Assessing ROI of Data Center Monitoring & Maintenance Contracts with a User-Friendly Tool and Framework

This audio was created using Microsoft Azure Speech Services

When it comes to maintaining the physical infrastructure equipment in a data center environment, approaches vary, and the options can create confusion. There are several different approaches to maintaining the physical infrastructure equipment (power, cooling, etc.) in a data center environment. White Paper 264, Attributes of an Effective Maintenance Program for Data Center Physical Infrastructure cuts through this confusion by describing the various approaches to maintenance programs, and discusses the key attributes to look for in a service provider. It also describes how data analytics, digital services, and connected systems are enabling the evolution from calendar-based maintenance to condition-based maintenance.

Our new simple-to-use, web-based tool helps data center managers estimate the return on investment (ROI) of a monitoring and maintenance service contract for prefabricated data center modules. The tool enables you to compare maintaining the module yourself in a “run to alarm” mode versus having the equipment OEM or other qualified 3rd party service provider monitor and maintain the installation for you in a more proactive, automated manner. While aimed at modules up to 200 kW, the underlying framework applies to any data center. To provide an overview of that framework and how to apply it to any new data center, we wrote White Paper 152, Calculating ROI of Monitoring and Maintenance Service Contracts for New Data Centers.

Potential Benefits of Monitoring and Maintenance Contracts:

To calculate the ROI of a service contract, obviously you need to know what functions the service provides and what types of value it aims to bring. For our framework, we assumed that equipment OEMs’ or qualified 3rd party vendors’ service offers would include at a high level:

  • 24/7 remote monitoring of power and cooling infrastructure.
  • Conditions-based (CBM) and/or predictive maintenance to prevent critical failures.
  • Proactive field service dispatch and parts replacement.

Well implemented and performed, these functions will:

  1. Reduce downtime by minimizing IT service outages by proactive monitoring and maintenance.
  2. Cut energy costs/emissions by optimizing cooling efficiency to reduce electricity consumption.
  3. Boost staff efficiency by freeing up IT staff for core or more strategic tasks by offloading monitoring and maintenance responsibilities.
  4. Eliminate spare parts costs by eliminating the need to maintain costly inventories of spare parts.

So, the total value of a data center monitoring & maintenance service contract could be summarized in this way:

GettyImages-1342270230_Branded

Calculating the value of monitoring and maintenance service contracts

Downtime Reduction

In assessing the potential financial risk of downtime both with and without a monitoring and maintenance service contract, four key variables must be understood: (1) device failures, (2) device failures that lead to IT downtime, (3) the average time to restore IT service, and (4) the cost of IT downtime. By putting a value on each of these four key variables, you can estimate the impact of downtime with the following formula:

maintenance contract energy expense

Electricity and CO2e Emissions Reduction

The cooling system often represents the biggest portion of the total energy consumption in a typical data center next to IT load energy. Mechanical systems are more likely than electrical systems to become inefficient over time without maintenance (clogged filters, dirty condensers, etc.) For these reasons, our framework quantifies the monitoring/maintenance energy cost and emissions reduction benefit based only on the cooling system.

The energy cost impact of a data center with no maintenance can be calculated using the following formula, where the cooling energy factor includes the energy penalty for years with no maintenance contract. The TradeOff Tool and White Paper 152 both explain in detail the assumptions and method for calculating the energy penalty and give users of the tool the means to adjust that penalty from the default value.

maintenance contract energy emissions

Likewise, the carbon emissions impact can be calculated using a similar formula but multiplying the total energy by the electricity emission factor.

maintenance contract staffing expenses

Note that both TradeOff Tool 36 and White Paper 152 explain each of these variables in detail for this and all the other value categories as well.

Staff Optimization

You should first estimate your own staffing costs when operating in a “run to alarm” mode (i.e., no DCIM, remote monitoring, or maintenance contract) to serve as a baseline. Depending on the maturity of your operations and maintenance program, the service contract will have a varying improvement in each of these variables. Think about past incidents and experiences, and what percentage of them could have been avoided or the time spent dealing with a failure that could’ve been avoided with the visibility and insights provided by 3rd party or OEM remote monitoring and the speed of proactive, vendor-initiated field service dispatch. The formula to estimate the staffing expense in managing the power and cooling infrastructure is as follows:

maintenance contract downtime

Spare Parts Cost Reduction

Many maintenance service contracts include the cost of these parts or whole system replacements, thus avoiding the unanticipated spikes in operating expenses when they become necessary. The spare parts cost reduction can be calculated using the number of device failures (mentioned in the Downtime section) each year and the average parts cost anticipated per failure event. Note, when spare parts are no longer available for a particular subsystem, this is generally an indicator it may be time to modernize or replace the system, to avoid future downtime.

To then calculate the ROI or cashflow of an investment in monitoring and maintenance services, you would need to calculate the above costs both for the do-it-yourself “run-to-alarm” scenario, as well as for the service contract scenario where there is proactive 7×24 remote monitoring, conditions-based and/or predictive maintenance, proactive service dispatch, and spare parts are included. Our new Prefabricated Data Center Service Contract ROI Calculator (i.e., TradeOff Tool 36) greatly simplifies these calculations and scenario comparisons.

Learn more about our digital-enabled services plans for prefab modular data centers.

Tags: , , , , ,

Add a comment

All fields are required.

This site uses Akismet to reduce spam. Learn how your comment data is processed.