A Matter of Trust
The "feel of the deal" may sound like an intangible factor, but it's one that experienced IT executives heed closely, especially in choosing between a large provider like IBM or EDS and a smaller services provider.
The Joys of Ownership
Outsourcing the data center was never a serious consideration for $425-million Silicon Laboratories in Austin, Texas. "We're a technology organization supporting a technology company. Everything we do ties right back into the business," says IT Director Kristi Browder.
About three years ago, this semiconductor manufacturer and designer of integrated circuits consolidated a variety of smaller data centers into one new facility at corporate headquarters. The $1-million build-out turned an employee fitness room into a state-of-the-art, 24/7 computing facility. The driving factors behind the data center project -- in order of importance -- were company growth, regulatory issues, lower costs and greater security, Browder says.
Showing a visitor around one day recently, Browder barely breaks stride as she sweeps her access card over the wall-mounted scanner and presses her finger onto the companion biometric device. The door to Silicon Labs' data center clicks open with a rush of cool air and a muted roar of sound. If you close your eyes inside a tier-one data center like this, you could swear you were standing under a waterfall. A trio of industrial-strength cooling units makes its presence known; these units keep nearly 500 systems humming along at optimum temperatures. "Oh, we love that sound," the IT director says with a satisfied smile, raising her voice a bit to be heard. "Quiet means something is wrong."
Every Wednesday morning, the company fires up its enormous 800-kilowatt generator stationed out back in a test run that belches black smoke into the air and startles everyone in the building with its rumbling. When the power fails, which has happened only once this past year, the generator takes over within seconds.
A staff of 18 tends to the data center, and another 18 are assigned to the software infrastructure and user needs among the 650 employees. "I've worked for outsourcers before, and I know it's really a question of what your core competency is," says Browder, a lifelong resident of Austin, which has become something of a magnet city for large data centers due to the lack of natural disasters in the city. "Are you building widgets or building infrastructure?"
Virtualization and open source are both key technologies for Silicon Labs in running its data center, and the 350 Windows servers require only 80 actual boxes. "We ask two questions about every application. Does it run on Linux? Does it run on VMware?" she says. "From a supportability standpoint, we love Linux. And virtualization lowers costs."
The escalating sophistication of such technologies also means her data center will be able to accommodate more growth without enlarging its footprint. Even so, Browder keeps an eye on outsourcing trends (which she carefully refers to around staffers as "complementary sourcing strategies") and doesn't rule out such partnerships in the future.
"Size doesn't matter. It's how comfortable I feel with the service they offer," asserts Lawrence Tam, vice president of engineering for Constellation HomeBuilder Systems Inc., a software provider for the home-building market and a division of $150-million Toronto-based Constellation Software Inc.
Over the past few years, Tam has been an owner and a renter. Those data center experiences made him a confirmed fan of outsourcing the infrastructure. "I really want my team to focus on software development for customers," he explains. "We outsource everything but the application layer and support to Rackspace. We're renting 20 servers, and they take care of the security, patching, database backup, whatever comes up on the hardware side."
The engineering executive likes not having to worry about the myriad issues involved in running a data center. "We make money by selling software, not by hosting it. I don't have to hire my own security expert, my own configuration expert, my own network expert," he points out. "The outsourcer has that expertise in-house. Their work with other companies means they're learning from those other customers and solving problems that might apply in my own environment."
During his evaluation of Rackspace and other larger players, Tam subjected his finalists to an unusual test. "I wake up at 3 a.m. and call them to see how fast they pick up the phone. I'm looking for a two-second response time," he says. "That's important because in real-life situations, Murphy's Law shows us that bad things happen at night. If there's no one around with the knowledge of my environment, I'll end up playing phone tag."
And who wants that in the middle of the night?
Tam's 3 a.m. test call is only the tip of his requirements iceberg, however (see "Outsourcing Checklist"). "There are a number of things to evaluate," he says. "One is the financial stability of the vendor. You don't want them out of business in two or three years, because every data center migration is a big task. Two, the customer support has to be outstanding and responsive. And three, the customer references have to be there."
At another company a few years ago, Tam had the unpleasant experience of pulling an outsourced data center in-house after his CFO decided the hosting was too expensive. "He looked at the numbers and said, 'The incremental cost of supporting 20 servers isn't that great.'"
But setting up the data center took the IT group more than a year, and uptime was rarely better than 98%. "It was really bad. On a daily basis, we were down anywhere from 10 to 20 minutes," the engineer recalls. "When I look at a holistic picture of what it takes to really host an application, it's not just about the network. It's about providing information to the customer -- and about application availability at the right time -- without worrying about security or scalability."
This was first published in April 2006