Financial Considerations of Modular Data Centers:
Modular data centers, when properly designed, can save an organization significant time and money throughout the initial construction and operating phases of the data center.
The modular data center is rapidly displacing the older stick-built data center construction approach due to its inherent scalability, lower total cost of ownership, faster implementation schedule and lower power usage effectiveness (PUE). Up until recently, the modular approach had been slow in acceptance because of prior misconceptions associated with modular or prefab construction. However, in recent years, this has all changed with newer high density data center designs and standardized manufacturing methodologies, which utilize air-conditioned factory environments and ISO 9001:2008 quality systems.
The financial advantages of a modular data center are very clear when evaluating the total cost of ownership (TOC), which is simply defined as the cost of the initial construction plus the ongoing operating expenses. Over the next two posts we will focus on the capital equipment expense (CAPEX), and the operating expense (OPEX) advantages, and explain how they make the decision to choose modular a smart financial move.
In this post, we will focus on CAPEX and the benefits that modular data centers offer in this regard.
CAPEX benefits include:
- Lower initial construction costs: It is estimated that using a modular data center approach for your next data center can reduce the total facility cost by 15 – 20 percent, when properly designed from the outset. These savings are a function of application-specific designs, which are more versatile and adaptable to specific geographic location and site requirements. This is particularly advantageous in medical facility applications where the modular approach may not be regulated under the same stringent hospital construction code requirements. Also, since the modules are factory-built, concurrent with the site preparation, there is less inherent risk to the construction schedule due to inclement weather or skilled labor shortages. Moreover, the prefabricated modular data center places an emphasis on the initial design, which results in less costly change orders on the project’s critical path. This translates into more predictive schedules which lead to more predictive costs.
PCX’s modular data centers are designed, engineered and constructed by a single source, so the skill and experience of labor at each level is consistently high. In PCX’s case, we are certified to the International Organization for Standardization’s (ISO) ISO 9001:2015 standards, which formally recognizes our ability to consistently provide products and services that meet customer and applicable statutory and regulatory requirements.
Lastly, delivering factory pretested solutions with standard interface connections for the site’s power and cooling infrastructure reduces the skill level needed on site. This is extremely important when adding data center capacity in remote locations.
- Scalable: A modular data center is inherently scalable, which affords the owner the flexibility to only build the portions of the data center that are initially required. This results in less stranded capacity for expensive infrastructure equipment associated with cooling and power. Growing the data center’s capacity commensurate with the compute requirements is critical to preserving precious capital in today’s challenging financial environment.
- Accelerated construction schedules: Modular data centers are factory-built to ensure standard and consistent quality, and to meet critical path schedules. As a result, they feature shorter lead times than stick-built structures. Given that modular data centers are fabricated in temperature controlled environments, their construction is not subject to potential weather delays or fluctuations in the availability of skilled labor. Consequently, the typical lead time for a modular data center can vary from 16 to 22 weeks depending on the project scope and application-specific requirements. The factory prebuilt data center also results in reduced on site safety risks and less construction waste.
Given the rapid expansion of data storage, multi-year build cycles are no longer acceptable. Modular data centers significantly reduce the construction timeline from years to a matter of months. With a modular data center, you can configure and determine the efficiency of it up front, both through mathematical simulation, and also by operating it at the factory prior to shipment. This saves time associated with redesign and reconfigurations at the front end of the project, and in turn, dramatically accelerates the total installation time.
- Faster depreciation: In certain instances, the modular approach to data center development allows customers to depreciate parts of the system at a more accelerated rate based on the different components of that system. This tax strategy is best discussed with the help of your business’s tax advisor.
In summary, when considering the reduced CAPEX construction cost, the scheduling advantages and the inherent scalability, the modular approach to data center construction makes a compelling case for your next data center next project.
In our next post, we will highlight the operating expense (OPEX) advantages of modular data centers.
For questions about modular data center solutions, or all other PCX solutions and services, please call us at 919.550.2800.