Data centre due diligence

A data centre technical due diligence is a desktop, physical or intrusive inspection of a data centre and its surroundings to ascertain the intended and actual design and operation of the facility as well as the potential for expansion.

It is undertaken by operators, buyers or investors to get a clear picture of the particular asset. The focus is on:

Market or book value of the asset and its expected life.
Identify of risk areas that require investment to bring them up to standard (data centres are expensive to build and operate, hence this number can be large).
Bring to light opportunities for expansion to make the most of the installed infrastructure and future build phases.

Why do we do it

Data centres are high value assets that owners and investors expect to perform at the highest level for a long time, decades.

Hence, before an expansion or investment is made, owners, buyers or investors need to understand the fair value of the site and how much they need to invest to reach the full potential of the asset.

A data centre due diligence sets out a baseline to understand the current state of the facility and where the risks and opportunites lie. This can then be used to plan upgrades to the site or used as input into business plans for investment.

When do we do it

A data centre due diligence is usually undertaken at two key junctures.

Before an operator begins an upgrade to a site. It is undertaken at this time to establish a baseline that gives focus to the upgrade plans by identifying areas that need development and areas that are ok.
When a buyer or investor is looking to invest in a data centre and needs independent advise on the facility value, risks and potential.

How do we do it

There are 3 main ways a data centre due diligence can be undertaken:

Desktop – Where information is gathered from the operator and assessed on paper or at a desktop level only
Desktop and site inspection – Where a desktop study is undertaken, followed by a site inspection with the operator and the site technical team to give an understanding of how the site operates
Desktop, site inspection and testing – A per point 2, as well as undertaking mechanical and electrical tests on key equipment to understand its condition, life expectancy and identify any faults.

In more detail, these tasks involve.

Desktop study

A desktop study involves a review of available information from the operator, namely:

Design information such as drawings, reports, specifications that set out the intended specification of the data centre.
As built (construction) information – contractor and supplier designs, drawings, reports, completion and commissioning records, accreditation certifications such as ISO, Uptime Institute, etc.
Operational info – maintenance records, fault logs, service history.

The information is collated and is analyzed with a view to understanding:

If the design meets the intent of the client’s requirements. Is the design resilient, what is the redundancy, does it comply with the required standards, e.g. Uptime Institute Tier rating (if specified)
If the site has been constructed as per the design
Is the site run as per the operational procedures, what is the maintenance regime like, is the appropriate staff and management in place to operate the site.

This analysis is usually presented in a report format, outlining the design intent of the data centre, highlighting key risks and opportunities. This can be summarized in a RED flag type table which outlines these key points, see the snip below of some typical criteria.

I have undertaken these studies when operators or investors are commencing initial investigations into data centres and are after a high-level view of the operation. The study can be undertaken in a short amount of time, at a low price point, while still giving an expert view of the data centre.

Desktop study & site inspection

This option involves a combination of a desktop study as well as a site inspection where you walk the site with the data centre manager and/or the site technical team.

The intent of the site walk is to get a deeper understanding of the site and see it in operation. This allows for comparison of what is recorded versus what is happening on site. Additionally, in talking with the operator and their staff it gives another indication on how a site is run. This is the most typical model as it gives a good balance of effort and the outcome is a detailed analysis that allows for effective planning.

This is the type of study I undertake the most and is typically used as input into planning for expansion or input into business cases. I have done this for:

A data centre operator who was pulling together a 5 year plan for operation and expansion. The study involved inspection of multiple sites across the country, with summary reports and cost plans for all sites focused on:
- Deficiencies with regard to specification – Uptime Institute Tier III.
- Useful life of equipment – how much life was left in key equipment and when it will require replacement.
- Expansion opportunities – how much capacity was in the system to ‘sweat the asset’.
Investors looking to invest or buy data centres where the investor is for a technical expert and requires an assessment of the data centre.

Desktop study, site inspection & testing

Another even more detailed option is to undertake intrusive inspections on plant and equipment to verify the reported data versus measured data, i.e. undertaking mechanical and electrical tests of equipment and systems such as:

Mains failure simulation – This test involves deliberately turning the main power supply to the data centre off to check the system continues to operate under emergency (generator) power as it is designed.
Uninterruptible Power System (UPS) testing – where the UPS is tested at steps of say 50%, 75% and 100% to monitor battery performance and power quality.

In data centres, this process is not that common, as the operation of a data centre or ‘mission critical facility’ is one where process and procedure is of the highest priority with customers requiring continuous operations 24/7/365. Hence, most operators are not that keen on third parties poking around the equipment and plant of an operational DC.

I have undertaken these tests when:

The data centre has been out of operation and the operator was looking to bring the site back online, as such these tests were required to identify the condition of equipment that is not in operation, hence equipment is power up and tested.
A site had a persistent fault that could not be rectified. In this case, testing was undertaken to try and understand the root cause of the problem.

Where to from here?

Site due diligence of data centres is a key tool in understanding the condition of an existing asset, how it is operated and the potential to maximise its utilization.

It is used by operators, buyers and investors when looking to understand the above and is undertaken by a specialist who understands how data centres operate.

If you would like more information or are interested in how you could undertake a due diligence on your site…

Contact me here…