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European enterprises can halve colo expenses by moving north, says Gartner

Favourable environmental conditions in Northern Europe mean enterprises can save on their datacentre expenses

Archana Venkatraman
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Published: 23 Oct 2014 12:22

Low energy prices and favourable environmental conditions in Northern Europe mean enterprises can save up to 50% on their colocation and datacentre expenses by moving their IT infrastructure to the Nordic region, said analyst firm Gartner.

London, Paris, Amsterdam and Frankfurt are currently the major colocation centres for multinationals and large enterprises in Europe because of high-speed network connectivity and low-latency offerings. But Gartner said power costs on average in the European Union (EU) have risen by around 13% since 2010, while power costs in northern countries such as Norway and Sweden have fallen by 5% in the same period.

Combined with efficiencies from using outside air cooling, Northern European countries give enterprise a clear economic and environmental advantage to hosting IT infrastructure there, the analyst firm said.

Enterprises must move non-critical workloads such as data warehousing to colocation facilities and datacentres in the north to save costs, the firm advised. 

Large enterprises such as Google, Facebook and Microsoft have all turned to the Nordic region to build their hyperscale datacentres, powered by renewable energy resources in these regions.

In September 2013, communications giant Ericsson announced it was investing almost £682m to build two modular datacentres in its native Sweden, as well as a third in Canada. In the same month, Microsoft said it planned to build a £156m datacentre in Finland following its purchase of mobile phone manufacturer Nokia. 

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Research director at Gartner Tiny Haynes said it's important to weigh up several key decision factors when considering moving workloads away from the major colocation hubs to Northern Europe.

“In most organisations there are several IT functions, such as data warehousing or browser-based apps, that simply do not warrant the significantly increased running costs of colocation in a major hub," he said.

Big colocation providers, such as Telecity, have also mapped out strategies to increase their presence in Northern Europe. Telecity acquired Finnish provider Academia, primarily to gain control over its Helsinki datacentre. The move came just four months after the company purchased another Finnish datacentre operator, Tenue Oy.

Factors to consider before moving datacentres to Northern Europe

Gartner’s Haynes outlined key decision factors that enterprises must consider when moving their technology infrastructure up north:

Network latency
Some applications like voice over internet protocol (VoIP) systems and virtual desktops need a low-latency environment to function well, while others simply do not. Datacentre professionals must categorise applications and assign them a suitable location accordingly. 

Once these criteria are applied, it’s likely most organisations will find some workloads that can be moved to a lower-cost location without impacting performance

Tiny Haynes, Gartner

Application requirements
Some applications are standalone, while others are integrated with a range of connected systems. If the application is interdependent, it’s best to keep all the constituent parts in the same datacentre infrastructure to avoid timeouts.

Security compliance
Data protection laws vary between countries, and certain data or applications that use data may not be suitable for use outside specific geographies, Haynes warned.

Power availability
IT must consider not just the availability to a business's rack, but also to the datacentre and the country itself.

Cooling costs
It is important to consider both the ongoing power usage effectiveness as well as the cooling methods available – such as renewable energy sources, including geothermal energy, hydro-electricity and free air cooling in Northern Europe.

Price
The price per kilowatt (kW) of infrastructure, as well as price per kW per hour, should be evaluated to outline the cost benefit of moving non-critical workloads to a northern colocation facility, Haynes advised.

Support
The IT support arrangement can either be in-house support from technical teams nearby or support provided through the supplier. But it is crucial to consider this factor to avoid downtime issues.

“If considering these factors reveals an opportunity to move workloads and applications to another location, it is also very important to properly map out the costs over a lifecycle,” said Haynes. “A cost estimate should be considered over at least three years and take into account several price components that make up the total cost.”

Haynes also highlighted other colocation costs enterprise IT must take into account while determining datacentre locations. This includes colocation setup fees the service provider charges as commission for using power, storage and network resources. 

Cost of moving hardware and applications to a new datacentre should also be considered, as well as colocation rental costs and decommissioning charges (charges applied at the end of the contract to transfer data and apps back).  

"Once these criteria are applied, it’s likely most organisations will find some workloads that can be moved to a lower-cost location without impacting performance,” he concluded.

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