"Most data centers require less than 10,000 square feet of space, and most data center capacity is utilized by small users," Bowman writes. "However, requirements are growing at a faster velocity due to Moore's Law--the principle that data center bandwidth doubles every 18 months. This, combined with users' general reluctance to spend significant money on mission critical facilities that protect assets rather than return visible profits, makes it incumbent to locate data centers wisely and economically."

The wisest and most economical locations for data centers, according to TTC, aren't necessarily convenient to the major metro areas where decision-makers are based. The largest five markets for data center locations are "driven by large corporate industries and are adjacent to large cities, for convenient access from the headquarters offices," writes Bowman. However, he continues, today "only critical applications need to be in or near headquarters." Non-critical applications, which require most of the data center space, can be located remotely to save money.

Weighing a number of criteria ranging from local utility rates to the likelihood of natural disasters, TTC rates North Carolina as the best state in which to locate a data center. Tennessee, Virginia, New Hampshire, Washington, South Carolina, Kentucky, Ohio, Alabama and Georgia follow it. Of these top 10 states, only Virginia is home to one of the top five data center markets ranked by volume--San Francisco; Los Angeles; Washington, DC/northern Virginia; New York/New Jersey and Chicago.

"The criteria that make a state good, or even a region of one, is what we call the Total Cost of Ownership," a proprietary model of life cycle cost analysis, Bowman tells GlobeSt.com. Included in the TCO model is the cost of energy, "which is a very large part of these data centers. A large data center can take as much energy as a small city; you can see the thermal footprint from outer space." With much of North Carolina supplied by nuclear power from Duke Energy, its utility costs are lower than in markets that draw on coal or oil-driven generating plants.

What does it say that only one of the top five markets is also in TTC's top 10? "It says that we haven't gotten very sophisticated over time in terms of our siting of data centers," Bowman says. "We put them where it's easiest--where we can drive to, where our HR people can service them."

If the economic downturn has provided any opportunity, Bowman says, "it would be to really drive down operating expenses: 'Where can I do this cheaper? What levels of distances can I actually live with that I wouldn't in ordinarily good times?'" He predicts that as a result, there will be more data center activity in TTC's top 10 states--"more cost savings, remotely. That is not an anti-New York or anti-urban statement. What that means is there are technological solutions. Two phrases you're going to hear over and over again are virtualization and cloud computing. These allow you to do data processing remotely and with fewer footprints. And these footprints are very expensive."

The urban data centers are not going away, Bowman says. "What will happen is that they will become part of the IT topology." Fiber optics is what makes these remote locations possible--each of TTC's top 10 states boasts an excellent fiber infrastructure--and is also what makes the urban centers telecommunications epicenters of choice.

In recent years, says Bowman, data centers, which cost about $200 million to $400 million to build, "had become tactical assets rather than strategic assets. They had become IT warehouses. The IT people woke up and realized, 'Since it costs so much to build these centers, let's make sure that only mission-critical assets end up here. Let's put our non-critical assets either in the cloud or at a remote site, or something that doesn't cost us so much to build.'"

In New York City as in other large urban markets, "you'll find a lot of these data centers inside office buildings," Bowman says. "Given what land costs are in Manhattan, you won't find a lot of stand-alone data warehouses there. You'll find them inside some of these vertical assets, but that's generally not preferred because of security."

The Westchester County and New Jersey suburbs are sprinkled with data centers; TTC recently completed one in Newark, NJ, for example. But Bowman says companies headquartered in Manhattan are looking to have their data centers--and most of their data--in more remote locations, or at very least ought to be.

"There's a minority of mission critical applications that need to stay remarkably close to the point of origin," says Bowman. "Let's call it 10% mission critical apps: active--active topology that's absolutely critical to the financial viability of the United States. It's that serious. Then there's what we call non-critical applications, and frankly most of our applications can live elsewhere."

Instant Insights /

Data Centers: Small Footprint, Huge Priority

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