Archive for December, 2010

Cost Segregation Tax Benefits For Modular Data Centers

Posted by on December 7, 2010  |  No Comments

Here is some information regarding benefits of cost segregation and the datapod system. UNS, LLC can provide a free cost segregation benefit estimate and fee quote with the Datapod system. Because the entire system (everything in the container and the container itself) is not considered to be a building, you would capitalize the total cost of the system (including the installation costs) and depreciate it over five years for tax purposes.

Attached is a benefit estimate that takes 100% of a $1,000,000 cost and moves it from 39 years to 5 years.  The Datapod system–compared to a million dollars of traditional new data center costs–will provide you with an improved cash flow of over $65,000 in year 1 and nearly $290,000 in years 1-5, cumulatively. This analysis assumes a 35% federal income tax rate. Consideration of state income tax will enhance the results.

CLICK ON TO VIEW:  ESTIMATE OF POTENTIAL TAX SAVINGS AND FEE (Cost Segregation)

To learn more about this subject please contact Waite Ave at w.ave@apcdistributors.com or 1-888-486-7725, ext. 201.

Don’s Corner: “Understanding The Average Return On Investment (ROI) After Completion Of A Data Center Assessment”

Posted by on December 7, 2010  |  No Comments

Don Melchert, Critical Facility Specialist

Understanding The Average ROI After Completion Of A CFEP

The Cost of Downtime is Exponential

Every critical facility experiences growing pains throughout its lifespan. Unexpected equipment failures, such as a UPS or HVAC system, can halt productivity resulting in costs that can be hidden, yet are exponential in nature. For instance, a failed UPS must be returned to normal operation as soon as possible in order to continue critical operations. In our competitive market, downtime is not an option. Without expensive, quick response service contracts, we are at the mercy of our vendors when it comes to emergency after-hours unscheduled maintenance. The service technicians will be on site at an increased hourly rate, of course, but what about the premium placed on the parts and materials needed to complete the repair?

Exploring the scenario further, those hidden, exponential costs come to light with a fury. The combination of an after hours (emergency) service bill plus parts is already expensive enough, but, in order to calculate the total cost, one must consider the additional cost of manpower from the staff that will be on-site and the additional resources used to support the corrective maintenance action. Let’s assume that the failure scenario stemmed from a generator failure during a power outage, and, during this outage, some of the UPS batteries failed. An all too common scenario and one that, unfortunately, many an I.T. or Facilities Manager has found themselves at the mercy of. To start from the top, lighting will be needed in the repair location, but what about the staff member’s office? …and the hallways leading to it? …and possibly the break room? …and eventually the restroom? What additional costs might be incurred if an accident or injury occurs during the maintenance action? Don’t forget, even after all of the repairs have been performed and the system returned to normal, additional support resources will be used to make the invoice payments to the service provider.

From the example above, it’s easy to see that calculating the total cost of a service interruption includes a lot more than just the temporary service interruption and what’s on the parts and labor invoice. If a critical facility can find and eliminate just one of the factors that can cause a critical systems failure, then conversely, the savings can be exponential as well!

Our Difference is Value

The majority of critical facility inspections and evaluations are performed while focusing on only the inner workings of the data center. The goal, for most companies performing the evaluations, is to show how much energy making any changes or corrections has made based in what was found during the inspection. Their entire approach is to locate key points in the data center where energy is being wasted or resources are being utilized inefficiently. However, the ability of a critical facility to remain online 100% of the time is the result of all of its Network Critical Physical Infrastructure components working together efficiently, not just what occurs solely in the data center.

A Critical Facility Energy Profile (CFEP) from UNS is different in that the evaluation is holistic, right from the start. Without interrupting the operational capabilities of the facility and its staff, a CFEP inspection actually begins from the moment the Critical Facility Specialist arrives at the site. If permitted, the entire facility and its NCPI components, from infrastructure to security, are inspected and each finding is taken into consideration when establishing an efficiency benchmark. Upon completion, the CFEP Report Card showcases any items where efficiency can be improved and suggests corrective strategies that will immediately reduce costs for a business across multiple cost centers. The total cost savings is dynamic, as savings in one area increase savings in another and another. In the end, it’s the bottom line that’s improved, not just one section of the business.

Seeing is Believing

WARNING: Any dollar value quoted for the ROI after performance of a CFEP will be false (low), as there is not sufficient data to accurately determine future savings gained from making a particular increase in efficiency. However, in this rare occasion, having an inaccurate prediction is definitely an error in your favor! Although the CFEP is holistic in nature, if we dissect just one section, such as a decrease in energy consumption gained by improving air conditioning efficiency, then we can show the savings in dollars for just that section.

As an example, we’ll use a critical facility in Indiana, with a total load of 8000kW consumed per hour at the current average energy cost in Indiana of $.0713 per kWh. If the facility is operating at the nation’s average of 50% efficiency and a PUE of 2.0, then their current annual energy costs is approximately $ 4,996,704 USD.

During a CFEP, it was determined that the orientation of the data racks in interfering with the airflow from the CRAC units, effectively forcing them to run on high at all times. The facility took action, implemented the recommendations from the CFEP and was able to completely eliminate one of their CRAC units and decrease the fan speeds of the remaining systems. If this facility can become just 1% more efficient in their total energy consumption, the cost savings is significant. Their total load has now dropped to 7600kW with a PUE of 1.90. Assuming the cost of energy remains constant, their annual energy cost has now dropped to $4, 746, 869 USD. From making just one change, to only one aspect of their NCPI, resulting in a meager 1% increase in efficiency, they now have a savings of $249,835 USD in the first year, and greater savings in years to come.

Again, although this example is impressive, it’s still very conservative and technically, it’s inaccurately low. The additional cost of savings associated with the elimination of one CRAC unit, including preventative maintenance contracts, consumable parts and all of the reduced man hours necessary to keep it operating at 100% would need to be added to the savings above in order to accurately show the full ROI for just one portion of a CFEP!

Don Melchert
Critical Facilities Specialist