Fifth Annual Southwest Data Center Summit Recap

At the Fifth Annual Southwest Data Center Summit, a discussion between data center operators, city and state officials, and electric utility companies quickly turned to what they can all do for each other. 

Every company is a technology company these days. And nearly every city is interested in luring high-profile tech companies to invest in their town.

Google kicked off the craze in 2007 when it announced plans to invest $600 million in a new facility in Council Bluffs, Iowa. In October this year, Facebook began construction on a data center in Los Lunas, New Mexico, which was expected to cost $250 million in its initial phase alone. In November, Microsoft announced plans for its fifth expansion in six years at a data center site in Boydton, Virginia, representing a total investment of nearly $2 billion.

What city doesn’t want a piece of that action?

At the Fifth Annual Southwest Data Center Summit in Phoenix, a discussion between data center operators, city and state officials, and electric utility companies quickly turned to what they can all do for each other. The panel discussion was part of a one-day regional summit hosted by CapRate Events, which specializes in property related conferences and is the organizer of the National Data Center Summit Series.

Land, water, electricity . . . and more

Data centers move to a city or town for basics like land, water, and electricity. And more. Keith Dines, Director of Acquisitions and Development for Aligned Data Centers, said, “Of course we start with site selection, but the criteria have really changed. We care about power and water and fiber and safety from environmental hazards, but we also care about criteria like tax incentives, which enable us to offer more services and better pricing to our customers.”

A big part of finding the right location, Dines said, is being able to get up and running quickly, and being able to offer the best services and prices to our customers. The ability to do that is largely influenced by public officials. Dines said, “I have to compliment the public officials in the Greater Phoenix area. They’ve been fantastic to work with.”

The same goes for the local power utilities, Dines said. “What’s really important and what’s not often talked about is the energy provider – not only the rate they charge, but the capacity of the infrastructure that’s in place, and the provider’s willingness to work with you.”

Economic development on steroids

Consensus on the panel was that the ideal data center location is one that works well for everyone involved – the data center operator, as well as local authorities and utilities. Utilities, of course, benefit from having new customers. Cities and states benefit from the influx of investment, which has ripple effects through the economy.

In other words, there’s good reason cities and states are eager to attract data centers. Geoff Shumway, Vice President of Business Expansion at Arizona Commerce Authority, said, “Our mission is to foster and promote quality job creation and positive economic impact for the state. Recently we are a lot more focused on data centers, which have tremendous economic impact. These are the types of companies we want to attract.”

“Data center development is often economic development on steroids,” said Mark Loftus from Dakota Electric, an electric cooperative in the Minneapolis/St. Paul area.

Growing demand for renewable energy

Dines told the audience – made up of data center developers, investors, engineering firms, and end-users – that the data center market is changing because of a growing interest in sustainability and, in particular, renewable energy. “A half dozen mega data center users – the cloud providers, Azure, Softlayer, Google, and Amazon Web Services (AWS) – are at one end of the spectrum, accounting for half of the demand for renewable energy,” he said.

“For colocation data centers aiming to play at that end of the spectrum, with the cloud providers,” Dines said, “if you don’t have the ability to provide 100% renewable power, you won’t even get asked to the dance. That’s just becoming a requirement.” A few years ago renewable energy was “nice to have” but now it’s a flat out requirement for a data center to even be considered. More and more small- and medium-sized companies are also asking about renewable energy, Dines said.

That’s another factor that makes Arizona an ideal location for a data center: the utilities’ development of renewable energy sources.

Bottom line

Perhaps more so even than other business developments, building a data center is an undertaking that requires close collaboration between the data center operator, state and local officials, and the power utilities. So in addition to the “basic” criteria a data center provider should consider when scouting a new location, there’s other criteria as well, including the ease of doing business, tax incentives, and relationships with utilities. They’re all reasons we love Phoenix and Arizona.

Aligned Energy’s Next-Generation Data Center In Phoenix Wins The 2016 “Energy Efficiency Project Of The Year”

Aligned Energy, a sustainable technology company with a mission to innovate and optimize infrastructure within Data Centers to eliminate waste of materials, energy and water to dramatically reduce the environmental and economic impact of the digital world, announced today that its ultra-efficient colocation data center in Phoenix has been selected by the Global Data Center Alliance as the winner of the 2016 “Data Center Energy Efficiency Project of the Year” award.

“With the entire state of Arizona focused on minimizing water and energy consumption, Aligned Energy’s industry-changing technology allowed them to stand out as the clear winner in the Energy Efficiency category,” said Jeffrey Dorf, President of the Global Data Center Alliance.

“Data centers are major users of water and power, and the key place where innovation must continue to happen as the industry prepares for expansion in this growing digital economy,” said Jakob Carnemark, founder and CEO of Aligned Energy. “This award acknowledges innovative companies and technologies that are advancing the data center industry in becoming greener, leaner and more economical. We are honored to be recognized as a vital part of this movement, and are committed to further identifying solutions to transform our industry to help create a better tomorrow.”

Embodying this commitment, Aligned Energy’s Phoenix facility is one of the most energy-efficient data centers in the U.S. Here’s a breakdown of why the 550,000 square foot, 62-megawatt data center continues to set a new precedent for data center efficiency:

  • Pay-for-Use: Aligned Energy’s industry-first consumption-based pricing model allows companies to provision capacity that is more flexible and can be used at any density. This provides them with the option to lease critical infrastructure based on current requirements with the flexibility to expand at any time. Because of the tremendous efficiency of this model and Aligned Energy’s technology platforms, total operating costs are up to 70% less.
  • Heat Removal: Aligned Energy’s award-winning highly-optimized modular heat removal cycle supports mixed rack densities up to 25kW and higher, reduces water consumption by up to 85 percent and energy use by up to 80 percent in data centers. This year, the technology received the prestigious 2016 Edison Award in the Smart Grids & Servers category. Fast Company also recognized the heat removal technology as one of The World’s Top 10 Most Innovative Companies of 2015 in Energy.

Led by a highly-seasoned team of industry veterans with decades of experience building, engineering and operating hyper-scale scale data centers, Aligned Energy is dedicated to developing and delivering next-generation data centers that eliminate operational inefficiencies through transformative, advanced technological and business solutions.

Press and Analyst Inquiries

Jennifer Handshew

jennifer@180-mktg.com
Mobile: +1 (917) 359-8838

How Does Your Data Center Break Down Pricing?

Historically, the complexity and lack of transparency in colocation pricing has made it difficult for customers to compare data centers, services, and prices. But trends toward use-based pricing are helping to clear up confusion, and helping data center customers avoid over-paying and achieve significant savings over time.

Data center pricing models have evolved, and continue to evolve, as we strive to price these big-ticket resources as efficiently as possible. In the wholesale market, leasing by the square foot gave way to capacity pricing that reflected power and cooling resources reserved for each specific customer. Metered power became the norm. Fixed costs for power allocation and use remain common by the rack. But in the wholesale market, use-based or “pay-for-use” pricing for allocated power and reserved cooling capacity is introducing a rapid delivery model, which reduces overbuilding, overbuying and overpaying. And it helps data center customers achieve operational savings over time.

In a single capacity charge, inefficiency exists because a customer will typically require space and cooling capacity that they expect to grow into without utilizing the conditioned UPS power for some period of time. And very seldom, if ever, will a colocation tenant use 100% of what they are leasing. So in the traditional model, customers pay for the power capacity (i.e., much of the cost of building the data center) even though they are not using it all and most likely never will.

Many factors – compute efficiency, technology refresh cycles, project delivery schedules and variations in the customers’ business itself – contribute to changes in the IT loads that make those loads hard to predict. As such, they’re likely subject to over-provisioning within multi-year contracts for costly data center facilities.

This means it’s important to find a colocation data center provider who offers transparency, flexibility and specific pricing of resources. A data center like that allows IT leaders to find significant savings by aligning space, cooling, UPS power, and pricing closer to their company’s actual needs.

Breaking down data center costs

Because most data center colocation lease terms are 5, 10, or even 15 years long, customers typically reserve space, cooling, and power to ensure they can grow their footprint within that data center. The traditional model only has one charge for that infrastructure, regardless of how much the customer has just reserved for later use and how much they’ve actually provisioned for use.

Because the vast majority of data center capital expenses and operating expenses go to power and cooling, if your colocation provider’s pricing model bills you for that infrastructure regardless of what you’ve actually provisioned for use, the amount you’re “over-paying” could be significant.

In contrast, at Aligned Data Centers, we break the equation into three attributes – to ensure customers only pay for what is used over time, versus what is allocated. Separating the cost of provisioning of space and required heat rejection capacity from the conditioned power allocation is the essential economic efficiency and pricing transparency that Aligned Data Centers brings to the data center market with our pay for use model. Our customers can reserve space and cooling but forgo the cost of conditioned power until it is required. They get the confidence of knowing they can grow without paying 100% of the cost of infrastructure they are not using.

In our model, “Reserved Capacity” is priced at a much lower $ per kW and “Allocated Power” is priced at an industry-competitive $ per kW. Utility rate is metered power consumption multiplied by an industry-leading PUE of 1.15 . Because Aligned Data Centers has bifurcated the infrastructure charge into reserved capacity and allocated power, and each is charged at a different rate, the effect is a dynamic and much more efficient $ per kW pricing that correlates directly to the customer’s actual utilization of the facility, as depicted in the chart below.

This is particularly significant because conditioned power (“Allocated Power”) is the most expensive single cost in a data center. So to the extent that its construction and operational cost and customer use can be more carefully modulated, the reduction in cost for the provider can be passed through to the customer.

Savings with Aligned Data Centers

There are two drivers of savings in the Aligned Data Centers pricing model:

  1. One driver of savings in our model comes from the fact that we have bifurcated the infrastructure charge. The “Reserved Capacity” (space and cooling) charge is roughly 50% or less of the market rate for provisioned power. The “Allocated Power” charge is a more typical market price.
  2. The other element of cost savings comes from the fact that we offer an industry-leading PUE of 1.15.

Together, the bifurcation of Reserved Capacity and Allocated Power and an ultra-low guaranteed PUE yield millions in savings over a contract term, as the example below (a five-year term) illustrates. In this example, Aligned Data Centers is 22% more cost-efficient than the traditional pricing model.

Minimum Obligation is the minimum contracted spend if you never use any power and thus pay only the Reserved Capacity rate. With traditional data centers, you would pay the full Rental Cost whether you used any allocated power or not.

Rental Cost is Reserved Capacity cost plus Allocated Power cost. This is the bifurcated Infrastructure charge described in the pricing model above. With traditional data centers, Rental Cost is not bifurcated – you pay the full Allocated Power cost regardless of what you actually end up using.

Energy Cost is the E described in the pricing model above (Power Consumption × Utility Rate × PUE). Energy Cost is lower at Aligned Data Centers because of a PUE of 1.15 compared to the traditional 1.40. The difference is the saving on the same load over 5 years.

Total Cost of Occupancy is Rental Cost plus Energy Cost. The graphic illustrates the difference over 5 years.

Pricing and contract terms matter more now than ever

Recent revisions to the accounting standards put forth by the Financial Accounting Standards Board (FASB) will require all companies to report leases with terms longer than one year as liabilities on their balance sheet. Because the Aligned Data Centers’ pay for use model provides a dramatically lower contractual commitment based on the actual utilization, the balance sheet impact is dramatically reduced. Read more about reassessing data center colocation agreements in To Find the Silver Lining In New Lease Accounting Rules, Look to the Data Center.

Bottom line

Greater cost transparency and flexibility in your data center contract will give you a better idea of exactly what you’re paying for and how to manage that contract over time. A data center that parses out your costs and provides choices so you can manage them is clearly advantageous.

Because of our dynamic pay per use business model (paying for what you actually use incrementally over the course of your lease), we can save customers significant money over time compared to our competitors’ static approach.

Contact Aligned Data Centers today and request your own custom-built Total Cost of Occupancy comparison.

Can Your Data Center Match Your Need for Speed?

Do you want to get better at what you do or do you want to do something else entirely? For most companies – the answer is, YES. Both. You need to be quicker, smarter, and more efficient at what you do already and come up with new business models for your company to thrive. But you can’t do either without a data center that gives you speed and agility.

We all know that more and more data is being generated and captured, which provides opportunities for business and challenges for IT. A key challenge is speed. The time IT has to make the magic happen – to create, iterate, repeat – is shrinking.

It’s not enough to deliver a product or service and do it well or even do it on a massive scale. The key to success is to identify the product or service that people really want – and the package they want it in. Often, that takes trial and error.

When organizations talk about improving their technology return on investment (ROI), they usually mean investments in hardware or software. In fact, one of the best opportunities to increase your tech ROI may come from improving the productivity of your IT and DevOps staff – giving them the right tools to run those trials, to create, iterate, repeat. A data center that helps you scale when you need it – reducing time to provision and increasing speed to market – can help deliver that bottom-line value.

Acting like a startup

Whether launching a whole new enterprise or creating a new product, IT is increasingly being pushed into startup mode, favoring experimentation over elaborate planning, customer feedback over intuition, and iterative design over traditional upfront designs.

The need to explore new digital business models has pushed all organizations to explore lean or agile methodologies such as “minimal viable product” and “pivoting” and mimic startup success stories like these:

  • After Dropbox began iterating much faster in order to test what customers really wanted, they grew from 100,000 to more than 4 million registered users in just 15 months.
  • Quickbooks’ early success came after founders broke product development down into teams no bigger than four and began focusing on rapid development of a prototype and quick testing of the market.

“When you’re finished changing, you’re finished.” – Benjamin Franklin

Few companies need to be sold on the benefits of digitization. According to a 2015 survey by McKinsey, executives worldwide expect digital initiatives to deliver annual growth and cost efficiencies of 5 to 10 percent or more in the next three to five years. And customers expect every organization to deliver products and services swiftly – with seamless user experience.

The need for speed and agility is not limited to the domain of digital startups.

For example, in the pre-digital world, a retail chain might renovate its stores on a five- or seven-year cycle. Today, leading retailers release major revisions of their ecommerce sites – their stores – every year, with substantial upgrades every few months. Most are responsive in real time, changing minute-by-minute according to consumers’ behavior.

As one example of legacy retail store’s efforts to be innovative, Nordstrom’s, which was founded in 1901, ran an Innovation Lab that launched customer-facing initiatives in a series of one-week experiments. These often resulted in new products or services.

As another example of a legacy business benefiting from digital speed and agility, a European brick and mortar bank expanded its customer reach when it automated elements of its mortgage application process by connecting an online calculator to its credit-scoring models, which enabled it to give customers a preliminary offer in less than a minute. This system cut costs while significantly improving customer satisfaction.

The point is that it’s going to take a fast, agile culture for organizations to be competitive in their markets.

It’s a group effort

The need for a nimble culture doesn’t stop inside the organization. All parties – IT, infrastructure & operations (I&O), even outside vendors – need to work together to implement a strategy that is ultra-agile, scalable, and responsive to change.

“This pace of change is relentless,” says Mike Chuba, managing vice president in the I&O group at Gartner Inc. While the digital enterprise has become a mainstream reality, a key challenge for I&O and IT leaders is to find systems and applications that can support those digital needs.

One of the toughest challenges for today’s IT and I&O leaders keeping up with that pace of change is managing capacity – ramping up to help make the magic happen. In this evolve-or-die world, it’s essential that the data center be responsive to the business needs, shrinking the time to market as much as possible.

Scalability, speed, and responsiveness

So what does a more agile, responsive, and scalable data center look like?

Scalability

At Aligned Data Centers, we’ve standardized and modularized the power and cooling infrastructure, making it deployable just in time, matching our customers’ need to be more agile. Each component is built out to the scale required for your customized pod/footprint (30 kW heat sink, 350 kW CDU, 500 kW cooler). A higher number of smaller generators are used, increasing reliability and scalability as well. The UPS system is similarly scalable. At Aligned Data Centers, you also can scale vertically by filling each rack with 25 kW and greater of high density power; it’s variable and high density racks built side by side, row after row.

Speed

When it is time to scale, our supply chain, including a partnership with the manufacturer Jabil, enables just-in-time deployment (8 weeks or less) of scale power and cooling capacity. And installation is quick, too – flanged connections between the pipe cages and CDUs allow the equipment to be snapped into place in a couple of hours. These scalable units can be added or removed without affecting the previously installed, active pods, or data center operations. Our customers are able to better align IT and business goals – paying in smaller, fine-tunable increments – because they are able to quickly expand their footprint, or pods, becoming fully functional with scaled power and cooling in a matter of weeks.

Responsiveness

IT loads are increasingly dynamic yet infrastructure remains static, and static infrastructure can’t support dynamic IT loads. At Aligned Data Centers, our infrastructure is dynamic, and responsive to our customers’ IT loads (25 kW or greater). Instead of forcing cold air into the data hall, our system removes the heat at its source, with heat sinks close-coupled with the server racks, so the system is dynamic in real time, ramping up and down based on server load. (Read more details in the blog post Data Center Reliability and Efficiency in the “Zettabyte Era.”)

Bottom line

More and more businesses are responding to digital changes by seeking what Ernst & Young calls “self-disruption” driven by “intra-preneurs.” As digital technology drives improvement in traditional business processes, the data generated and captured helps business leaders answer the question “What business are we really in?” “Who is our customer?” “What’s the risk of standing still?”

So, do you want to get better at what you do or do you want to do something else entirely? For most companies – the answer is, YES. Both.

Today’s pace of change is accelerating at an extraordinary rate. You need to be quicker, smarter, and more efficient at what you do already and come up with new business models for your company to thrive. But you can’t do either without a data center that gives you speed and agility.