With the rapid development of technologies like 5G, IoT, AI and cloud computing, data center has become the core infrastructure to support digital transformation. As a result, investment in building and upgrading data centers is surging globally. However, data center investment requires huge upfront capital expenditure and has a long payback period. Thus, it is critical for enterprises to evaluate data center return on investment (ROI) thoroughly before making investment decisions. This article will analyze several key factors that influence data center ROI, including power usage effectiveness (PUE), server utilization, energy costs and carbon emissions. By understanding these factors and leveraging financial analysis tools like discounted cash flow and net present value, enterprises can make informed decisions on data center investments to maximize ROI.
Lower PUE means higher data center ROI
Power usage effectiveness (PUE) measures how efficiently a data center uses power. It is calculated by dividing total facility power by IT equipment power. The closer PUE is to 1.0, the more efficient the data center is. For a new data center, aim for PUE under 1.5. Going from PUE of 2.0 to 1.5 can reduce power costs by 25%. When evaluating data center ROI, choosing energy-efficient infrastructure like airflow optimization, high-voltage AC power distribution, free cooling systems and modular power can lower PUE and improve ROI significantly.
Increase server utilization improves data center ROI
Many data centers operate at very low server utilization rate, often less than 10-15%. Low utilization leads to wasted server capacity and higher costs per workload. Data center operators can adopt virtualization and container technologies to increase server utilization to 60% or higher. Higher server utilization spreads the fixed costs over more workloads, reducing capital and operating costs per workload. It also allows data center to support more business services with the same IT assets, generating higher revenue to improve ROI.
Manage energy costs is key for data center ROI
Energy costs account for over 25% of a data center’s operating expenses. Location plays a big role in electricity costs – certain regions offer cheaper industrial power rates or renewable energy options. Negotiating lower energy rates with utility providers can also reduce costs. At the facility level, using high-efficiency power supply units, optimizing cooling methods and turning off unused equipment can further minimize energy use. Data center operators should track and manage energy expenses closely and model different energy cost scenarios when evaluating ROI.
Carbon emissions impact data center ROI
With increasing environmental regulations on carbon emissions, data centers need to factor in costs of carbon offsets or carbon taxes when estimating ROI, especially in regions with high emissions electricity generation. Building data centers in locations with abundant renewable energy supply can minimize carbon footprint. Within the facility, installing on-site solar panels or procuring renewable energy helps reduce carbon emissions. As sustainability becomes more important, the ability to operate data centers with low carbon emissions gives competitive advantage and improves ROI in the long run.
Evaluating data center return on investment requires holistic analysis across infrastructure, IT systems, location, energy, sustainability and financial factors. Data center operators should leverage metrics like PUE, utilization, energy costs and carbon emissions to model ROI thoroughly. An optimal data center investment maximizes capacity, efficiency and sustainability while minimizing costs to achieve strong ROI.