Which Companies Own and Operate Their Own Data Centers

Many large companies, such as banks and telecommunications firms, recognize the importance of maintaining a reliable and secure data infrastructure. They have built their own data centers, often complemented by disaster recovery centers (DRCs) located over 20 miles away from the main facility. For businesses aiming for 24/7 accessibility for their customers, setting up a data center can be an essential investment. However, for many companies, outsourcing data center services can be a more cost-effective and efficient solution.”

What Industries Typically Own Data Centers?

Maintaining a data center is a critical infrastructure requirement for several sectors. Here are some of the leading industries that operate their own data centers:

Telecommunications: These companies handle vast amounts of data and require low latency for their services. Examples include ATT, Verizon, and Level 3 Communications. Financial Services: Banks and other financial institutions deal with sensitive data that must be secured. They also require high availability and compliance with industry regulations. Companies like J.P. Morgan Chase, Bank of America, and Goldman Sachs are known for their in-house data centers. Logistics: Companies involved in warehousing and shipping require secure and efficient data management to support their operations. FedEx, DHL, and UPS are examples of firms with their own data centers. Content Creation: Media and entertainment companies, such as Disney, and content delivery networks (CDNs), like Akamai, rely on robust data centers to ensure the smooth delivery of content to users worldwide.

The Build vs. Rent Decision: Key Criteria

With the rise of cloud services from providers like AWS, the decision between building and renting a data center has become more complex. Deciding to build your own data center involves several criteria, including:

Security Requirements

Some industries, such as financial services and logistics, require stringent security measures to protect sensitive data. Regulatory requirements also play a significant role. For instance, prior to the EU-US privacy deal, US firms offering services in the EU were required to maintain a separate data center in the EU to comply with data privacy laws. This is a regulatory decision and involves adhering to strict guidelines.

Latency Concerns

Low latency is essential for industries such as telecommunication and financial markets. High-speed data delivery can significantly impact business performance. For example, in the stock market, a 1 millisecond difference in latency can result in millions of dollars in trading profits, thereby determining market positioning. This is a strategic decision based on market needs.

Data Volume and Scale

The scale of data is another critical criterion. Firms dealing with large volumes of data, such as financial transactions, social media data, and gaming data, can justify the high costs of maintaining a data center. Major tech companies like Facebook and Apple have their own data centers, driven by the sheer volume of data they handle.

Cloud Services and their Impact

The advent of cloud services from providers like AWS has significantly altered the landscape for data center management. Enterprises now have the option to rent infrastructure rather than build it. This can be a wise choice for businesses looking to reduce costs and focus on their core competencies.

Conclusion

In conclusion, while some industries have compelling reasons to own and operate their own data centers, others can benefit from cloud services. The decision should be based on business needs, regulatory requirements, and strategic positioning. Companies need to carefully evaluate their requirements and make informed decisions to ensure they provide the best possible service to their customers and stakeholders.