News & Insights for the AI Journey|Sunday, June 16, 2019
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HP Pitches Cost-Cutting Datacenter Facilities Service 

HP is rolling out what it calls its Facility-as-a-Service datacenter approach that aims to provide an alternative means of sourcing datacenters by going beyond current colocation models.

Besides giving customers more flexibility and control over datacenter operations, HP emphasized that its FaaS model would allow them to shift initial capital expenses related to datacenter construction directly into operating expenses for the datacenter.

The company argues that the capital costs of modernizing existing datacenters or building new ones often drive enterprises to consider colocation options. That option limits initial capital outlays, but HP insists that its approach is more flexible than colocation and gives customers more control over their datacenter operations.

Rick Einhorn, vice president of HP's Technology Services Datacenter Consulting unit, tells EnterpriseTech that FaaS is a way for customers in capital-intensive industries like pharmaceuticals and telecommunications to defer datacenter costs. The savings could then be used for R&D or other operating expenses.

FaaS "enables and organization's CFO to switch costs from a capital to an operating expense, and provides the CIO with their own operated datacenter which has the flexibility to expand as the business grows," Einhorn added.

Under FaaS, HP would own the datacenter and lease it back to customers who would control its operation. Customers would be responsible for acquiring real estate and building the datacenter shell. HP's modular datacenter approach would then be used to fine tune the datacenter to a customer's specific requirements for capacity, critical facilities services like cloud computing and storage along with provisioning.

Einhorn claimed HP's approach leverages the advantages of datacenter colocation while eliminating the cost of ownership. Plus, he added, the leased datacenter would be "the right size at the right time."

Savings under FaaS would be derived by including the cost of datacenter construction in a typical five-year rolling service agreement. In addition, HP would provide its modular datacenter offerings to address specific capacity and provisioning requirements, the company said.

Also included in the FaaS package is a renewable service agreement that would be part of a scheduled maintenance plan.

HP cites statistics from market watcher Forrester Research estimating that the cost of building and maintaining a traditional datacenter is more than $59 million. Along with upfront capital expenses are operational costs like power, staffing and maintenance.

For CFOs trying to contain capital expenses, the result would be a state-of-the-art datacenter that aligns revenues with costs, Einhorn argued. "We think this is where datacenters are going."

Hence, HP sees an opportunity in helping capital-intensive businesses to speed the return on investment in new and costly datacenters.

HP claims to have designed more than 65 million square feet of datacenter space, accounting for more than two-thirds of green datacenters certified under the U.S. Green Buildings' LEED (Leadership in Energy and Environmental Design) program.

Estimates of the size of the datacenter services market run as high as $50 billion.

Einhorn declined to identify potential customers, but did say HP has a "pilot customer" and is courting other "pipeline customers" for its FaaS approach, which is available now.

About the author: George Leopold

George Leopold has written about science and technology for more than 30 years, focusing on electronics and aerospace technology. He previously served as executive editor of Electronic Engineering Times. Leopold is the author of "Calculated Risk: The Supersonic Life and Times of Gus Grissom" (Purdue University Press, 2016).

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