The Case for Data Center Services Is Strong in a Weak Economy

Some sales strategies are only strategic when the economy is in full swing. However, the business case for data center services holds up, and in many cases improves, as working capital tightens.

Lou Peccoralo, COO of COLOTRAQ, a marketplace for telecom and IT services, explores this theme in Sunday’s session at the Channel Partners Conference & Expo called “Downturn-Proof Data Center Sales Strategies.”

It’s almost always a good ideas to outsource one’s data center needs in order to take advantage of the economies of scale a hosting provider offers, to save money on and comply with the environmental requirements power and allow yourself to focus on your core competencies. But in a credit-starved economy, Peccoralo said, the lack of available financing “puts the kibosh on any capital-intensive construction projects” for those thinking of building their own data center.

“Even for companies with relatively large data centers environments, it is difficult to match the savings of a hosting vendor with 10 or more facilities,” Peccoralo said.

Energy costs will only rise and overhead expenses for private data centers will reach unprecedented highs, but this does not change the basics of an IT sales strategy, he said. IT capabilities are still strategic for businesses looking to grow, save or introduce new services, so IT infrastructure demand will remain strong as companies look to invest in new blade or other technologies that are more efficient. Outsourcing rather than investing in new infrastructure can save five to 25 percent in operating expenses.

The difference between 2009 and the previous two years is only the cash flow, Peccoralo said. The trends and demands are still there. “Companies are still trying to figure out how to get more out of their IT assets with less power,” he said.

Peccoralo broke down the three levels of data center services — basic collocation, collation plus supplemental services such as backups and change control and full-blown managed services. He also provided data on the different vendors providing solutions for such services.

“If people are thinking of selling data center services, I wanted to give people a better idea of who they should be working with,” Peccoralo said.

Peccoralo also addresses the environmental, or green, issue. There is no blueprint yet for a green data center, he said, but there is a trend for responsible companies to put their data in centers that have gone through some process of becoming green by making power consumption more efficient.

While some sales teams see the odds stacked against them because of the current economy, Peccoralo said having answers to the problem of cash flow could have them dancing for joy at the end of the year.

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