HP puts on data center hard hat

The company is offering to manage construction projects, promising customers 'one throat to choke'

Hewlett-Packard wants to manage the construction phase of its clients' data center projects, hoping to expand its revenue from this area and, it says, help customers complete projects more quickly and for as much as 30 per cent lower cost.

HP already offers consulting services to help with decisions such as where to locate data centers and what type of facility to build. It also sells design services, including the selection of mechanical and electrical equipment, and "post-construction" services such as commissioning and testing.

But when it comes to building a data center and installing the generators, cooling systems and other heavy equipment, companies typically bring in contractors. HP is trying to move in on that part of the industry, giving it a complete "end-to-end" data center services business.

Through its new Critical Facilities Implementation service, HP says it will subcontract jobs to the construction companies and manage the entire project, giving customers "one throat to choke." It has completed a few data centers in China under this model and is now offering the implementation service worldwide, said Rick Einhorn, worldwide director for HP's Critical Facilities Services group.

IT companies such as HP and IBM -- which also has a big data center practice -- are playing a bigger role these days in data center design and construction. They say their IT expertise can help customers "right-size" their data centers to match the expected workloads, keeping costs down.

That's in contrast to several years ago, when companies often built huge facilities with enough power and cooling infrastructure to meet their IT needs for the next decade. That practice is now seen as inefficient, and as data centers have expanded to account for a bigger share of capital and operating costs, companies are realizing this and starting to build data centers in new ways.

HP says its end-to-end management approach will get projects finished at lower cost. "Typically, when you do a project in a turnkey fashion, you save up to one-quarter to 30 per cent of the budget for that facility," Einhorn said.

"Part of that is through significantly reducing the schedule. You can compress a lot of the work that's done in design and construction ... start construction sooner rather than later, and get your facility to market sooner," he said.

HP hopes to take a bigger "share of wallet" from data center construction projects. The new service will also tighten its relationships with customers, which could give it a better chance of being chosen to supply the IT gear inside the facility, Einhorn said.

It faces some challenges, however. It's not clear, for example, that data center construction companies will want to give up their direct relationships with customers. HP might find itself in an awkward relationship with them.

"We're not going to compete with the construction managers per se. We want them to work with us, and for us, under this model," Einhorn said.

He declined to say which companies HP plans to work with. Names in this industry include Holder Construction, StructureTone and Turner Construction.

In addition, some customers may have existing relationships with contractors that they're reluctant to break. And they may be wary of allowing HP to manage the whole process, since it is not an area of expertise for the company historically.

Still, Einhorn said HP's Critical Facilities group has been hiring experts in this area. And he said customers are asking for a model that makes one company accountable for the whole project.

HP's Critical Facilities Services group was formed when it bought EYP Mission Critical Facilities three years ago. It had 350 employees at the time, almost all in the U.S. and the U.K., said Einhorn, who was EYP's president. HP has increased the headcount "significantly," he said, though he wouldn't give a number.

Last summer the group started building pre-fabricated data centers, which can be assembled quickly on site. It also opened a factory devoted to churning out its containerized data centers, known as Performance Optimized Datacenters, or PODs.

After a 40 per cent drop in data center capital spending from 2007 to 2010, during the recession, HP, IBM and the other industry players hope to cash in on a market that has started growing again, particularly in developing markets such as China, India and Brazil.

The market in China is "similar to what we saw in the U.S. back in 2004, when you saw greenfield data centers and large retrofits everywhere you turned," Einhorn said.

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