As the amount of data being produced, stored and transferred grows exponentially, the demands being placed on technology infrastructure continue to increase. This is certainly true in Hong Kong as a regional hub for the logistics and FIRE sectors (i.e. finance, insurance, real estate and business services), all of which heavily rely on secured data center facilities to support their operations.
Different businesses are at varied points of the trajectory when it comes to deciding whether or not to outsource their data centers. Here are some of the key considerations for Hong Kong businesses when it comes to evolving their data center strategy.
Despite Hong Kong's high lease rates and the costs associated with hiring and retaining skilled technical staff, some businesses today continue to accommodate their own data centers onsite, running the risk of over expenditure and burdensome inefficiencies. Most companies would cite data availability and security, and the ability to scale more quickly with in-house resources as their rational for choosing not to outsource. Yet, the reality is that the cost of maintaining an in-house data center is high.
When making the decision to keep the data center in-house or not, businesses need to consider many factors, as well as long-term implications.
Real estate costs
Let's take a look at one of the most obvious costs associated with the data center: the lease itself. In Hong Kong, FIRE sector businesses often prefer to lease premium office space in the Central Business District (CBD) — which is easily accessible and creates a perception of investment and success in the market. From a data center perspective, these companies believe that their data will be more secure by being located close by, and that location will boost access to the power and cooling requirements needed to ensure their IT infrastructure runs smoothly.
A report by Colliers International on Harnessing the Growth of Data center Development in Hong Kong stated that the average rent for a Hong Kong CBD location runs over HK$100 ($12.90) or above per sq. ft. per month. Considering that the average raised floor space of a data center is 14.1k sq. ft. based on a survey of Hong Kong decision makers commissioned by Digital Realty last year, it's clear that the average fixed cost of keeping a data center in-house comes at a premium price tag.
Energy costs and power-related limitations and risks
Aside from high real estate costs, there are also several critical technical issues that need to be considered. For example, data centers require approximately 1kW of air conditioning for every 1kW of heat inside the rack in order to ensure the technology runs efficiently. As a result, companies choosing to house data centers onsite face significant additional costs in terms of power and cooling, which can often account for up to half the cost of running the entire office.
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