GLOBAL RESEARCH AND CONSULTING

Evaluating Your Critical Facilities

Optimizing for the Future,
The Core of Business Operations

February 2010
 Special Report: Evaluating Your Critical Facilities
TABLE OF CONTENTS
Executive Summary ................................................................... 3

Own Versus Lease Considerations ..........................................4

Site Selection Criteria .............................................................4

Facility and Equipment Reliability ...........................................5

Energy Modeling and Efficient Design .....................................6

Sustainability and the Cost of Not Going Green! ....................7

Data Center Containerization Industry Trends .........................8

Cost Segregation and Tax Savings ..........................................8

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© 2010, CB Richard Ellis, Inc.

 Special Report: Evaluating Your Critical Facilities
EXECUTIVE SUMMARY
A critical facility such as a data center is arguably the
most crucial resource within an organization, regardless What plans do you have for your
of its geography. Whether in Cleveland, Ohio or Beijing, data center in the next few years?1
China, critical facilities provide the means for all stor-
Lease space from
age, management and dissemination of data, applica- a co-location/
tions and communications for business. The operations managed hosting
facility 16% Renovate/expand
of entire organizations can be shut down if employees
existing data
and customers are unable to access the information center 47%
contained in servers, storage systems and networking
Build a new data
devices that reside within this key business repository. center 38%
Millions of dollars can be lost in a matter of minutes for
banks, online brokerages, airlines, shipping facilities
and other companies that rely on 100% 24x7 uptime This special report will guide you through the various
operation. Faced with these consequences, IT executives trends impacting the data center/critical facilities environ-
today must optimize their data centers, particularly the ment, including site selection criteria, how to determine
network infrastructure underlying their operation, to what level of facility and equipment reliability is appro-
ensure business continuity. priate, understanding impacts of an efficient design on
the cost of energy, trends in both the containerization
As the demand for data storage, electronic communica- industry and sustainability solutions as well as cost sav-
tions and global economic connectivity expands expo- ing strategies through tax planning.
nentially, the design, construction and management of
data centers is increasingly critical to corporate success.
Today’s economic environment dictates increased op-
erational efficiencies as conditions continue to squeeze
capital and operating expenses, leaving corporate real
estate and IT organizations continually challenged to
find more efficient and creative solutions to the ever-
expanding demand for information.

The majority of data center facilities have either reached,

or are quickly approaching, their capacity. Resource de-
mands for data center facilities are expected to continue
to increase. According to a Fall 2008 survey from the
Data Center Users’ Group, 64% of respondents antici-
pated their current data center’s capacity to be sufficient
for only three years or less.1

1 Data Centers Users’ Group, Fall 2008 survey

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© 2010, CB Richard Ellis, Inc.


OWN VERSUS LEASE CONSIDERATIONS
Often, the first major decision that must be evaluated
is whether to own or lease. There are several reasons
why a company may benefit from one scenario over
the other. When determining which path is better for a
particular organization, the company should evaluate
the following basics:
• Three, five and 10-year needs of the company
• Location based on synchronous or asynchronous
capabilities
• Location based on utility availability, utility rates and
communication infrastructure
• Data center operations as a core competency of the
company
• Facility as an asset or liability as it would appear on
the balance sheet
• Preferred OPEX or CAPEX financial structuring
options
• Staffing requirements and related cost of services
Special Report: Evaluating Your Critical Facilities
SITE SELECTION CRITERIA
With the decision of own versus lease complete, business
leaders must weigh myriad site selection factors. This
decision demands complex analysis as organizations
balance the costs of energy, sustainability and volatility
in power generation, as well as environmental and other
risks.
Data center locations continue to be predominantly
driven by factors such as:
• Synchronicity and limitations due to latency maxi-
mum requirements
• Availability of established network communications
infrastructure
• Risk avoidance, especially as it relates to weather
hazards
• Seismic activity (see map below)
• Utility infrastructure reliability
• Climate conditions favorable to high-efficiency air-
side economizers
• Latency between existing and new locations
• Access to talent and transportation
• Regional or local economic incentives
Seismic Activity Map1
These are key factors in determining the basic decisions
on locating a data center, and each have their own dy-
namic impacts to budgetary concerns. Site selection can
also be influenced by local government and economic
development agencies.
1 Global Seismic Hazard Assessment Program
February 2010
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© 2010, CB Richard Ellis, Inc.

FACILITY AND EQUIPMENT RELIABILITY
Turning to the reliable operations of the facility and
equipment, business leaders are faced with yet another
set of decisions that will impact overall success of their
data center. As potential sites are evaluated, facility
and equipment reliability are top of mind. In the case
of a new data center, emerging technologies are pro-
viding data center users the ability to review, in real
time, the operational performance of the facility down
to the box in the rack. Reliability is not exclusive to the
building structure, as the data center has become a
sophisticated facility measuring and capturing various
data used to tune the operations.
If a data center goes off-line, substantial direct and in-
direct losses can occur. Direct losses translate into extra
costs and lost revenue. Indirect losses are much harder
to quantify and can include degraded reputation, legal
liabilities, contractual responsibilities, regulatory obliga-
tions and customer satisfaction issues.
According to a report published by Strategic Research
Corporation, the financial impact of a major system out-
age is enormous:
• $6.5 million per hour in the case of a financial bro-
kerage operation
• $2.6 million per hour for a credit card sales autho-
rization system
• $14,500 per hour in automated teller machine
(ATM) fees if an ATM system is offline
Special Report: Evaluating Your Critical Facilities
Tier I – The lowest tier level provides only a single path
for power and cooling distribution with no redundant
components. 99.671% availability
Tier II – Similar to Tier I in that it provides only a single
path for power and cooling distribution, but reliability is
enhanced with the addition of redundant components to
some infrastructure. 99.741% availability
Tier III – Provides at least two paths for power and cool-
ing distribution, with only one of the paths active, and
provides redundant components similar to Tier II. This
includes infrastructure which can be shut down for main-
tenance purposes without affecting the critical loads. This
is referred to as “concurrently maintainable”. 99.982%
availability
Tier IV – Provides at least two active paths for power and
cooling distribution, redundant components, concur-
rently maintainable and is “fault tolerant,” meaning that
the facility can sustain at least one failure in its infra-
structure without impacting the critical loads. 99.995%
availability
Cost Impact of Tier Classifications1
Availability $/kW
Tier I 99.67% $9,000
Tier II 99.75% $10,000
Tier III 99.98% $18,000

Infrastructure costs versus reliability are not necessarily Tier IV 99.99% $20,000
correlated in the way one might expect. Costs increase
exponentially as the probability of downtime decreases.
Most modern data centers are designed with a site
availability of 99.9% to 99.999%. In determining the
optimum reliability level for your data center, downtime
needs to be evaluated in terms of potential loss of
revenue.

The following tier classification system was developed by

the Uptime Institute and is used in assessing the reliability
and availability of mission critical data center facilities:
1 KTA Group Inc., www.ktagroup.com, Kevin H Brightwell
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© 2010, CB Richard Ellis, Inc.

 Special Report: Evaluating Your Critical Facilities
ENERGY MODELING AND EFFICIENT DESIGN efficiency improving as the quotient decreases toward a
Trends in energy costs, consumption rates and envi- minimum of 1.0. 3
ronmental output are driving many business decisions
Efficiency and Savings
in addition to data center planning. Data centers are
known for their high energy consumption and related
sizable carbon footprint compared to office or industrial
buildings. Furthermore, most pressures on data centers
— e.g. increasing energy cost, regulatory requirements,
increasing power density1, uncertain long-term plans for
capacity or density — affect their efficiency. To overcome
these efficiency challenges, we must change the way
we design, install, operate, manage and maintain data
centers.
Data centers of the past operated at a PUE of approxi-
Are there really efficiency versus density trade-offs? mately 2.0. Therefore, for every watt delivered to the
Many times it is assumed that high density makes ef- computers it took 2.0 watts to drive the entire data center.
ficiency worse, but this is only true when trying to push Today we see PUE as low as 1.15. This represents a sav-
existing or inefficient data centers to cool at high density. ings of 42.5% in energy consumption.
In reality, high density enables high efficiency in a prop-
IT organizations can use proven management tools
erly designed new data center or pod in an existing data
for their physical and virtual infrastructure. These tools,
center. In fact, the highest efficiency data centers will be
which are designed for multi-vendor, multi-platform
high density data centers.
environments, simplify infrastructure management by
Power Utilization Effectiveness – PUE providing a comprehensive view of all physical and
virtual components, known as “virtual performance
Total Power Into the Data Center management.” With these solutions, IT professionals
PUE = can employ a rich set of infrastructure and performance
Total Power Delivered at the Rack
management features to handle the nuances of their vir-

Although PUE is the industry standard measuring unit for
efficiency, there is no consistent method of calculating it. Is
it an instantaneous measurement, an annualized figure, or
a running average? Should all sites be compared equally,
or is availability in design and operation a consideration?
This has led to some confusion and creates some pretty
outrageous claims within the industry.2
tualized environment. These advanced solutions create
the ability to identify underutilized user equipment and
inefficiencies typically referred to as ghosting. Virtual
performance management has become a significant
component of driving up efficiencies and cost savings
resulting in a positive impact on the PUE.

This measure takes all the power coming into the data
center including power for cooling, lights, power lost in
transforming from one voltage to another, and divides it
by the actual power delivered at the rack to the comput-
ing equipment. PUE is expressed as a ratio, with overall

1 Refers to electrical power per square foot

2 GHT Limited, www.ghtltd.com, Robert M. Menuet 3 WB Engineers, www.wbengineering.com, Robert W. Courson III
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© 2010, CB Richard Ellis, Inc.

 Special Report: Evaluating Your Critical Facilities
SUSTAINABILITY AND many have strongly debated and still find the current UK
THE COST OF NOT GOING GREEN! legislation controversial, but the UK’s Carbon Reduction
Commitment Act is scheduled to become law and launch
by April 2010. Ultimately until these differing forms of
legislation actually become law, speculative approaches
to factoring in pending carbon legislation impacts into
the design, construction and operations are unlikely to
occur.

The age of green data centers is upon us. In fact, half

the cost of data center ownership can now be attributed
to the cost of operating energy. Statistics indicate that
less than 5% of the data centers in the U.S. have imple-
mented any kind of economizer cooling. The data center
user with a 250 kW UPS load can now be expected to
spend at least $250,000 per year on power. Savings of
25% can be realized by understanding where the power
is being used and implementing existing technologies.

Sustainability considerations have had a significant im-

pact on construction costs, typically resulting in higher
initial costs with more pressure to demonstrate return on
investment through lower operational costs. Scalability
of data centers increases in importance as tight capital
markets cause pressure to keep initial costs lower.

Another major and very recent consideration for data

centers is how carbon laws will ultimately impact de-
sign, construction and operations of these facilities. To
compound this issue, legislation has been shown to
have many variations in different parts of the world. This
lack of consistency has created a tremendous sense of
uncertainty with owners and operators alike as to how
best to address the sustainability questions. For example,
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© 2010, CB Richard Ellis, Inc.

 Special Report: Evaluating Your Critical Facilities
DATA CENTER CONTAINERIZATION INDUSTRY COST SEGREGATION AND TAX SAVINGS
TRENDS Have you already decided to build a new data center? If
so, be sure to plan to take advantage of cost segregation,
an IRS-recognized method of creating increased tax ben-
efits for costs related to construction. Cost segregation
analysis delays U.S. federal tax payments and increases
net cash flow for owners by identifying building compo-
nents that are eligible for accelerated depreciation under
the federal tax code. If you have built or acquired a new
facility since Jan 1, 1987, you are eligible for these tax
benefits.

The data center containerization industry (DCCI) is a Instead of treating the entire building cost as real
burgeoning sector of the industry taking a proactive property and depreciating it over 39 years, owners can
approach at providing an engineered solution to power treat certain components and their costs as personal
and cooling integrated with the hardware environmental property, thereby writing off the costs over five or seven
requirements. This approach results in a new unit, the years. Typically, between 30% and 70% of construction
containerized or modular data center, where the con- or acquisition costs, depending on the electrical, HVAC
tainer or module is manufactured to specific performance and finishes, will qualify for five-year or seven-year tax
criteria to fully support the hardware’s environmental lives. Cost segregation creates an average of $70,000
needs. to $150,000 in tax benefits per million dollars of data
center cost.
Large scale data center users have come to realize the
benefits of pre-populated computer racks and took the Added Tax Benefits Through Cost Segregation (sample)
next logical step by simply changing the basic unit from For example, a $10 million data center:
cabinets to containers. Given the current economy and
the need for creative and cost effective solutions, DCCI Without Cost Segregation With Cost Segregation
has made the migration from the disaster recovery and
Straight-line Depreciation: Segregated Depreciation:
military application to a mainstream application.
$250,000 per yr (40 yrs) $4,500,000 over 5 yrs
For years, critical environments users have sought ways
$100,000 over 7 yrs
to better match capital investment with actual compute
needs. While a DCCI is not a perfect solution, it can go $800, 000 over 15 yrs
a long way towards improving capital and operating
Tax Benefit: Tax Benefit:
budgets. The containerized solution takes many data
center capital costs and converts that investment into re- $2.6 M Net Present Value $3.8 M Net Present Value
movable/re-usable assets defined as personal property,
$1.2 M in added tax benefits. What could a company do
making it available for more rapid depreciation in line
with the dollars?
with that of the computer equipment they house.
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© 2010, CB Richard Ellis, Inc.

 Special Report: Evaluating Your Critical Facilities
ABOUT THIS SPECIAL REPORT
The trends and considerations outlined in this special report offer a starting point to ensure the success of your data center
including lower overall costs, higher efficiency, greater uptime, and other critical factors. Engaging a professional services
firm will help organize and manage the myriad of critical decisions required for success. This report was developed by a
consortium of CBRE Project Management subject matter experts, and specifically tapped our Global Knowledge Networks
(GKN) experts in our Critical Environment/Facilities group. The GKN is designed to offer clients access to global experts
and resources specific to critical
environments. Resources include
best practices, vendor resources,
Global Knowledge Networks Leadership
research and staffing.

Content is based on best practices

gleaned from over 500 corporate
and institutional clients and over
100 years of industry expertise
and leadership. The CBRE Project
Jerry Reich Chong Tan Matthew O’Shaughnessy
Management leadership team is Americas APAC EMEA
jerry.reich@cbre.com chong.tan@cbre.com matthew.oshaughnessy@cbre.com
available to guide you through
more specifics and best practices il-
lustrated within this report, and their CBRE Project Management Leadership
appropriate application to your Cam Kourany Ken Schotl Rob Biggs
existing and planned projects. Canada U.S. - West U.S. - Central
cam.kourany@cbre.com ken.schotl@cbre.com rob.biggs@cbre.com

ABOUT CBRE PROJECT

MANAGEMENT Tom Nelson Bret Nave Susan LaGanke
U.S. - Northeast U.S. - Southeast Latin America
CB Richard Ellis maintains the thomas.nelson@cbre.com bret.nave@cbre.com susan.laganke@cbre.com
largest network of professional
real estate project managers in the
world. Our unmatched geographi-
cal coverage – combined with our optimized service delivery process – enables us to plan and execute a full menu
of project management services for users of and investors in commercial real estate. We partner with our clients by
implementing cost efficient, scalable staffing models and introducing industry leading processes designed to optimize
project management activities and make the most efficient use of capital across the portfolio. Regardless of size, industry
sector or geographic dispersion, our project management professionals consistently deliver cost savings and value.

ACKNOWLEDGEMENTS
This special report was written by the following subject matter experts: Jerry Reich, Managing Director; Chuck Redpath,
Managing Director; Jorge Fernandez-Miranda, Vice President; Terry Rennaker, Director; David Osborne, Director;
Chong Tan, Director, and Matthew O’Shaughnessy, Director.

© 2010 CB Richard Ellis, Inc. CB Richard Ellis statistics contained herein may represent a different data set
than that used to generate National Vacancy and Availability Index statistics published by CB Richard Ellis’
February 2010

Corporate Communications Department or CB Richard Ellis’ research and econometric forecasting unit, CB
Richard Ellis—Econometric Advisors. Information herein has been obtained from sources believed reliable.
While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representa-
tion about it. It is your responsibility to independently confirm its accuracy and completeness. Any projections,
opinions, assumptions or estimates used are for example only and do not represent the current or future
Page 9
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cannot be reproduced without prior written permission of CB Richard Ellis. © 2010, CB Richard Ellis, Inc.