IT Investments and the Total Cost of Ownership (TCO) of a Data Center

By Brian Lillie

Exterior view of SV5, Equinix’s newest data center in Silicon Valley, California.

The most effective CIOs find a way to align IT investments and buying decisions with their organization’s business objectives.

We participate in leadership meetings that evaluate and ultimately decide on our firm’s three to five year business plans. This active seat at the table with our firm’s leadership team allows us to prioritize and budget for the highest impact projects that deliver on the business goals of our organizations.

Part of the price of that access is that we must both educate business leadership on the language of IT while also educating ourselves on the terms used by our business colleagues. We must do this to communicate effectively and for our IT investments requests to gain approval. We must do this to be viewed as an asset to the business versus a cost center to be managed.

One of the most effective means that I have leveraged and that my CIO industry peer group should leverage is to measure our IT investments in terms of Return on Investment (ROI) and Total Cost of Ownership (TCO).

TCO is a methodology that allows us to capture not just individual line items associated with a purchase, but the adjacent costs and efficiencies impacted by that purchase. Leveraging TCO as a methodology broadens our base business case measurements to allow us to feed ROI calculations with higher business impact.

To that end, Equinix has partnered with Advocate Networks to build a TCO calculator for data center services. This calculator captures input fields of space, power, connectivity, availability (impact of down time), latency, and smart hand services and provides a financial comparison between a “do it yourself” model and an outsourced data center model. We built this as a tool that my CIO peer group can leverage when making data center decisions and when making business cases to their organizational peer group when fighting for limited budget.

We hope that you will attend one of our free webinars on February 10th and February 15th that introduces our TCO calculator and how your organization and leverage the tool in building your data center decision business case.