How to Buy Colocation in 3 Easy Steps

How to Buy Colocation
How to Buy Colocation

– lessons from our Houston Data Center

So, it is time to get out of your IT Closet. Or perhaps you woke up from the dream that AWS sold you and realized its time to build a reliable IT infrastructure that makes both your CIO and CFO happy. By the way, before you head too far off the races buying hardware feel free to check out our favorite data center hardware and software vendors of 2020 (Coming Soon).

With this simple step by step guide, we will show you how to find the right data center and get a good deal. Buying data center colocation can be daunting, but you can quickly get to a decision by following this guide.

This purchasing process could probably apply to any B2B transaction, but we will look at it through the lens of buying data center colocation:

  1. A Clear Introduction (THE EMAIL)
  2. Progression With Key Milestones (THE TOUR)
  3. A Fond Farewell (THE FINAL CHANCE)

We am not saying RFP’s are dead, we have seen some great ones, but you need to understand what purpose they serve. Ultimately a good RFP should capture specific needs, availability of space, and commercial terms. Consulting engineers do a design review of one line documents. One good example in an RFP is clearances of doors because the customer uses over-sized cabinets. Door clearance is an essential consideration for that customer, so it is an excellent question for an RFP.

A Clear Introduction

When first reaching out, be clear about your needs, timeline, and expectations. If you aren’t sure about something, highlight your assumption and ask for guidance — we do this all the time!

We have toured and audited over 300 data center facilities and responded to countless datacenter deals, so we have seen plenty of the worst and best. Here is what the perfect email or contact form submission would look like: 

Good Afternoon,

My company, Company XYZ, is beginning the evaluation process for data center colocation.

I will need approximately four cabinets with 20A 208V power in each. I require a fully fault-tolerant designed facility because my load cannot go down, so the feeds should be A+B power. Please provide me with commentary on how you achieve fault tolerance in your facility.

Beyond that, we will be cross-connecting to two carriers, but also would like a price on your blended network if available for 100 Mbps, 250 Mbps, and 1Gbps. Please provide me with your list of on-net carriers.

We expect to make a decision this month on a data center, with our start date in approximately three months.

What is most important to me is reliability, but strong commercial terms are essential as well. Please lead with your best foot on pricing as I will be making a decision based on the first formal quotation, which will be after our tour on Wednesday. Please be prepared to discuss calibration pricing when I arrive Wednesday. Anything you can do to make my life easier, such as free cross-connects, free remote hands-on, etc. will be considered strongly. I would also like to discuss any services you have that will assist me with migrating my gear.

I will be touring facilities on Wednesday next week and will reserve four time slots to do this based on the best responses to this initial RFP. Please let me know a time slot that works best for you: 9 AM, 11 AM, 1:30 PM, 3:30 PM – I will assign slots on a first-come, first-served basis.

This format has been used successfully by individual IT Directors looking for a cabinet up to hyper-scale purchasers looking for ten thousand plus square feet.

Providing the right information and lead in to their key activity of a tour will prevent you from receiving spurious calls from salespeople. If you give this information to them in the initial email, they won’t need to call you before the tour.

The biggest rookie mistakes we see are you not taking control of your time by setting a window of availability aside for tours. Or even worse, not going to tour the facility and trying to run your quotes digitally. Skipping the data center tour is a huge missed opportunity. We will discuss why soon.

Another huge missed opportunity we see is not giving the data center the information they need to get pricing for you to be prepared to discuss when you come to take the tour. Little do you know the data center tour is your most significant opportunity to establish a human connection and get crucial initial negotiations done. You will quickly learn how willing they are to work with you. You showing up for the tour proves to the sales team that you are a serious buyer, so they should invest skin in the game to get your business. Do not leave your tour without a verbal discussion of pricing. If you are missing something in terms of information to get initial quotes, pick the smartest guy in the room on the tour and ask him to help you audit your space and develop a power solution that meets your needs. You will know the one when you see him. 

Bonus Hint: If you are not confident in the amount of power you need – ask for a right size guarantee – the chance after initial move in, to right-size your contract once just in case you bought the wrong amount of power. If they can’t or won’t guarantee it – ax them – we just made your choice easier congratulations!

Final Comment: If you are more than six months out on your project, it may be best to wait until the time is a little closer because deals and opportunities can change, and you don’t want the relationships you built to get stale. Strike while the iron is hot. You can ask for some calibration pricing and tour, but be upfront with them that the timeframe is 6-9 months out, for example, and that you will be shortlisting and bringing a decision-maker along for a final tour 1-2 months out. Being up front will provide clear guidance to speak to you at a later date.

 

Progression With Key Milestones 

Don’t want to get hounded uselessly by salespeople? Don’t want to get bogged down in a contract negotiation process? Then run a fast and efficient process.

Pick a day to do tours

The better the salesperson knows you, the more negotiating power you have because they will be willing to go out on a limb for you. We can promise you that the @gmail.com account that won’t provide a phone number for us that wants the best pricing doesn’t get the best pricing.

You want to be a real opportunity.

You also don’t want to burn an entire week going on individual tours with different datacenters. You can comfortably knock out four trips in a day. If you follow our formula above, you should be able to narrow down to four data centers. A few other critical criteria that you can use for narrowing down are as follows:

  1. Do they own the facility – if they are subleasing space or are in an office building, they probably aren’t “the real deal.”
  2. Slow response (>24 hours) to your email. If they aren’t responding quickly to a sales opportunity – they won’t react quickly to an urgent need as a customer.
  3. Not a compelling story on the presentation of the website or response to your email. The website should tell the brand story. It is hard to sell a fake Rolex – so spending a bit of time looking for that belief in what they do on their website is a good starting point.
  4. Low or no google reviews. It COULD be that they are brand new, and that’s fair to consider if you could evaluate other sites they have operated. If they have been there for ten years and have ten reviews on google with a 3.6-star rating, they probably aren’t inspiring confidence in their current customers.

While at the tour, get a verbal discussion of some prices and take notes to calibrate and provide initial feedback if necessary. Don’t be afraid to be honest. Reiterate key needs and ask for concessions that you probably wouldn’t get otherwise. Build a list of “asks” and present them – don’t expect them to say yes on the spot. Tell them they are things to consider for their proposal.

Remember for your tour: Tour the people and the feel of the facility, not just the dog and pony show. Most of the physical tour is a dog and pony show – ask them to show you and explain how they achieve fault tolerance in their network, electrical, and mechanical infrastructure in both capacity and distribution paths. If they can’t do this – eliminate them. If you want quick guides on how to determine the reliability of a data center quickly and easily – check out this guide (Coming Soon).

A Fond Farewell

Farewells are just as important as introductions. The start of the farewell or closing process is receipt of the final proposal from the datacenter after you have toured and verbally discussed pricing, concessions, and determined fit for your organization.

By this time, you should mentally have a top 1 or 2 data centers in your head. Pick who your favorite data center was. If the final quotes come back, and the price is everything for you, give your favorite a second chance and be transparent. Otherwise, pick the best quote of people you are comfortable with and move forward.

Let each of the data centers know by an email that you have made a selection and are not open to further discussion on the matter, but that if anything changes in the future, you will let them know. You have drawn a clear boundary and let them know that the process is over for them. Usually, they will be respectful of your time.

Want to take the BS out of it? We came up with this process based on the internal process that we run that we have found to be the most efficient and consultative journey for colocation. Our customers love TRG – it is no small part of why we are the best rated and most reviewed Houston Data Center. Please give us an email (why not try the template) and set up a tour. We promise that you won’t be disappointed!