failover
- The next step is determine what services are required.
- backend - the infrastructure
- database servers and various network components
- middleware - the application layer
- application, e-mail, etc. servers
- frontend - the pieces that talk to the 'net
- firewall, load balancers, content switches, intrusion detection servers, web servers or portals
- Consolidate where possible - eliminate if not needed - improve if required
- reduce complexity and duplication of services / standardize on a single database platform (if possible) / standardize on a single web architecture (if possible)
- Determine what your SLA's *really* are.
- 99.99% for network and SAN - less than 5 minutes of downtime each month
- 99.9% for major services - less than 45 minutes of downtime each month
- 99% for individual servers in redundant or failover groups - less than 8 hours of downtime each month
After you've taken the time to gather that information, and get a real understanding for scope, you should begin to look at your various options.- Partial outsource - retain everything internally except for the actual server room(a)
- rent or lease rack space from a third party
- provide your own gear
- continue to do all administrative tasks - including OS and hardware support
- Partial outsource - retain all administration, with all hardware support from vendor(b)
- rent or lease server and rack space from a third party
- continue to do all administrative tasks - including OS
- Partial outsource - retain all administration except for OS - all hardware support from vendor(c)
- rent or lease server and rack space from a third party
- obtain OS support from third party
- continue to do all administrative tasks - except OS
- Piecemeal outsource - each service provided by different vendor - you become contract administrator
- rent or lease server and rack space from a third party
- contract out OS support to different third party
- contract out application / database administrative tasks to other third parties
- Inhouse - this options requires a large initial expense, but results in the greatest overall control
- requires facilities administrator - to take care of power / cooling / space allocation
- If the facility does not currently exist, or requires expansion...
- purchase generators / air conditioners / humidifiers or dehumidifiers / racks / network wiring / fire supression components / wiring harnesses and conduits
- construction - server rooms are considerably more expensive than normal office space
- OS support and administration / application and database administration / network administration
Only once you have a thorough understanding of the current state, a more robust array of options, and an understanding of cost vs. control will you be able to make the right decision. This is not meant to be a complete template, but should allow you to see the steps that are required more clearly.Own the facility, hire contractors to set it up (Score:2)
Best Guarantees? (Score:2)
I also bet if you define them to your satisfaction, none of the vendors will actually agree to signing the contract. Then you can take that to your boss and he'll understand why you need to do it in-house. Don't be afraid to hire contractors to give you a hand in-house too. Pay them to document their work so you have records and little loss of knowledge.
Bob Cringely wrote recently about the SLA on his Internet connection. The LEC
Data Center busines, dedication and curve.... (Score:2)
My work is in hosting and administrating a server and client farm. I am both web programmer, system integrator, linux guru, part time designer, programmer, electronicus and artist all-in-one. The list certainly doesn't stop there which makes it a science and me a system engineer. It's a continuesly going learning curve. I've got many books for many years about mail, dns, Apache, Perl, Bash, bibles which have helped me further for about 14 years active unix duty now