Data Centers Wringing Cost out of the Asset Life Cycle
Data centers are becoming much more sophisticated in the life cycle management of their hardware assets as evidenced by the growth of the open compute movement and the increased adoption of white box solutions within data centers as operators look to reduce complexity and operational expenses. Operators are adopting a variety of supply chain management techniques from the commercial computing space and leveraging financial tools to lower hardware costs and improve operational results.
Data center operators are taking advantage of the same principles of commoditization and standardization that have made the white box movement so effective in lowering hardware costs and applying them to the asset life cycle workflow within the data center space. They are partnering with strategic partners that are market leaders within their respective commodities to squeeze more value from their assets. By applying Pareto’s principle and focusing on high expense and commodity items operators are able to focus on the areas where they can make the biggest impact. By leveraging market dynamics they are seeing improved asset ROI on both the purchase and the sale of the assets.
Rather than locking into a sole source solution data centers are able to evaluate a variety of available options and pick the best cost performance option to meet their needs. Moving away from sole source solutions allows data decenters to explore sourcing options such as open market purchases, vendor managed inventory solutions and plateau agreements to lower costs. Operators are getting creative in how they are configuring transactions to maximize asset value. They are increasing purchasing power by bundling purchases for hard drive refresh cycles with the sale of decommissioned storage assets to lower total cost of ownership.
We have seen asset recovery step out from the shadows with data centers taking increasingly sophisticated financial approaches to unlock value from assets against future asset recovery value to redeploy capital within the organization. This allows companies short on working capital an extended runway to continue to invest in growth and infrastructure needs.
With many exciting technologies on the horizon we expect to see continued fresh and creative ideas within the asset life cycle space as data centers look to maintain flexibility and manage costs in an increasingly competitive marketplace.