Data center consolidation is increasingly vital for organizations dealing with underutilized or inefficient servers, applications, and infrastructure, aiming to enhance efficiency. This strategy, though complex and risky due to the need to shut down and relocate multiple hardware and software components, offers significant benefits by following a well-devised plan. It reduces costs, simplifies IT operations, lowers energy consumption, and strengthens data center security measures.

Data center consolidation involves merging multiple, outdated, data centers into fewer, modern, and efficient facilities, and upgrading IT infrastructure by replacing less capable devices with efficient ones. This process simplifies the overall facility setup and enhances operational efficiency.

A critical endeavor for modern organizations, data center consolidation addresses efficiency, security, and cost challenges. Dgtl Infra delves into the complex strategies and benefits of consolidating IT resources, ranging from initial assessments to the intricacies of server, storage, network, and application consolidation. Continue reading to gain comprehensive insights into how data center consolidation can transform your organization’s operational dynamics, improve regulatory compliance, and streamline management.

What is Data Center Consolidation?

Data center consolidation is the process of reducing the number of data centers or consolidating resources within a facility, including servers, storage systems, and networking equipment. This process involves physically merging smaller, outdated, or less efficient data center locations into fewer, more modern, and efficient ones. Additionally, it entails replacing numerous less capable IT infrastructure devices with fewer, more advanced and efficient ones, thereby simplifying the overall facility design and layout.

Server Farms Consolidating under Best Practices with Benefits for the Approach and Process

Key Factors Influencing Data Center Consolidation Decisions

Organizations burdened by expensive and complex data centers should prioritize consolidation. The key factors influencing data center consolidation decisions are:

  1. Reduced Costs: Consolidating data centers can lead to significant cost savings. This is achieved through lower operational expenses, reduced energy consumption, fewer procurement fees for equipment and services, and decreased costs for software licensing and maintenance
  2. Efficiency of IT Operations: By centralizing resources (both hardware and software) and management, data center consolidation minimizes redundancy, thereby streamlining maintenance and support. In other words, consolidation reduces the sprawl of equipment and processes, significantly increasing the efficiency of IT operations
  3. Lower Energy Consumption: Centralizing resources through data center consolidation leads to more efficient energy use. Power and cooling systems become more effective and easier to manage on a larger scale. This efficiency is further enhanced by the reduction of redundancy in power and cooling systems, which contributes to lower overall energy consumption
  4. Improved Data Management and Security: Consolidation centralizes data management and enhances security. It simplifies the IT landscape, reducing the complexity and the number of potential security vulnerabilities that can arise across multiple data center systems
  5. Cloud Migration: As organizations increasingly move their data centers and workloads to the cloud – including public, private, and hybrid cloud models – the need for physical space is reduced. This transition facilitates the consolidation of on-premises data center space and equipment, leading to further cost savings

Business Drivers for Data Center Consolidation

Data center consolidation is often driven by significant organizational events or strategic decisions, such as mergers and acquisitions, technological advancements, and corporate restructurings or downsizings.

Mergers and Acquisitions M&A Shake Hands in Office with City View in the Background
  • Mergers and Acquisitions: When companies merge or acquire others, they often end up with multiple data centers. Consolidating these data centers helps in streamlining operations, reducing redundancy, and achieving the cost-saving goals central to the acquisition rationale
  • Technological Advancements: Cloud computing, virtualization, containers, automation, and software-defined networking (SDN) allow organizations operating multiple data center locations to consolidate their operations into a single, primary data center. Furthermore, these technologies assist organizations with a single, large data center in minimizing their hardware needs and support infrastructure
  • Corporate Restructuring or Downsizing: During periods of restructuring or downsizing, companies often look for ways to optimize their operations and reduce capital expenditures. Consolidating data centers can be a part of this optimization, especially if the company is reducing its physical footprint or workforce

Data center consolidation, a specific form of data center migration, is increasingly recognized and leveraged for its benefits by various organizations, including enterprises, cloud service providers (CSPs), and government agencies. It has been notably prevalent in the financial services and banking sectors. Major companies like JPMorgan Chase, Wells Fargo, Morgan Stanley, UBS, Moody’s, S&P Global, Fiserv, and CME Group have embarked on significant data center consolidation projects.

Data Center Consolidation Strategy

A data center consolidation strategy comprises six key steps: initial assessment, inventory and analysis, a data center consolidation project plan, design and architecture development, execution and migration, followed by testing, optimization, and management. This structured process enables an organization to reduce its data center footprint by consolidating multiple facilities and servers into fewer, more efficient, and centralized locations.

Such a strategy is especially crucial for large organizations that operate data center equipment across multiple remote sites or utilize components from a variety of vendors. Below is an outline of the key elements involved in a data center consolidation strategy:

1. Initial Assessment

Initial Assessment of Physical Locations and Real Estate for Consolidating Goals
  • Physical Locations: Assess the number of locations hosting data center equipment to understand the consolidation scope. Evaluate each location’s efficiency and strategic value to decide which facilities to retain or consolidate
  • Space Utilization: Analyze the total square footage and its usage (white space vs. gray space), along with maintenance demands. This is crucial for planning space requirements and potential consolidation
  • Real Estate Costs: Examine leases, including cost per square foot and per kilowatt, for financial planning and cost-benefit analysis
  • Energy Usage Analysis: Assess energy consumption at each site, including specific equipment requirements. Identifying potential areas for improvement is key for cost reduction and sustainability. Important metrics to analyze include Power Usage Effectiveness (PUE) and power density, which is measured in kilowatts (kW) per rack/cabinet or watts per square foot
  • Power and Cooling Management: Evaluate the efficiency and capacity in kilowatts (kW) of power systems – Uninterruptible Power Supply (UPS) systems, generators, switchgear, Power Distribution Units (PDUs) – and cooling systems – heat rejection components like chillers and cooling towers, as well as Computer Room Air Conditioning (CRAC) and Computer Room Air Handler (CRAH) units. This assessment aims to enhance hardware longevity, operational efficiency, and cost-effective reliability
  • Business Objectives: Define the goals and expected benefits of consolidation, such as cost reduction or improved IT efficiency. Identify any new organizational structures and processes required for the consolidated data centers. Estimate the budget and resources needed, including vendor contracts, hardware purchases, and maintenance costs
  • Risk Evaluation: Identify potential risks and challenges in the consolidation process, such as downtime, data loss or security breaches, legacy system compatibility issues, and complexities in integrating diverse IT environments. This step is crucial for proactively mitigating potential challenges and ensuring a smooth transition
  • Stakeholder Engagement: Involve key stakeholders to understand the organization’s business and technical requirements

2. Inventory and Analysis

Inventory Analysis with Engineer Working in Data Center Room

Asset Mapping

Asset mapping catalogs all physical and virtual assets, including servers, virtual machines (VMs), storage systems, network equipment, and software. It assesses these assets’ current utilization, performance, and capacity. Key aspects include:

  • Server Inventory: Details like number, capacity, utilization levels (peak and average percentages), type (rack, blade, tower), and virtualization status. These details provide an overview of the data center’s most significant and costly hardware assets
  • Storage Analysis: Capacity by type (flash, disk) with usage percentages, and types of storage systems (SANs, NAS, all-flash arrays), are crucial for understanding storage efficiency and needs
  • Networking Equipment: An inventory of switches, routers, and firewalls helps to understand network infrastructure and its optimization potential
  • Racks and Cabling: Evaluating the number of racks and their density in kilowatts (kW) per rack, rack space utilization, and cabling infrastructure ensures efficient space use, optimal airflow and cooling, and reliable network performance

Application Discovery

Application discovery identifies and documents all applications, including versions, configurations, and usage patterns. Evaluate the support needed for each application by business area, service-level agreement (SLA) tier, and user count. Also, determine which applications and services can be efficiently run on virtual machines (VMs) or by using cloud services, thereby reducing the need for physical hardware.

Dependency Mapping

Dependency mapping involves understanding the interdependencies between applications, servers, and storage. Mapping these dependencies helps create a transition schedule for continuous delivery of critical services. Including an overview of Wide Area Network (WAN) and Local Area Network (LAN) management services provides insights into network interdependencies vital for seamless data center consolidation.

Consolidation and Cloud Potential

Identify underused assets and redundant systems by assessing current resource utilization rates. This includes merging resources like VMs, subnet consolidation, decreasing physical servers and storage arrays count, and optimizing facility layout. Additionally, evaluate the cost-benefit of migrating workloads to the cloud, balancing on-premises and cloud strategies. For instance, compare the costs of running VMs on-premises versus in the cloud.

3. Data Center Consolidation Project Plan

Roadmap for Data Center Consolidation Project Plan with Markers Indicating Numbers for Progress
  • Developing a Roadmap: Develop a detailed project plan that outlines timelines, milestones, deliverables, and the budget for the data center consolidation process
  • Resource Allocation: Plan for the allocation of human, financial, and technical resources. Clearly assign roles and responsibilities to project team members
  • Technology Selection: Select the most suitable technologies for compute, storage, networking, and security. Consider various server types, virtualization software, storage systems, routers, switches, software-defined networking (SDN) solutions, data center infrastructure management (DCIM) software, and intrusion detection/prevention systems (IDS/IPS)
  • Vendor Selection: Identify vendors (e.g., hardware and software providers) who possess the requisite skills and resources for the consolidation project. This step is vital, especially when in-house expertise in areas like virtualization, capacity planning, performance management, and data security is limited
  • Communication Plan: Establish a communication strategy to keep key stakeholders such as IT managers, senior management, business partners, and customers informed throughout the project’s duration
  • Contingency Planning: Create backup plans for potential challenges during the consolidation. This involves establishing robust backup and failover mechanisms, considering factors like the location of backup systems, cloud services used, and alternative network options for Wide Area Network (WAN) disruptions

4. Design and Architecture Development

Design Architecture Development Review Blueprint for Construction of Build Project
  • Infrastructure Design: Develop an architectural blueprint for the new, consolidated infrastructure. This blueprint should address current needs while allowing for scalable expansion. Key considerations include floor space, power, and cooling capacities to support both existing and future demands. The design process typically involves collaboration with construction contractors, architects, structural and civil engineers, IT, and energy consultants
  • Reference Designs: Utilize proven reference designs to guide the consolidation process and mitigate risks. These designs draw on the expertise and experiences of teams that have built operational data centers, helping to determine important project parameters such as criticality features, power density, capacity, target uptime, equipment technologies, system performance specifications, and budget. Reference designs from companies like VMware, Cisco, Dell, and Hewlett Packard Enterprise (HPE) are commonly employed
  • Target Architecture: Decide on the architectural layout for the consolidated data center. This includes planning the arrangement and interconnections of various components such as servers, storage systems, and network infrastructure
  • Energy Consumption: Assess the new energy requirements of the consolidated data center, focusing on energy efficiency and sustainability. Plan the power sourcing to align with the organization’s sustainability goals, such as using renewable energy
  • Modular Configurations: Consider using prefabricated or modular configurations for data center construction. These methods can reduce the total cost of ownership (TCO) for data center infrastructure, and expedite the planning and deployment of data center consolidation
  • Change Management: Establish a detailed plan to migrate data center assets from the current hardware and facilities to the new, consolidated setup
  • Disaster Recovery Planning: Formulate a robust disaster recovery strategy for the consolidated data center. Strategies include establishing replication between similar consolidated data centers or setting up separate disaster recovery sites, especially when significant variations exist between data centers or public cloud options are not feasible

5. Execution and Migration

Execution Migration in Large Server Room Examines Technology Environment
  • Team Assembly: Extensive projects like refurbishing old buildings or constructing new data centers require a large and diverse team. This team should include design firms, architects, construction contractors, energy consultants, equipment vendors, commissioning agents, legal advisors, IT professionals, and a project manager
  • Preparation and Testing: It’s essential to prepare the new environment and test its readiness. Conduct dry runs to detect and solve unexpected problems before the actual consolidation. Ensure complete data backup prior to migration
  • Migrate Infrastructure: Decommission old servers and dismantle IT hardware from remote sites. Install and set up new hardware, software, networking solutions, and applications according to the planned design. Execute the consolidation in phases to reduce operational disruption
  • System Integration: Seamlessly integrate different systems and applications into the new consolidated infrastructure
  • Documentation and Training: Create detailed documentation on new systems and processes. Provide training on these new systems to the relevant personnel, who may now face broader responsibilities post-consolidation

6. Testing, Optimization and Management

Testing Optimization Management to Commission new Computer Room Facility
  • Performance Testing: Rigorously test and commission the entire new data center infrastructure under real-world scenarios. This ensures that the system meets all performance criteria and operational requirements
  • Review and Feedback Loop: Consistently collect feedback from users and stakeholders. Use this information to make iterative improvements in systems and infrastructure, aiming to enhance efficiency, performance, and cost-effectiveness
  • Infrastructure Management: Implement continuous monitoring and management tools for the consolidated data center operations. Utilize data center infrastructure management (DCIM) software, and establish metrics to evaluate the performance of consolidated workloads against cost, manageability, and security goals
  • Maintenance Management: Determine and plan the necessary maintenance for optimal long-term performance of the data center, including its physical infrastructure components like power systems, cooling units, servers, networking equipment, and facility space. This includes management of work orders and spare parts

Benefits of Data Center Consolidation

Data center consolidation offers several key benefits, including reduced operational costs, enhanced efficiency of hardware and software, improved security, adherence to compliance standards, robust disaster recovery capabilities, decreased energy consumption, and simplified management and maintenance processes.

Analysis Meeting Discussion on the Benefits of Data Center Consolidation Project Strategy

Below are the five most significant benefits of data center consolidation:

1. Reduced Operational Costs

Data center consolidation significantly reduces operational expenses. This reduction is achieved by either eliminating or downsizing redundant systems, leading to a more straightforward and manageable environment. Fewer physical locations also contribute to lower costs in energy consumption, maintenance, staffing needs (such as system administrators, database administrators, and network engineers), asset management, and property leases.

2. Hardware and Software Efficiency

Consolidating data centers can lead to more efficient resource utilization. Centralized operations simplify the management and optimization of hardware (such as servers, storage systems, and networking equipment) and software. This efficiency leads to better performance due to higher equipment utilization, cost savings on capital expenditures by avoiding the replacement of aging hardware, and reduced expenses on software licensing.

Consolidation means fewer physical assets and equipment, simplifying hardware and network monitoring, network discovery, and ongoing hardware maintenance. A smaller physical infrastructure also enables easier management of network and storage performance, as there are fewer components to monitor.

With fewer software platforms to manage, redundancy between applications with similar features is eliminated. This can significantly increase productivity for IT teams. For example, consolidating from multiple locations to a single one allows organizations to remove redundant instances of database management, network monitoring, and data center infrastructure management (DCIM) software.

3. Improved Security, Compliance, and Disaster Recovery

Consolidating data centers allows an organization to more effectively focus on security, compliance, and disaster recovery. This centralized infrastructure offers several advantages:

  • Security: Consolidation leads to stronger, more unified data center security by reducing potential attack surfaces. It results in fewer points of vulnerability, with fewer facilities to secure and a reduced number of applications and systems to protect. Additionally, the consolidation process presents an opportunity to rectify existing security flaws, such as misconfigured assets and outdated systems, thereby enhancing overall security
  • Compliance: Merging data centers together improves organizational compliance by centralizing the implementation of consistent policies, which is particularly important in meeting the increasing array of regulatory mandates and standards. These include the International Organization for Standardization (ISO), the Health Insurance Portability and Accountability Act (HIPAA), the General Data Protection Regulation (GDPR), and the Payment Card Industry Data Security Standard (PCI DSS)
  • Disaster Recovery: Consolidation simplifies and enhances disaster recovery plans. It reduces the number of physical locations and assets that need to be managed during a crisis, thereby improving reliability and availability

4. Decreased Energy Consumption

Data center consolidation involves phasing out or upgrading outdated, less efficient equipment with modern, energy-efficient technology. This leads to a significant reduction in power and cooling expenses. For instance, through consolidation, organizations can invest in solutions like rack PDUs (Power Distribution Units) and hot and cold aisle containment for improved cooling efficiency. These measures enhance Power Usage Effectiveness (PUE) and lead to direct cost savings.

Consolidating data centers also results in lower energy consumption and costs because organizations operate fewer physical servers (enabled by virtualization), storage systems, and networking equipment. As a result, there is a reduced demand for power and cooling.

5. Simplified Management and Maintenance

Consolidating data centers leads to fewer locations and assets to manage, which simplifies tasks such as system discovery and network management. This simplification makes it easier for IT staff to optimize, manage, and understand data flow patterns and network mapping. Furthermore, standardizing processes and practices across the organization becomes more feasible, thereby enhancing operational efficiency, minimizing human error, and eliminating redundant or outdated procedures.

Additionally, data center consolidation reduces mean time to repair (MTTR). IT professionals can identify and resolve issues more rapidly, leading to increased service reliability and uptime, and reducing service level agreement (SLA)-related penalties.

Infrastructure and IT Resource Consolidation

Infrastructure and IT resource consolidation encompasses several distinct processes, including server consolidation, storage consolidation, network consolidation, and application consolidation. Each of these processes focuses on optimizing and streamlining their respective areas to improve efficiency and reduce costs within the IT infrastructure.

Server Consolidation

Server consolidation aims to decrease the number of servers, which in distributed computing environments are numerous as traditionally each server was dedicated to a specific application. Due to the significant number of servers in organizations, ranging from thousands to millions, server consolidation is essential to manage them effectively.

Historically, each department could easily purchase and manage their own server for specific applications, leading to a proliferation of servers. For each application, several servers were required, including development, staging, training, and disaster recovery servers at a remote site, resulting in the need for many servers per application.

Types of Server Consolidation Techniques

There are two main methods for server consolidation:

  1. Vertical Scaling: This involves reducing the number of servers by running multiple applications on fewer, but more powerful servers
  2. Horizontal Scaling: This method distributes increased workloads across several replicated servers

Server Categorization for Consolidation

Servers can be grouped into three broad categories, each requiring specific consolidation techniques for optimal performance:

  1. Front-End Servers: Closest to the user community, these servers typically use horizontal scaling with load-balancing to distribute incoming loads. Standardized IT management practices are crucial for cost-effectiveness
  2. Application Servers: These servers, which run applications and middleware, are often suitable for vertical consolidation, replacing many smaller servers with fewer larger ones
  3. Back-End Database Servers: High-end servers running mission-critical databases or applications. They are highly resourceful and clustered for near-perfect uptime, making them ideal for vertical consolidation

Storage Consolidation

Storage consolidation is designed to improve performance and efficiency by centralizing data, which is typically distributed across multiple servers, into a single, advanced storage system. This strategy addresses the problem of disparate storage systems, where each server possesses its own direct-attached storage. By consolidating storage, it eliminates the need to expand storage on individual servers that are running out of space, particularly when other servers in the data center have plenty of unused storage capacity.

Benefits of Storage Consolidation

  1. Increased Storage Utilization: Storage consolidation leads to higher utilization rates compared to storage accessible by only one server, making it more efficient to manage increasing data volumes
  2. Easier Data Backup and Recovery: Consolidated storage simplifies backup and recovery processes, requiring less configuration and time compared to managing multiple disparate storage devices
  3. Cost-Effectiveness and Enhanced Reliability: It is more affordable and efficient to increase reliability and uptime, as well as remote data replication, in a single high-end storage system than in multiple, smaller disconnected devices

Types of Storage Consolidation

  1. Server Consolidation: Migrates applications from multiple hosts to a single host, centralizing their storage in one place, making it accessible to all applications
  2. Single Storage Subsystem for Various Servers: Utilizes a single large storage subsystem for applications from different servers across various platforms, like Linux and Windows, reducing the need for separate storage for each platform
  3. Consolidation with Storage Area Network (SAN): Employs storage-switching devices to connect multiple servers to a shared storage pool, allowing any server connected to the SAN to access any storage device in the network
  4. Consolidation with Network Attached Storage (NAS): Enables servers to access storage over the network using protocols like HTTP (Hypertext Transfer Protocol) or FTP (File Transfer Protocol), catering to both department-level and enterprise-wide applications

Network Consolidation

Consolidating diverse networks into a unified, efficient system requires effective process and people management, with multiple strategies available for integrating network topologies and processes.

Strategies for Network Consolidation

  1. Multi-Topology Network Strategy: Maintain varied network equipment and topologies but consolidate personnel, leading to reduced staff managing all networks. This often results in subpar network management and support
  2. Single Network Expansion Strategy: Choose one existing network based on technical merits and expand it to serve the entire organization. This involves migrating servers and devices from other networks, where poor selection can lead to significant disruptions and outages
  3. Integrated Network Strategy: Conduct a cost analysis of all networks and potential solutions, aiming to design a hybrid or entirely new network. This approach requires detailed, stage-by-stage migration planning, considering application dependencies and user latency acceptability

Impact of Consolidation on Network Bandwidth

Server and storage consolidation can variably affect network bandwidth requirements, including both north-south (data center to user) and east-west (server to server) traffic. Bandwidth may increase at consolidated locations due to intensified north-south traffic, remain unchanged, or even decrease, particularly in east-west traffic, if applications are consolidated on the same server, reducing the need for network communication between servers.

Application Consolidation

Application consolidation begins by identifying applications that are appropriate for consolidation, such as database instance and application sets consolidation.

Database Instance Consolidation

Consolidating database instances can be done by merging multiple instances of the same database onto a single server. However, it’s crucial to avoid mixing different types of databases, such as Oracle, IBM Db2, and SAP ASE, on the same server. This is because each type of database has unique kernel and patch requirements.

Application Sets Consolidation

Focusing on application sets involves recognizing patterns in how applications are used, particularly in terms of data interactions among different application groups. Applications that process data in a sequential manner and do not compete for the same server resources at the same time are good candidates for consolidation. Consolidating these applications can lead to benefits such as reduced network traffic and improved communication between the applications.

Mary Zhang covers Data Centers for Dgtl Infra, including Equinix (NASDAQ: EQIX), Digital Realty (NYSE: DLR), CyrusOne, CoreSite Realty, QTS Realty, Switch Inc, Iron Mountain (NYSE: IRM), Cyxtera (NASDAQ: CYXT), and many more. Within Data Centers, Mary focuses on the sub-sectors of hyperscale, enterprise / colocation, cloud service providers, and edge computing. Mary has over 5 years of experience in research and writing for Data Centers.


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