For an investor, data center due diligence in the colocation and service provider sector requires more than just reviewing power and cooling infrastructure.
Critical facilities due diligence efforts and opinions typically include reviews and assessments of existing asset conditions, one-line diagrams, equipment age, building management systems, Capex/Opex, Tier levels/equivalents, energy efficiency, and potential points of failure.
"It is critical to understand the applications, security and processes in place for both the acquirer and the target."
At EYP Mission Critical Facilities (EYP MCF), we often provide ROM cost estimates for expansion, upgrades or improvements identified in the course of our analysis. On top of this, our due diligence service offering can include additional areas beyond the mere physical asset assessment an engineering firm would provide that need to be well-understood as part of any merger or acquisition.
These areas include:
Operational procedures, maintenance management and staffing. These elements both drive costs and are frequently important elements in data center outages.
Review of commissioning reports and historical failure incident report logs. Identifying reasoning for past failures that typically are a result of human error or in some cases may identify a more serious issue with building infrastructure.
IT systems architecture. It is critical to understand the applications, security and processes in place for both the acquirer and the target. These elements are key revenue drivers (and important to SLAs of course) and the expected synergies, integration costs for multiple systems, and risks to the overall data center must be understood.
Understanding these critical aspects of a deal during the due diligence phase is often overlooked and should be included in this process. A systems architecture assessment is important due to the tight integration and effect that it can have on the operations, management, and client (whether external or internal) facing environment.
"A due diligence effort should include additional areas beyond the mere physical asset typically reviewed" DCD News Blog
The enterprise and operations back end has serious impact on the underlying effectiveness of services and TCO. Choices of Operations Management suites, monitoring tools, client portals, use of Cloud, SaaS/PaaS, all have definitive impacts on Capex/Opex and the reliability and resiliency of the facility asset.
This integration goes to the value of the purchase or more importantly uncovers the potential future state investments you may need make. Without this type of additional analysis, the acquirer may not have as accurate an understanding of the value of an asset as they should, to make informed decisions. As pointed on the DCD News Blog, "A due diligence effort should include additional areas beyond the mere physical asset typically reviewed"
If you are a data center investor or holding company, please let us know how we can assist you with your growth and acquisition strategy.
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