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2020 - Paper - DEMYSTIFYING DATA CENTER COSTS AND PRICES
2020 - Paper - DEMYSTIFYING DATA CENTER COSTS AND PRICES
Volume 11, Issue 3, March 2020, pp. 346–353, Article ID: IJM_11_03_037
Available online at http://www.iaeme.com/ijm/issues.asp?JType=IJM&VType=11&IType=3
Journal Impact Factor (2020): 10.1471 (Calculated by GISI) www.jifactor.com
ISSN Print: 0976-6502 and ISSN Online: 0976-6510
Avjeet Kaur
KR Mangalam University Gurugram, India
ABSTRACT
Management of costs on data is assuming significance with data growth. As
information technology (IT) costs are spread in firms, thin and complex, perceptions of
costs on data are hazy. Such haze become mist when cost basis for the data costs are
different for service provider and service consumer. Service consumers are offered data
services on the basis of per GB/ TB data stored, moved, retrieved or processed. While
data center costing is commonly based on the amount of electricity requirement like 10
MW data center. Range of costs estimates for data center in terms of $ per TB per month
is observed irrationally high, while range of data center services prices are observed in
rationally narrow range of TB per month.
Key Words: Data Centre Cost, Data Centre, On-cloud service, TCO, Costing for IT,
Data cost, Costing of data.
Cite this Article: Sarvesh Kumar Tripathi and Avjeet Kaur, Demystifying Data Center
Costs and Prices, International Journal of Management (IJM), 11 (3), 2020, pp. 346–
353.
http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=11&IType=3
1. INTRODUCTION
We are in transition from data age to digital intelligence age. Artificial intelligence requires
data as much one can accumulate. Digital data generation is involuntary and storage a
compulsion. People are indifferent to usefulness of data stored. Data growth is exponential and
same is the case with associated costs. It is feared approaching, a data tsunami in upcoming few
years (Tripathi Sarvesh Kumar). Costs on data is a concern for every individual or enterprise
of our times. Such concerns and compulsions are getting manifested into booming data center
business. Business wire has projected CAGR of 17 % for global data center market for the
period 2017- 2023 (Maida).
Direct costs to the individuals are camouflaged under hype of fast launched new mobile
phones, new versions appearing in market every other day.
Indirect costs flowing through availability of free data storage offered by firms owning large
data centers of large information technology like firms Google and Amazon are keeping cost
concerns away from individuals, at least now. All data centers consume huge amounts of
electricity, multiplying carbon footprints thereby indirect costs to individual on the planet earth.
Though data storage facilities offer storage quota for free, in reality these are not free, other
users of data center share the costs. More over environmental costs are not considered as of
now. Phrase “There is no free lunch” applies to data storage too. World is waking up for the
concerns on the carbon footprints and environmental costs.
According to Pranav Prakash, the presales consultant at Photon, the data canter carbon
footprint is palpable:
“Seventeen percent of the total carbon footprint caused by technology is due to data centers.
The electricity that is needed to run these data centers is nearly 30 billion watts. These servers
waste 90 percent of the energy they use because they run on full capacity all day long.”
(Michel)[2].
For firms, costs are directly associated with size of data owned or held by firm. As data
sizes are rising costs are also rising, in spite of adoption of the energy efficient technology in
data processing and designing a data center. (Shehabi). Shift from the paradigm “Digitize all,
store all, store forever” (Tripathi Sarvesh Kumar) to “Store trash free Data” is expected to cost
reductions for firms and individuals both.
As information technology (IT) costs are spread in firms thin and complex, perceptions of
costs on data are hazy. Such haze become mist when cost drivers/ cost basis for the data costs
are different for service provide and service consumer. Service consumers are offered data
services on the basis of per GB/ TB data stored, moved, retrieved or processed. While data
center costing is commonly based on the amount of electricity requirement like 10 MW data
center or 100 MW data center.
In absence of the electricity efficiency standards for data centers, data size handled per unit
of electricity is expected to vary from operator to operator (Shehabi).
In order to rationalize costs on data, firms choose to avail data center services with
compromises on security and privacy. Current trend of mass migration to cloud deserves
examination of rationality behind such decisions. Option of migration to cloud may appear
cheap but first impact is loss of ownership of data and data holding infrastructure. Maurizio
Naldi and Loretta Mastroeni observed that –
Since migration involves a significant one-off effort to move all the data on the new
platform, and that can be exploited by cloud providers to cage the company in a lock-in
condition, the decision to migrate has to be examined thoroughly (Maurizio Naldi) .
Comparative prices offered from cloud computing service providers is natural process, but
comparison of costs could bring in some in-sights for the customer to take decision about what
proportion for data to move on cloud and what to be kept captive from importance of data and
its ownership considerations.
This paper aims at review of the secondary literature on the costs on the data in data centers
and prices of data center services. Typical comparison is presented on the data center costing
and data service pricing, prevailing in the market place. Attempt is made on arriving at similar
costs and prices basis i.e. per TB of data held or owned by a firm for a period (Monthly), popular
as total cost of ownership (TCO). Since IT costs of the firms are fast aligning towards size of
data held by it, aligning basis for costs and prices would enhance visibility to the bearer of costs.
Study is based on the secondary source of rare information. Considered assumptions are
applied for critical input needed for the derived calculations.
2. OBJECTIVE
To review cost of data held with individuals and firms. Review of costing of the data centers,
derivation of the costs at common costs driver i.e. Costs in $ per TB of data stored in data center
and used from data center for a month. Finally, costs comparison is made with data center prices
offered by popular data center service providers in marketplace.
3. METHODOLOGY
Latest literature is reviewed for costing models for data centers from secondary source of
information. Available data on costs at different cost driver’s basis converted to common cost
driver of cost per TB data per month by selecting relevant sources. Offer prices for the data
Centre services are collected and compared with the costs on common costs driver.
3.1. Observations
Perception of costs incurred on data transfer to data storage media, storage and retrieval is vague
for individuals. Individuals do not care for it separately. For individuals costs on data are inbuilt
in the costs of digital device. IT Firms are keeping data cost information to themselves as trade
secret. Firms also have problem in costing for data, due to absence of the costing model
agreeable to all and invisibility of IT costs spread everywhere in the organization (Pramanik) .
IT function operates on the budgets as percent of the sales turn over. IT product and service
vendor enjoy value based and skimming pricing strategies. Competitor based pricing strategy
is slowly emerging with competition in the on-cloud service market.
There is unanimity on the major cost components of the data Centre but costs on per unit of
the data differs due to grey area of the data storage capacity per server.
Customer went from 40GB disks to 160GB. Customers have a habit of filling disk space
with data that is no longer required, multiple copies of the same files, and so on. Unless we can
find a way to re-educate the customer, in five years’ time we’ll be going through the same
upgrade cycle with them again.
There are various hidden costs associated with network storage beyond just buying a larger
hard drive. The first hidden cost is need for data to be backed up.
Other hidden costs need to be factored into the storage cost. Disaster recovery times blow
out when small businesses keep data that’s no longer needed by them. This is the one metric
you never want to be worried about, but if you have a guarantee that you’ll get the client up and
running 24 hours, time taken to copy the data onto replacement hardware eats into that time.
As size of data swelled, cost size of the data holding infrastructure also swelled. Costs to
power the data holding infrastructure, costs on back up and costs on the cooling system for the
servers popped out of the IT department expenditure and budgets. In-house (on-premise) data
centers thus assumed separate identity. IT costs then, got clear bifurcation between data Centre
and rest of the IT services / functions.
Data centers built and maintained by very large firms like Amazon and Google started
offering data storage service by 2002 at prices lower than the costs on captive data centers. Such
services are popular now as on-cloud data Centre services (Maurizio Naldi).
Data Centre costs are subset to the IT costs of the firm, irrespective of the nature of the data
Centre services in-house or on-cloud.
Centre costs could be size of the data enter impacted by economy of scale. Bigger the size of
the data Centre, lower is the cost.
4. CONCLUSION
Costs on data with individual is observed in the range of $ 0.4 to $ 19 per TB per month of the
data. Very high variation from $ 0.01 to $ 29.76 per TB per month has been observed in Data
Centre costs, estimated through different sources of the information. Variation in the data
Centre service prices is observed in narrow range from $ 24.08 to $34.67 per TB of data handled
per month. Vide variation in the data Centre costs is subject for the future research.
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