Our team at Sanity Technology are often asked about the advantages of co-location within our data centre versus hosting in house. In today’s tough economic conditions many IT managers feel that the distinct advantages of reliable power, cooling and security are a luxury item that they cannot afford. This often leads to keeping IT infrastructure “in-house” within an office environment, typically in a small server closet in a back corner somewhere because it’s believed to be a cost effective option.

However, in practice the choice to host in-house is almost always the most expensive option. We will breakdown these costs for you with electricity (including equipment power and cooling), power protection, floor space, maintenance, and capital expenditure forming the basis of our expenses.


Let’s start by looking at electricity costs, a single rack of equipment consuming 10A of electricity costs $13,665/year or $1,138/month if you are using an “ in house” facility. This covers the power drawn by the equipment as well as the power consumed by the air-conditioning required to adequately cool the equipment.

Compare this with a data centre environment, such as the co-location services provided by Sanity Technology, where at the time of writing (October 2013) a single 42RU Cabinet with 10A of electricity is available for $1,250/month with no setup costs – and that cost includes an internet connection with 100GB of data transfer.

Not only is it very cost effective to utilize a data centre, but it also brings the added luxuries of backup generators, multiple air-conditioning systems for redundancy, multiple layers of physical security, ultra-fast and reliable internet connectivity, and much more.

The cost of electricity is rarely scrutinized within an organisation as it’s considered to be a cost that cannot be controlled, yet the resultant impact on this cost by computing equipment is very significant.

Let’s say that you have a single rack full of equipment that’s consuming 10A of electricity 24/7 and calculate that cost out:

  • 10A * 240v = 2,400w (Watts)
  • 2,400w / 1000 = 2.4kW (Kilowatt)
  • 2.4kW * 24 hours * 365 days = 21,024kWh (Kilowatt Hours)

Therefore, based on the typical electricity cost in Australia of 26c per kWh, we have the following:

  • 21,024kW * $0.26 = $5,466 / year

This, however, is only the power consumption costs for the equipment itself, the overall electricity consumed results in even higher costs due to cooling requirements which we explore in detail below. Often air-conditioning systems, such as that found in households, are installed in an office server room because they are cheap to install; yet this approach of “Room Air Conditioning” (RAC) is very inefficient for computing equipment. This type of cooling results in a significant amount of electricity consumed by the cooling systems alone, which is known to achieve an overall Power Use Efficiency (PUE)* measurement of 2.5 or higher. Effectively, for every 1kW of electricity consumed by the computing equipment there will be a further 1.5kW consumed to generate the necessary cooling to neutralize the heat generated.

The electricity costs to power computing equipment on its own may have looked favourably compared to a data centre, but once the real electricity costs become apparent we’re presented with the following calculation (based on the original 10A consumed for a rack of equipment):

  • 21,024kWh * 2.5 = 52,560kWh
  • 52,560kWh * $0.26 = $13,665 / year or $1,138 / month

* You may have heard about Power Use Efficiency (PUE) measurements before and not fully understood what it meant other than a lower number being better. The PUE is the multiplier of electricity consumed to service computer equipment against the electricity consumed directly by the equipment itself. In a RAC environment PUE 2.5 and higher is typical, however a highly efficient PUE 1.3 can be found in data centre’s such as that operated by Sanity Technology where chilled water air-conditioning and hot aisle containment systems (HACS) are utilized.

Now let’s look at the other costs associated with an “in house” approach.

Power Protection

When someone thinks about protecting their computer equipment from power disruptions they often think about an Uninterruptable Power Supply (UPS). Whilst a UPS is of the utmost importance it should be considered to be primarily a power filtering device that protects against power spikes. Secondly it acts as an emergency short-life power supply that lasts for only a few minutes to give you an opportunity to shutdown equipment gracefully.

For many organisations the mere act of shutting down equipment is not acceptable and the short battery life from a UPS is usually not fully understood until a power outage occurs where the batteries run flat and all equipment is off.

Unless you’re lucky enough to have a building supported by a generator than the mere consideration of a generator is a very expensive one. The difficulty and expense of a generator is almost always considered far too costly and ends up being neglected as an acceptable risk.

Floor Space

The floor space consumed by a server closet within a commercial office can also be a factor. In a typical office with a lease with a floor space cost of $300/per square metre than a 10m2 area of an office would represent an additional ongoing expense of $3,000 / year. While server room closets often consume space that wouldn’t be otherwise used it does become quite prominent when multiple racks of equipment are housed.


The ongoing maintenance costs of the air-conditioning and a UPS are another factor which is often overlooked. Batteries need replacement every few years and air-conditioners breakdown and need regular maintenance to avoid outages.

Capital Expenditure

The upfront cost of air-conditioning, a UPS, racks, cabling, etc, can add up very quickly. To support a single rack of equipment for 10A you’d be looking at roughly $5,000 for air-conditioning plus another $3,500 for a UPS, and another $1,000 or so for the rack cabinet itself. This is a bare minimum cost for a solution that doesn’t include any redundancy if the air conditioning or UPS fails and also lacks a long term power solution for outages (i.e., diesel generator).

In conclusion using a facility such as Sanity Technology will ultimately save thousands per year compared to an “in house” solution by reducing your electricity, power supply, floor space, maintenance and capital expenditure costs considerably. For an obligation free quote why not call us today on (07) 3503 8880 or click here to contact us.