Do you remember how the first generation of personal computers came into the market? You had to find a “computer shop” and specify your needs. Then, the “computer expert” would work with you to choose components, order them from vendors, and assemble them. It probably cost 20 times more to have a personal computer than buying one in a retailer store today, but it was the only way.
Now the data centers are going through a similar phase. When the buzz started a few years ago about prefabrication, there were almost unanimous claims of substantial CaPex savings without sound case studies. This caused many people to become skeptical and in my opinion, may have been a serious deterrent to initial broad based adoption. While there is an opportunity for cost savings with every modular architecture (mainly based on deferred capital expenses), there are unique cost savings opportunities with prefabricated data centers:
Design – Prefabricated data center modules can reduce most of this phase and related cost because the building blocks are already designed in an R&D environment; and site plan design becomes very simple because the layout uses pre-engineered modules. You can reduce design cost even more by leveraging a prefabricated data center reference design.
Construction – Prefabrication decreases the complexity of the project. It cuts costs on shipping, un-packaging components, taking inventory, laying out, and assembling components because most of the assembling work is done in factory. You could even save on facility costs if you choose to deploy your prefabricated data center outside.
Installation and Maintenance – A “one-stop” contract leads to less cost; save the costs of purchasing a custom management control system installation and custom programming.
Expansion – When you are building a traditional data center, you always want to estimate your future growth and build a data center oversized for 5 to 10 years because the upfront cost to plan, design, and build it is too high. This redundant cost makes a large part of your capital expense and is a waste of your cash flow. With prefabrication, you can easily deploy additional modules in a relatively short time and at a low upfront cost, which would optimize your cash flow and reduce spare data center capacity.
History has shown that as components get integrated into higher-level subsystems, costs go way down. It may take a while for technology to develop and for economies of scale to kick in for prefabrication of data centers to have a significant cost advantage, but history does have a tendency to repeat itself.