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Connecting data centers: 2021

Connecting data centers: 2021

One thing learned during 2020 is that our society is remarkably capable of quickly adapting to change. Commerce, government, schools, and churches all were forced to immediately embrace operational digitalization. Regardless of where, any enterprise was in use of networks at the start of 2020, by June nearly all had changed operating models in response to the global pandemic.

Virtual workplaces, remote learning, video meetings, digital collaboration, e-commerce, all existed before but hit a pandemic-driven increase. That created enormous demand for network and data center capacity.  

Thankfully, networks were designed and built over the last few years which met the challenge quite well. We’ve written about the global datasphere and how networks meet the challenge of keeping pace with its increasing size. 2020 should serve as a reminder for all enterprises that connecting to data is essential to survival.

What is the best way to connect to your data? Is it best to continue to lease managed services or is it better to construct dedicated DCI resources using dark fiber and dedicated equipment? Here’s a simple business case.

Let’s consider a large enterprise connecting an on-premise data center to a colocation data center in the Paris metro area. Specifically:

  • Two large data centers in the Paris metro area, roughly 10km apart
  • 100Gbps capacity need at the project outset. Capacity need grows to 200Gbps after four quarters
  • Compare to 100 and 200G services from local provider
  • 36-month contract terms for both dark fiber and managed service

The business case compares DCI provided using two point-to-point 100G managed Ethernet services with using a 100G private build DCI using DWDM optical equipment.

Incremental cash flows generated by the build are shown in the chart. Once cumulative discounted cash flow crosses the zero point in the fourth quarter, the project generates higher cash flows than continuing to lease services.

Incremental cash flows generated by private-build DCI

Incremental cash flows generated by private-build DCI

The bars show incremental cash inflows and outflows. In the first quarter, an initial investment of approximately €85,000 is made for the DWDM optical hardware, software and set up fees.  

Bars above the zero axis show the project generates net OPEX savings from the first quarter. Reducing the OPEX by using a network integrator to provide hardware and software maintenance and network support externally at a lower cost, would result in higher cash flows and a further reduced payback period.

Finally, increasing bandwidth from 100G to 200G can easily be achieved by lighting additional wavelengths over the dark fiber at a marginal incremental cost, as the CAPEX assumptions include the cost of additional hardware for future bandwidth increases. Increasing bandwidth using additional managed Ethernet or wavelength services would incur significant additional cost – assuming that additional capacity is readily available.

Your results may vary, depending on the specific locations requiring connectivity and expected capacity growth. But what is certain is that your datasphere will only continue to grow. The challenge is to find the best solution for your unique situation.

4 February 2021 - How to Optimize the interconnection DCI of your datacenters while decreasing your costs. It's the promise of our partner NXO France and the optical transport technologies of Nokia to retake the control on your data storage and to secure your sensitive data.

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Chris Janson

About Chris Janson

Chris Janson follows trends in optical networking technology and its application to enterprise and other network operators. He has long contributed to the communications equipment and semiconductor fields through engineering and marketing roles. Chris enjoys giving back to the community through teaching engineering courses and serving on volunteer boards. In between that, he can be found running, riding bikes or windsurfing on Cape Cod or Maui.

Tweet me at @cj01950

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