White Paper: Looking Beyond the Horizon - Build Versus Buy


“Should I build or extend my data center or should I buy data center space from a specialist provider based somewhere else?”



Build or Buy?

Every company - large, medium-sized or small - will run into, or will have already run into, this question.

To address it, most companies will embark on an interesting journey during which they collect a lot of information and, in all likelihood, build a business case to show the most cost-efficient option.

One of the difficult aspects of building this business case is the timeframe: usually components that go into a data center have an economic lifespan of 10 or even 15 years. Over so many years, the IT landscape is sure to change dramatically – it certainly has in the last 15 years! How can we possibly look so far ahead? The answer is simple; we can’t.

So we don’t. We tend to limit factors in our business case to the period we can foresee in detail, typically the next 3-5 years. However, there are some longer term criteria that can be planned for – at least in terms of risk or potential benefit rather than detailed cost. So we should spend some time looking beyond this 3 to 5 year mark and determine whether we think there are additional risks or benefits we should incorporate in the case.

This white paper explores some of these longer-term factors. The illustrations show that associating these factors with a monetary value can considerably impact your 10-15 year build versus buy TCO. Decide for yourself if they apply to your particular case. If they do, this paper will help you to make a quantitative estimate for most of them that can be used to help you make the right decision when planning your data center.

TABLE OF CONTENTS

Executive Overview 3
Build versus Buy – How to Quantify 4
Typical TCO Factors 5
Hard factors 5
Soft factors and mid-term risks: a matter of taste? 6
Looking beyond the horizon 7
Build a cost model 7
Quantifiable long-term factors  8
Other long-term factors 14
Impact of long-term factors on full TCO 15
Conclusion: expand the horizons of your business case 16

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Equinix, Inc. (Nasdaq: EQIX) operates a global interconnection platform of more than 200 International Business Exchange™ (IBX®) data centers in 52 markets in the Americas, EMEA, and Asia-Pacific. Our mission is to protect, connect and power the digital economy.
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