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Making the case for in-house data centers

Bruce Harpham | April 21, 2016
With seemingly everything moving to the cloud these days, it’s important to know when setting up your own data management center can still be the right decision.

“Some states have deregulated electricity and that means cost reduction opportunities. When I was in Pennsylvania, I achieved a 25 percent reduction in electricity expenses by switching electricity suppliers,” Arcus adds. If alternate electricity providers are not available, utilization is another area to explore. If a data center is below capacity, adjust climate control systems accordingly.

“Reviewing data storage technology is another area for process improvement. Our data center currently uses data tapes. While it is a proven technology, it is inefficient to use. Cheaper and faster data storage and backup solutions are an area to be investigated,” says Janna Connor.

Vendor management: a key skill for data center managers

Vendors provide several important services to internal data centers and need to be managed by an informed professional. “Six months before a vendor contract expires, I start the process to research alternatives and ways to improve the contract,” says Arcus. “Familiarity with a range of vendors gives me an opportunity to add value. For example, changing WAN service providers to a less well-known brand saved on cost with no meaningful service impact,” he added. Switching from a single vendor model to a multi-vendor model often yields improvements as well.

In addition to cost considerations, vendor management is important in other ways. Client demands to improve security and efficiency drive data center service providers to improve their offerings. “Understanding vendors requires a strong understanding of invoices. A well informed data center manager is able to understand each line item on an invoice to validate whether it is correct,” Arcus explained.

New ways for data centers to add value

Data centers have historically been viewed as repositories of data and IT services – they can add value in other ways. “We have used spare capacity in our data center to test mainframe computers under consideration. That stress testing helped IT make better choices about which equipment to purchase,” says Janna Connor.

“Our organization has found that an in-house data center strategy is more cost efficient and productive,” says Connor. BlueCross’s current use of in-house data centers represents a change from the early 2000s when third party providers played an important role. “From a facilities perspective, we have a great relationship with IT – they can pick up the phone and have problems addressed fast. That responsiveness is important in health care,” Connor added. “With an in-house data center, everyone is on the same page regarding the regulatory and privacy concerns in the health care field,” she says.

Leasing data center capacity to another organization is another way for an internal data center to add value. “Our Texas data center has over thirty thousand square feet available which could be developed. We are exploring the possibility of leasing this capacity to another organization,” Connor says. The potential leasing arrangement would be with a single organization which would partner with BlueCross on data center design.


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