Currently, I am studying data center site selection, and have been asking the question what is wrong with data centers having 1% of the cost being in the land when other commercial real estate will typically have land 20-25% of the cost. One big thing most miss is land is not a cost, it is a non-depreciable asset.
Capital assets that are inexhaustible or where the useful life does not diminish or expire over time, such as land and land improvements. Infrastructure assets reported using the modified approach to depreciation are also not depreciated.
Land is not an expense, it is an investment. So, land should be looked evaluated on its ROI, not it's overall cost, including land improvements.
Which then led me to think why is it data centers don't use more supply chain management concepts which would address issues like land cost in the overall solution and most likely save you much more than the cost of the land?
Supply Chain Management is defined as.
Supply chain management (SCM) is the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers (Harland, 1996). Supply Chain Management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption (supply chain).
Another definition is provided by the APICS Dictionary when it defines SCM as the "design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand, and measuring performance globally."
Can't you think of all the different groups and vendors involved in providing data center and IT services as a supply chain management problem? Is the CIO in charge of the supply chain? Maybe.
Here is a piece of irony from a CIO.com article on supply chain management. Supply chain management SW is a mess.
Supply chain management software is possibly the most fractured group of software applications on the planet. Each of the five major supply chain steps previously outlined is comprised of dozens of specific tasks, many of which have their own specific software. Some vendors have assembled many of these different chunks of software together under a single roof, but no one has a complete package that is right for every company. For example, most companies need to track demand, supply, manufacturing status, logistics (i.e. where things are in the supply chain), and distribution. They also need to share data with supply chain partners at an ever increasing rate. While products from large ERP vendors like SAP's Advanced Planner and Optimizer (APO) can perform many or all of these tasks, because each industry's supply chain has a unique set of challenges, many companies decide to go with targeted best of breed products instead, even if some integration is an inevitable consequence.
So, if a bunch of people who focus only on supply chain management can't get the software right, how can the data center industry get the right software to run data centers like a supply chain?
I think I have an answer on how to approach supply chain management for data centers. The first step is to identify the problem, then test what approaches solve the problem best. The fragmentation and silos is the opportunity to address. How do you pull all the pieces together? My ideas are based on using social networking and memetics.
More to come.