The (Cost) Benefits of Colocation

Aug 21, 2018

Total Cost of Ownership (TCO) is not a new idea, but it’s a solid way to work out what you will have to pay for a product or service. It takes every possible cost involved in owning or running something, in our case a data center, to work out what you will spend in the long term. 

This is the TCO equation we use:

TCO formula

Let’s look at each element in more detail. (1) Firstly, Capex. Datacenters are intrinsically expensive. Costs of land, buildings, security and equipment add up into a heft investment. If you choose colocation, then you’ve already taken this out of the equation. Colocation is a smart decision on many levels, not least scalability – the ability to grow or reduce demand as your needs change. Not so easy if you’ve built a fixed-size facility of your own.

Next up is (2) energy. As this is one of the highest outlays for a data center we separate it from the other operational costs. In our home country of Sweden, the government introduced a generous energy tax break for data centers so we pay a lot less for our power than our EU neighbors.

 Pass savings on

The third element in the equation is (3) operational costs. These are the costs to cover the running of your data centre, for example land leases, staffing and maintenance. Colocation means you immediately benefit from economies of scale by sharing these costs with other businesses.

Read our easy guide to colocation data centers for more aspects on colocation!

On top of cheap (and renewable) power, we’ve designed the facility to be as energy efficient as possible. Through clever engineering solutions, minimizing heat loss and selling excess heat back to our energy provider we keep costs low. And all these savings are passed on to our customers.

Download our whitepaper on how to evaluate data centers

100% uptime

The D stands for the (4) dreaded downtime. We know that most customers consider this the biggest cost risk. And rightly so - the Ponemon Institute calculated the average cost of an unplanned outage at 740,000 USD. So, we offer 100% uptime – ensuring that servers in our data center keep running all the time. 

Last in the equation is (5) the goodwill from sustainability. Consumers and businesses increasingly turn to organisations that put sustainability high up on their agenda. With the ICT industry accounting for 10 percent of the world’s carbon dioxide emissions, data centers are in prime position to make a real impact.

Climate positive
This is perhaps that part where we really excel. We use renewable power and send excess heat to the city of Falun to heat housing and dry wood pellets. This, in turn, stops fossil fuels from being burnt, creating a climate-positive data center – which we believe is a world first.