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Data Center Power: A User’s Guide to Soft and Hard Costs

by Stephen Vechy | Thu, Aug 12, 2021

data-center-costsData centers can’t afford to go dark. That’s why reliable critical power systems are central to their operation. Selecting and maintaining these systems comes at a price, but a stronger understanding of “hard” and “soft” costs -- and what can be done to mitigate the latter -- can protect the bottom line.

Hard and soft costs vary from one operation to the next. In general, hard costs refer to the expected and quantifiable expenses that an organization pays to stay in business. In contrast, soft costs are the less tangible or "surprise" expenses that can add up over time.

For example, critical power systems come with predictable hard costs (e.g., initial procurement, installation, and maintenance) and a host of soft costs that typically add up to nearly two-thirds of a system’s total lifetime expense.

Soft costs can be hard to calculate for a critical power system. This is because many of them are incurred when data centers go dark due to power failures. And according to a recent survey by the Uptime Institute, nearly three out of four data center execs have experienced such an event in the past three years alone.

What are some examples of the kinds of soft costs incurred during an outage?

l  Service level agreements (SLAs): Outages can result in fines as a result of contract breaches. Organizations may also face legal or regulatory repercussions as a result of mishandling data. 

l  Recovery actions: When a data center goes down, organizations may need to pay extra for root-cause investigations and other recovery efforts that may not have been accounted for in the budget.

l  Productivity losses: According to the Uptime Institute, data centers can lose an average of $9k for every minute their data center goes dark. This is no small change, and unexpected expenses like this can trigger additional losses, such as…

l  Reputational damage: This results from a client’s loss of trust in the data center’s ability to store and protect their digital assets. Understandably, this could also lead to a loss of future business—which means it’s a high soft cost that often doesn’t happen immediately.

One can see how soft costs add up. At the same time, it's easy to see why measures to prevent outages can have a positive, long-term impact on a data center's operating expenses. The good news is that 75% of respondents to the same Uptime Institute survey believe their latest and more recent outage was preventable.

How to Lower Your Soft Costs

Outages are a major fear for data centers. And for good reason.

Unfortunately, many companies still roll the dice by purchasing critical power systems, assigning someone internally to keep tabs on the equipment, and simply hoping the system comes through when it needs to. (Spoiler: it often doesn’t.)

Scarce resources, a lack of skilled personnel, and increased edge computing (and the scattered facilities that entails) can mean even data centers with the best-laid plans have unintended outages. As the Uptime Institute survey pointed out, “good design, effective processes, and staff action” can go a long way in terms of outage prevention.

So, what does proper design, implementation, and management of a critical power system entail? At Concentric, our approach includes:

l  On-site assessment: An in-depth study of the facility gauges specific power needs based on real-time data. It also identifies the critical assets that must remain operational during a crisis. Plus, an on-site assessment helps to identify and address potential risks.

l  Bespoke design: Professional engineers consult with data center stakeholders to design a critical power system that accommodates the data center’s power needs and seeks to reduce the financial and operational impacts of an outage. One major benefit to this approach is that it provides a throughline that ensures a unified approach to each step of the process, as opposed to a piecemeal process and the dreaded “design by committee.”

l  Turn-key installation and support: There are advantages to trusting third-party power system specialists to assess, design, installation, and manage your critical power system on your behalf. Doing so brings greater stability to your operations, frees your team to focus on their roles, and reduces the number of vendors coming into your facility, which has been a legitimate concern during the pandemic.

l  Proactive service management: Once a critical power system is established, a dedicated third-party power specialist steps in to monitor its performance and attend to any repairs, replacements, or fine-tuning as needed. True, proactive service management comes with its own price, but these costs are offset (and then some) by the larger costs incurred by preventable outages.

l  Replacement cycle management: Every component has an end-of-life timeline. A properly managed power system has oversight to ensure those timelines are being tracked and that key equipment is being replaced (and, if possible, recycled) to avoid outages.

Ultimately, the key benefit of a managed power system is peace of mind. That is peace of mind knowing your investments aren’t undermined by preventable soft costs.

This is the philosophy behind Concentric's Perpetual Power, an all-inclusive system that typically offers savings of 20% over its clients' current costs and ensures centers avoid downtime.

“When clients adopt the perpetual power approach to managing their critical power systems, they remove all the worrying about each part of the power system,” says Steve Vechy, Director of Engineering and Marketing. “We see our role as our customer’s consultant and advocate, so our mission is to discover their needs and provide the optimal solution regardless of brand.”

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