Do you need a detail explanation of how a data center business model works? If YES, here are 3 types of data centers and how they make money. A data centre is a facility that centralizes an organization’s shared IT operations and equipment for the sole aim of storing, processing, and sharing data and applications.
Since these facilities house an organization’s most important and proprietary assets, data centres are very crucial to the continuity of daily operations. Some years back, these data storage facilities were highly controlled physical infrastructures, but the public cloud has greatly changed that model.
Aside where regulatory restrictions mandates an on-premises data centre without internet connection, most modern data centre infrastructures have moved and improved from on-premises physical servers to virtualized infrastructure that supports applications and workloads across multi – cloud environments.
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What Does a Data Center Looks Like?
The architectures and requirements of data centres are known to vary greatly due to use and intentions. For instance, a data centre built for a cloud service provider like Amazon satisfies facility, infrastructure and security requirements that greatly vary from a completely private data centre, such as one built for a government facility that is dedicated to securing classified data.
But irrespective of classification, a working data centre operation is achieved through a balanced investment in the facility and the equipment it houses. Since data centres are known to house an organization’s most important data and applications, it is very pertinent that both facility and equipment are secured against intruders and cyber attacks.
Currently, there are over 7 million data centres around the world and almost every business and government entity builds and maintains its own data centre or has access to someone else’s, if not both models.
Also, there are varying options available in this modern age, such as renting servers at a collocation facility, using data centre services run by a third party, or using public cloud – based services from hosts like Amazon, Microsoft, Sony and Google.
3 Major Data Centre Models Used in the United States
Just like it was stated above, there are different models used by data centres in the United States, and the architectures and requirements of each of these models tend to differ greatly from another. Naturally, there are pros and cons to each data centre model and they are properly explained below.
1. On – Site Data Centres
In this particular data centre model, managers take charge of their own data centre at their own location. According to experts, an on-site data centre improves efficiencies for some business needs. Indeed, it also comes with maintenance requirements and it can be more difficult to scale this investment up or down: any wrong step and the cost of this model can be much higher than other choices.
Also note that every activity and easiness attached to cloud computing makes it seem like on – site data centres are outdated, but there are a couple of different reasons why companies may choose to own their own data centre. For instance, some companies have static requirements and perform a good amount of processing on an ongoing basis, and they have invested in the data centre capacity to do that.
With time, these businesses might make changes to the data centre, but it ends up being more expensive to go into a leased facility or into the cloud unless there is a good reason to do it, such as changes in operations or technology. Insurance companies and banks are a good example of businesses and industries that use this data centre model for a long time – they’re part of the organization’s core capabilities and are considered to be a strategic advantage.
Also note there are companies that work with large data sets, like oil and gas firms. Moving those large data sets around to different locations – like into the cloud – is very expensive and time – consuming. There are also businesses whose workloads aren’t designed for cloud or can’t be virtualized, such as applications written in COBOL for mainframes.
Altering those applications and replicating that software in a different environment tend to be a very large and expensive undertaking. Although, at some point, legacy applications such as this will end up being rewritten to run in virtualized or cloud – native environments when the needs justify the expense and risk of doing so.
MTDCs provide businesses with the ability to pay for infrastructure as a utility instead of managing the data enter in – house. Note that even complex enterprise resource planning (ERP) environments with millions of dollars tied up in customization might not actually justify establishing and owning a private data centre.
At this point, it may be ideal for them to move it into a hosted facility and buy space, power, cooling and connectivity from the MTDC. And, since it is normal route for major public cloud, service and content providers to also have a presence in MTDCs, enterprises can connect directly to them.
Have it in mind that this can significantly reduce latency and user experience, and simplify their planning by having their public and private clouds, and carrier connectivity, under a single roof.
3. Cloud Computing
From a business perspective, the Data Centre industry seems to be warming up better to the use of cloud over time. Note that when an organization transfers its workload to a cloud environment, it is different than simply converting to virtual machines (VMs). Enterprise data centres are renowned for supporting many different applications, and this can mean hundreds or thousands of VMs.
Have it in mind that it can be quite challenging to manage this new virtualized environment while also making sure of high security and availability. Adding automation and orchestration tools tend to effectively enhances operational efficiency and can turn multiple VMs into a private cloud. And with resources being agile and easily available, it works well for any workloads the business may need to deploy.
Under this model, also note there are private and public cloud environments and they also differ in several ways. When a company decides to use a private cloud environment, the company has the advantage of absolute control. Also internal operating costs may be much lower than the monthly charges from using a public cloud depending on the way the data centre services are used.
Also note that transferring to a private cloud is a lot easier from a security and management perspective than moving to a public environment; it is common practice for the enterprise for the most part. The public cloud, on the other hand, is a rental environment that provides much of the same facilities seen in private cloud.
However, the next wave of applications is typically rewritten as cloud – native applications to run on specific types of public platforms. Public cloud are known to move companies completely out of the infrastructure business, and might provide better security than small or mid – sized enterprises can manage on their own.
But it is very crucial to note that regulations can be an issue: the regulatory environment may not have caught up with what is possible with public cloud. For some companies, there are many regulatory issues to surmount before moving to a public cloud. That’s why many banks, for instance, often host private clouds in their own facilities.
Another issue with public cloud is that it lacks standardization across cloud platforms. Cloud vendors have their own ways of doing things and it can be very hard to change to another vendor down the road. Putting software into a different cloud environment can be very daunting and expensive. If you have very large datasets in the cloud, it can be hard and expensive to move them into another facility.
Also, according to experts, cloud forces managers to give up a certain amount of control in terms of service level agreements. Once a public cloud fails, managers have to know about backup and recovery plans. Once he or she has made a commitment to the public cloud, it may be impossible to move back.
4 Ways How Data Centers Work and Make Money
With massive amounts of cable running through the facility and a confusing array of ports and plugs to manage, how data centres work can be a confusing topic for anyone who isn’t used to those systems. Data Centres are more or less a hybrid business made up of real estate, technology, and service.
They function like hotels where you rent a room (server) for as long as you need to host your website. The hotel offers everything you need, housekeeping, room service and laundry (networking, power, and maintenance), while you pay for the convenience. Below is a breakdown of how these facilities work and the services they render to generate income.
a. Infrastructure As A Service
Data centres normal provide equipment to customers who don’t want to or cannot invest in building their own facility for private use. The client then pays for what they use and have the added benefit of being able to use more hardware as the demand increases.
Note that the infrastructure offered normally consists of storage space, hosting services, servers, firewalls etc. The service provider is then tasked with the maintenance and upgrade of all the equipment letting the customer focus more on developing software or application to use that infrastructure.
b. Software As A Service
According to reports, it is often cheaper to purchase software just when you need it than to buy a lifetime licence especially if buying for many people for example in a company. Presently, in this age, you can access software as a service through your web browser without installing them on your devices, thus, allowing people to easily collaborate as it allows easy data sharing.
Data centres are renowned for offering software such as word processors or spreadsheet programs in a similar way. Note that it also does not mean that they have to make the software themselves but they can offer discounted packages for existing software like Google Docs or Office 365 etc.
c. Network As A Service
Aside from just offering equipment, a data centre can also offer network services like phone services over the internet (VoIP), Virtual Private Networks (VPNs), private telephone network for use within a company (Private Branch Exchange) and Unified Communication.
This is good for startups that are looking to access enterprise level network hardware without costs of getting technical expertise to setup or maintain similar services for their needs. The service is billed on a pay as you go basis.
d. Platform As A Service
Note that this service is mainly for developers as it offers a sustainable environment for them to build and deploy applications. The data centre provides a platform that supports certain programming languages and one that caters for most of the configuration of servers and networks. This also allows developers to specialize on their code, build quickly and ship early.
Also note that a developer can scale up their application easily as resource demand increase especially since they don’t have to bother about upgrade costs. The expense of getting more access to hardware through the different packages offered by this service tend to be less than when the developer purchased the hardware and set it up for themselves.
In conclusion, note that a lot of companies use more than one data centre model. A company might decide to use public cloud to enable self – service access to computer resources, for instance, while it runs proprietary, business – critical applications in an on – site data centre or an MTDC. However, different companies choose different needs, and they use different data centre models to meet them.
There are several alternatives available today, and anyone can customize the investment strategy and the migration path to implement a combination of hardware/software approaches. Cloud is becoming more popular, MTDCs are becoming much more capable, and regulators are trusting off – premises solutions more. The only option is to use the best model for the task at hand.
Frequently Asked Questions
What Is Data Center Business?
A data center is a facility that unifies an organization’s shared IT operations and equipment for the purposes of storing, processing, and disseminating data and applications. Due to the fact that they house an organization’s most critical and proprietary assets, data centers are vital to the continuity of daily operations.
How Do Data Centers Make Money?
Data centers can make money from selling managed services, space, power, and access to an interconnection ecosystem.
Is Cloud A Data Center?
Yes, because basically, a cloud data service is a remote version of a data center – located somewhere away from a company’s physical premises and lets you access your data through the internet.
How Do You Start A Data Center Business?
- Conduct your market survey and feasibility studies
- Learn everything you need to learn about owning and operating a data center business
- Choose a name and register the business
- Draft a detailed Business Plan
- Secure the needed licenses and permits
- Apply for an EIN (Employer Identification Number) / Federal Tax ID Number.
- Open a corporate bank account
- Secure your IT equipment, server, and internet facility et al
- Lease, equip, and furnish your office
- Hire employees
- Market and promote your services
Why Are Data Centers Important To Business?
Data centers are important to business because investing in the services offered by Data Center solutions will help enterprises avail scale cost, data security, and service efficiencies. Data Center service providers enable enterprises to customize solutions as per local requirements without compromising on the elemental course of the core business process.
What Are The Standards Designed For Data Center Infrastructure That Ensures Data Transmission Smoothly And Securely?
- ISO 9000 – Quality System.
- ISO 14000 – Environmental Management System.
- ISO 27001 – Information Security.
- PCI – Payment Card Industry Security Standard.
What Are The Key Management Activities Of Data Center?
The typical tasks in data center management are;
- Upgrading hardware and software/operating systems.
- Managing data distribution and storage.
- Backup processes.
- Emergency planning.
- Technical support.
What Are The Core Components Of A Data Center?
The core components of a data center include routers, switches, firewalls, storage systems, servers, and application delivery controllers. Please note that because these components store and manage business-critical data and applications, data center security is critical in data center design.
How Much Data Will There Be In 2025?
The vast majority of the world’s data has been created in the last few years and this astonishing growth of data shows no sign of slowing down. In fact, IDC predicts the world’s data will grow to 175 zettabytes in 2025.
What Are The Standards For Data Center Infrastructure?
- Network infrastructure.
- Storage infrastructure.
- Computing resources.
- Network security appliances.
- Application delivery assurance.
What Is In A Data Center Facility?
Basically, what you will see in a data center are; routers, switches, firewalls, storage systems, servers, and application delivery controllers
How Is A Data Center Designed?
The principal goals in data center design are flexibility and scalability, which involves site location, building selection, floor layout, electrical system design, mechanical design, and modularity. Data center facilities rarely achieve the operational and capacity requirements specified in their initial designs.
What Should a Data Center Designer Consider Before Building a Data Center?
- Internal Network.
- Backups and Offsite Storage.
- Physical Security.
- Fire Suppression.
- Climate Control
What Are Some Data Center REITs?
There are 5 major data center REITs, and they are CoreSite Realty Corp. (COR), Digital Realty Trust (DLR), Equinix (EQIX), CyrusOne (CONE), and QTS Realty Trust (QTS). Although these are the 5 major data center REITs, there is also a 6th choice Iron Mountain Inc.
Are Data Center REITs A Good Investment?
Sure, Data center REITs are good investments. As a matter of fact, Real estate investment trusts (REITs) are generally thought of as income investments. These trusts own facilities that provide secure and reliable data storage for companies. Data center REITs can be a great combination of low risk and high reward potential.
What Is Data Center Security?
Data center security refers to the physical practices and virtual technologies used to protect a data center from external threats and attacks. Because data centers hold sensitive or proprietary information, such as customer data or intellectual property, sites have to be both digitally and physically secured.
Why Is Data Center Security Important?
When selecting a data center partner, security is of one the most important features of any data center. After all, your mission-critical infrastructure will be housed within someone else’s facility. Data breaches and other cyberattacks are a growing threat for any businesses.
What Are The Types Of Data Centers?
There are actually four main types of data centers and they are;
- Enterprise data centers.
- Managed services data centers.
- Colocation data centers.
- Cloud data centers.
How Do You Manage Data Center Operations?
- Deploy DCIM Tools.
- Optimize Data Floor Space.
- Organize Cabling.
- Cycle Equipment.
What Defines A Modern Data Center?
Basically, what defines a modern data center is that the data center must be able to communicate across these multiple sites, both on-premises and in the cloud. Even the public cloud is a collection of data centers. When applications are hosted in the cloud, they are using data center resources from the cloud provider.
Will Cloud Replace Data Center?
No, the cloud is not a replacement for the data center.
How Much Money Does A Data Center Make?
A typical data center employs 1,688 local workers, provides $77.7 million in wages for those workers, produces $243.5 million in output along the local economy’s supply chain, and generates $9.9 million in revenue for state and local governments.
How Much Does It Cost To Open A Data Center?
Available data shows that a 1,000 square ft. data center would cost about $1 million. A data center of the size that Facebook or Google might use would cost from $250 million to $500 million.
What Companies Have The Most Data Centers?
The companies that have the most data centers are;
- Digital Realty Trust.
- China Telecom.
- China Unicom.
- China Mobile.
- KDDI Telehouse.
Why is Reliability Needed In A Big Data Center?
In a data center, having a reliable system design is the most critical variable. Once a failure does occur, the most important consideration becomes getting the IT equipment and business processes up and running as fast as possible, thus keeping downtime to a minimum.
What Companies Need Data Centers?
Any entity that generates or uses data has the need for data centers on some level, including government agencies, educational bodies, telecommunications companies, financial institutions, retailers of all sizes, and the purveyors of online information and social networking services such as Google and Facebook.
Do Banks Use Data Centers?
Absolutely, and as a matter of fact every day, banks grapple with over 1.9 petabytes of data and are finding themselves constrained in many ways by their in-house data centers.
How Much Does A Microsoft Data Center Technician Make?
Datacenter Technician salaries at Microsoft can range from $46,366 – $86,237 per year. Please note that this estimate is based upon 16 Microsoft Datacenter Technician salary report(s) provided by employees or estimated based upon statistical methods.
How Do I Become A Good Data Center Technician?
In order to become a good data center technician, you should have the following skills:
- Thorough knowledge of monitors, switches, routers, and other technical equipment.
- Troubleshooting skills to solve network issues promptly.
- Customer service skills.
- Problem-solving skills to provide solutions for any issues with operating systems.
What Is Required To Be A Data Center Technician?
In order to secure a position as a data technician, employers require a high school diploma and some experience. However, many employers prefer candidates who have a bachelor’s degree or associate’s degree in a technical field, such as computer science or engineering, and at least one year of tech support experience.
What Does A Data Center Technician Do?
Data center technicians install and maintain data servers and network equipment. Their duties include monitoring the day-to-day performance of servers, maintaining an optimally controlled environment for servers, and troubleshooting network and server problems.
What Are Data Center Infrastructure?
Data center components require significant infrastructure to support the center’s hardware and software. These include power subsystems, uninterruptible power supplies (UPS), ventilation, cooling systems, fire suppression, backup generators, and connections to external networks.
What Company Stores The Most Data?
- General Electric. GE
Who Owns The Most Data Centers In The World?
Located in Langfang China, Range International Information Group is the world’s largest data center and occupies 6.3 million square feet of space.
How Much Does It Cost To Build A Small Data Center?
Actually, it depends on some factors involved, but on the average it will cost you about $1000 a square foot to build your own data center.
What Are The Biggest Expenses In Running A Data Center?
The average yearly cost to operate a large data center ranges from $10 million to $25 million. A little less than half is spent on hardware, software, disaster recovery, continuous power supplies, and networking. Another large portion goes toward the ongoing maintenance of applications and infrastructure.
How Can You Protect Your Data In The Cloud?
- Use a Cloud Service That Encrypts.
- Read the User Agreements.
- Set Up Your Privacy Settings.
- Use Strong Passwords.
- Use Two-Factor Authentication.
- Don’t Share Personal Information.
- Don’t Store Sensitive Information.
- Use a Strong Anti-Malware Program
How Much Electricity Does A Data Center Use?
Available data shows that on a global scale, data center power consumption amounted to about 416 terawatts or roughly three percent of all electricity generated on the planet.
How Do You Build A Data Center At Home?
Here are simple steps to follow in order to build a data center home;
- Gather hardware for your data center.
- Install and prepare SUSE Linux.
- Install SAP HANA 2 and S/4HANA.
What Is The Future For Data Centers?
The future for data centers is very promising due to the increasing demand for cloud computing infrastructure and IoT functionality.
Are Data Centers A Good Career Choice?
Yes, of course, working in a data center is a good career choice and this is so because data centers offer competitive salaries, enjoyable work, and diverse opportunities for workers looking to hit the ground running in a dynamic industry.
Where Are The Largest Data Centers In The US?
The largest data center in the United States is Digital Realty- Lakeside. Located in Chicago, spanning a total of 1.1 million square feet, the Lakeside Technology Center shares the top spot for the largest data centers in the United States.