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3 Options That CIOs Have To Consider: Build, Colocation or Cloud

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The CIO must consider all options carefully when deciding to expand via building, colocation or cloud.

If there is one thing that I think that we can all agree on then it is that our data processing and storage needs continue to grow as the company comes to realize the importance of information technology. The person with the CIO job now has to find a way to deal with this explosive growth. This means that you are going to need to find more room to house the servers and the storage systems that your firm is going to be needing. You have three options: build, colocate or cloud. How can you decide between these options?

3 Possible Solutions – What’s The TCO?

Before we spend a lot of time trying to solve the problem of an ever-growing IT department, perhaps we should first make sure that we really have a problem here. I’m not sure if it’s good news, but we really do have an issue. It turns out that 15 petabytes of new digital data is being created every day. Ninety percent of today’s digital data was created in the last two years. Over 145 billion emails are sent every day. And the list goes on. Yes, CIO, you are going to need more space to both process and store all of this data.

Traditionally, when CIOs were faced with the need to expand the IT infrastructure of their company they had two different options: build or colocate. This is a very expensive decision to make and it is not one that a CIO can make by themselves. Instead they need to work with engineers, technology specialists, construction management staff and real estate professionals.

What needs to be determined for both approaches to providing expanded IT capacity is what is called the total cost of ownership (TCO). The need for a TCO comes from the simple fact that any expansion of processing and storage is going to require a long-term commitment from the company. Yes, there will be the initial costs of switching over or starting to use the new facilities, but the real cost will probably occur over time. This is what needs to be calculated.

In order to determine the TCO of a build vs. colocate decision, a CIO has to know how to ask the right questions. These questions will include site surveys, risk assessments, site selection and prototype design. This evaluation process can become very complex very quickly. CIOs need to make sure that they have enough time and the right resources to be able to do it correctly.

The New Power Of The Cloud

The arrival of cloud computing has now changed how CIOs need to think about building out their IT infrastructure. Under the traditional way of expanding IT infrastructure, your company would own the new servers and storage systems that will be housed in the new facility. However, if you choose to go with the cloud option, then you will have effectively outsourced your IT infrastructure.


When considering the cloud option for expanding your IT infrastructure, you need to take the time to ask the right set of questions. These include having a full understanding of what the risks will be of having someone else provide you with IT processing and storage. What, if any, applications are the best suited to be migrated to your new cloud storage? What would the total cost of using the cloud be, including usage charges and charges for peak processing?

One of the most important questions that a CIO will have to find the answer to when trying to decide between build, colocate or cloud is whether or not they are willing to outsource their IT operations. If you do decide to take the cloud path, then you will need to develop new contract negotiation skills in order to deal with ever-changing technology and IT trends.

What All Of This Means For You

The facts reveal what is really going on in just about every firm out there: their need for more and more processing capacity and storage is causing their IT infrastructure needs to keep expanding. The person in the CIO position now has to make a decision when it comes time to get more IT space: build, colocation or cloud.

When a CIO has to consider what expansion option best meets the needs of their IT department they need to calculate the total cost of ownership (TCO) for all three options. Calculating the TCO of build vs colocation requires that a number of questions be answered. When the cloud is added as an option, another series of questions will need to be answered. The ultimate question that has to be answered is if you are willing to outsource your IT operations.

As CIOs we need to realize that our IT operations will never be getting smaller. Instead, we always need to be planning how we are going to grow the area that the company’s IT assets are going to require. We always have three different options for how we can go about accomplishing this, we just need to be smart enough to choose the right one for our IT department.

This content was originally posted on The Accidental Successful CIO. It has been republished here with permission. The writer retains all copyright.


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Dr. Jim Anderson

Dr. Jim Anderson has spent over 25 years consulting with a wide variety of IT firms from the very big to the very small. His insights into the leadership needed to combine the separate worlds of business and IT strategy offer hope to CIOs everywhere who are struggling with this challenge.In this blog, The Accidental Successful CIO, Dr. Anderson offers his insights on how to get business and the IT groups to work together for the betterment of the firm.