Another Open Letter to Co-Lo Data Center Operators

In this guest post, Matt Ferm shares more insights for co-lo operators:

On February 6^th Gary Kelley, posted an article titled “An Open Letter to Co-Lo Data Center Operators.”  In the article he offered some do’s and don’ts during the RFP process.  I would like to share some observations around what prospects are look for when evaluating a data center co-location provider.

As Gary mentioned, Harvard Partners performs a lot of co-lo RFPs, co-lo contract negotiations on behalf of clients, and migrations to co-location sites.  We coach and mentor clients from the point they think they might want to migrate their data center to watching them become fully operational in a co-location site.  During this process we see the reaction clients have to the sales pitch, value proposition, and site visit of many co-lo operators.

Here are some observations:

• You are not special – we know every co-lo operator is special and you are all better than your competition.  After two site visits (and two data center tours) our clients turn to us and say “it feels like we have done this before.”  As this is what you are selling, you must do the data center tour, but please recognize it can be mind-numbing to see one data center after another.  Keep the tour brief and focus on what will interest the prospect.
• Listen to the customer – the customer has selected to visit because they are trying to solve a specific problem.  Maybe it’s a construction project impacting their data center or frequent outages.  Maybe they want to instill more discipline in their data center operations.  In any case, it is important for you to understand who you are talking to and why they are seeking co-location.  Don’t compare the prospective customer to organizations they can’t relate to.  Using an example of a very large company when talking to a medium-sized prospect can become insulting as it makes the prospect feel much less important.
• Don’t oversell - most customers are coming from a server room or a Tier 1 data center.  Maybe they have a generator and maybe they have some extra cooling.  The likelihood is their “data center” is a converted room in a commercial office building.  You are about to show them something so far beyond their imagination they tend to get overwhelmed and ask “do I really need all this.”
• Details matter – customers come to you because they know you will pay attention to the details required to operate a state-of-the art data center.  Don’t create doubt with such incidents as dirty floors, too many construction workers around production equipment, ceiling tiles with water stains, visible rodent traps, and propane grills anywhere near your generators.  When the prospective customer comments “I wouldn’t let that happen in my data center” you know you’ve lost the deal.

Two propane grills (and a picnic table) adjacent to the diesel generators (and belly tanks containing fuel.)

• Make it real – whatever you sell make sure the prospective customer can translate it into dollars.  Every co-lo operator talks about managed services and cloud in one slide and then goes back to talking about generators, cross-connect rooms, and cooling towers.  If you are going to talk about extra services then make them real through a demonstration and consider bundling services into the co-lo contract.  Every one of our clients has told us co-location is the first step to the cloud.  We watched two CIOs “wake up” as a co-lo operator created a fully operational Windows Server instance in their cloud within 5 minutes.  The same co-lo operator offered free “cloud migration services” which got a response of “so what” from the CIOs.  When the offer changed to a free 4 CPU, 12 GB RAM, 100GB storage instance for a year, the CIOs immediately decided to go with that co-lo operator.  The CIOs were able to dollarize the offer and place a value on it.
• Become a partner – customers are looking for you to demonstrate how you will make them better.  Providing a resilient and robust data center is an important selling point, but so is your knowledge of process, managed services, technical architectures, cloud, and DR.  We watched as technical teams between a co-lo operator and a customer started to have a “mind meld” over a network architecture.  The CIO observed the interaction between the two teams and was convinced he had found a partner and made a decision to go with that co-lo operator.
• Be personable – Gary always reminds me “people buy from people.”  In the co-lo space it is always true.  You might think they are buying the generators, chillers, and multiple points of access into your facility, but what they are buying is you.  The CIO is looking for the person they will trust with their career.  Every CIO I meet when working on co-lo engagements tells me the co-lo decision is a make-or-break decision for their career.  Very simply, if they can’t provide services to their users, then they had better start updating their resume.
• Price is important – once you accept you are not special then you realize co-location services are a commodity (sorry).  Responding to an RFP with a low price gets the attention of CIOs.  Most of the time, before we get called in by a CIO, they have already visited one or two co-location sites.  They like what they see and are very excited, but realize they should do an RFP.  When one of those co-lo operators comes back with something resembling “list price,” the CIOs go visit other co-lo operators and quickly realize the services they require are commodity.
• Bundle – when we do an RFP we always ask for a certain number of remote hands hours to cover things like tape rotation.  You can differentiate yourself by offering these types of services as part of the base cost when the prospective customers visit you.  It is something they remember.

We believe the co-location market is changing.  Just two years ago we were mostly concerned about customer expansion over the course of a 5-year contract.  Today, we must think about contraction of space as customers think of going to managed services and the cloud.  Your relationship with the customer and helping them grow are the key selling points as our industry moves forward.

An Open Letter to Co-Lo Data Center Operators

Regular readers know I am a fan of using co-location providers for small and mid-size businesses.  Larger businesses have the mass and scale to run their own data centers.

We are seeing a dramatic uptick in the number of organizations seeking co-location.  Some are moving because of external factors (the CIO with an elevator going through the data center opted to go co-lo, as did a CIO where flooding damaged the data center building.)  Others are experiencing growth, and finding the costs to expand in place prohibitive.

Whatever the reason, these organizations often look to us to provide advice and counsel.

As a part of the co-location decision, we believe in an RFP process.

Analyzing hundreds of responses leads us to make a few observations:

• Always be honest – we had a respondent claim to be a Tier 4 (think NYSE and the government) data center operator.  Tier 4 has redundant everything….real belt and suspenders.  For this respondent, it would be a neat trick as they only had one generator.

Were they intentionally misleading, or did they not understand? 

• Check your math – As independent consultants, we analyze the financial aspects of proposals using proprietary models we’ve built and refined.  As we load vendor’s submittals to our spreadsheet, we often find errors in submissions (most often, the words and the numbers do not align.)
  
  
• Respect the process – it seems every one of our proposal efforts exposes a vendor who is unwilling to follow the process.  This normally takes the form of a vendor reaching around the consultant (us) and trying to influence directly or indirectly.  Perhaps this is the equivalent of a Hail Mary football pass, a final act of desperation…since in all cases the vendor going around the consultant did not prevail in the end on the strength of their response.  We know vendors will do this, and so we prepare our clients for the defense.

We work very hard for the client and the respondents to play fairly.

We recommend our clients visit co-location providers and “kick the tires” before making a final decision.

This is where gaps in the expectation versus delivery are often exposed, yielding more observations.  I like getting to the co-lo site an hour before the formal tour, and take a walk around the building.  I take my trusty BlackBerry with me, and take pictures of things I see.  In fairness, I am not including pictures in this blog post intentionally as I don’t want any vendor feeling bad, or any vendor using this to market against another vendor.  That said, what I find is vendor seem so driven to please they overstate the facts:

• “You wouldn’t be in our parking lot for more than 5 minutes without someone challenging you.”  Well, I sure took a lot of pictures in the 15 minutes I was out there.
• “The gas main at the front door has been deemed ‘Not A Risk.’”  I don’t know…it seems a gas main should be hidden/protected from automobiles.
• “We check our logs closely.”  OK, good.  (And Bill Gates just signed in.)
• “We would never let a constable take anything, even if they had appropriate court papers”  The constable sitting in the room did not agree.
• “You wouldn’t get close enough to see the equipment.  You would be stopped in 3 seconds.”  Well, I have pictures of the serial number right off the device, with my little non-telephoto equipped BlackBerry.
•  “That door to the UPS Switchgear area is never opened.”  We have a picture of it propped open.  There was someone standing there when it was open.  Really?

To be clear, other than forging Bill Gate’s name we don’t do anything illegal.  We’re not scaling fences, or using ladders.  Just a nice stroll around the building.

One client recently insisted in participating by taking a water bottle with them on tours.  While only one vendor didn’t challenge the bottle, that one vendor lost a large amount of credibility.

I can’t stress enough the importance of keeping a facility neat, tidy and tour ready.  Seeing a cage in a co-location facility used as a janitor’s closet leaves me scratching my head.  Having all the covers off HVAC devices with nobody working on them makes one wonder about the overall maintenance plan.

If a client asks to see the mechanicals, show them.  We recently had one vendor that hesitated, and this left a sour taste in the client’s mouth.  The vendor did eventually show the space…

Power is an important element of cost.  Vendors putting all their profit in the power creates a disparity with others.

One or two vendors like to trash their competitors.  We’re not fans of that approach.  Speak to your own merits.

One last thing we tell our clients is to check references, and to Google the vendor.  Ask if there have been business impacting outages, and how they are to work with.  If a vendor has had a data center floor impacting issue, hopefully they’ve already mentioned it, and how they incident management process quickly addressed, and steps taken to address.  This is electro mechanical gear, and things CAN happen.  Rarely!

Have you considered the Cloud?

I’ve been in and around data centers my whole life.  My first job “in the business” was as the “3 until the work is done” computer operator for a large amusement park.  For years and years, the accepted norm was for companies to house their own data centers.

I’m a full convert now.  Unless a company’s needs are for large (over twenty thousand square feet) or ultra-secure data centers, using a co-lo or managed services provider makes imminent sense.  We’ve previously covered how to select a co-lo provider and we’ve helped many organizations with evaluation, selection and migration to co-lo.

Simply put, the facilities capital costs for smaller data center needs are often cost prohibitive.  Frankly, the bottom line is organizations should better use those funds for providing increased value.

Often organizations move an existing data center into the co-location facility.

If an organization is doing a co-location play, and buying new equipment for the co-lo, we ask, “Have you considered the Cloud?”  Often the answer is NO…and it’s time organizations open their minds to the “Cloud.”

Cloud computing is the delivery of computing as a service where shared resources, software, and information are provided as a metered service over a network (often the Internet). 

The “Cloud” is made up of industry standard components (although some high end cloud providers do their own hardware designs.)   The “Secret Sauce” is in the provisioning software providing the ability to spin up an instance and billing.

As an example, take NaviSite, a Time Warner Cable provider of cloud services.

Source : http://www.navisite.com/technology-navicloud-platform-architecture.htm

As another example, Access Northeast provides a base level of cloud support:

Source http://www.accessnortheast.com/wp-content/uploads/2011/04/SecureCloudBack3.pdf

Again, industry standard components.

We see a cloud as an excellent vehicle for an organization to buy services as needed, quickly deploying,  and without large technical staffs.

The same can be said of Managed Services.  If your organization is going to do an Exchange 2010 migration, why not migrate to a professionally managed external service?  Companies offering managed services think about service and support models much differently than individual organizations because of scope and mass. 

The key to understanding the use of external providers is making sure your company understands the risk associated with providers and makes detailed evaluations.  Two guys in a garage can, in theory, spin up a cloud offering without the kind of infrastructure behind them we would expect.  Often, third party services can be used in evaluating alternatives, understanding the contractual implications, and assisting in the migration.

At Harvard Partners, we have no technical staff whatsoever, yet have fully supported phones, Exchange, web hosting and the like.  We fully leverage external services. 

The only thing I wish we had was occasional deskside support.  I have a nice new laptop sitting in a box yet continue using my older underpowered laptop as I just simply don’t choose to take the time to migrate. 

Take the time to challenge your organization’s technology paradigm!  You may find you are able to do things better, faster AND cheaper.