PROJECT REPORT FOR SETTING UP DATA CENTRE

By Jibu Jacob, Semester - 5 MBA (Part-time)

Executive Development Centre

1. Summary

..................................................................................... 3

2. Business Description ..................................................................... 4 3. Marketing Segment ...................................................................... 4 4. Pricing Strategy ............................................................................. 5 5. Operations .................................................................................... 6 6. Financials ...................................................................................... 8 7. Anticipated Risks ......................................................................... 9 8. Business Strategy ......................................................................... 9 9. Critical Milestones ........................................................................ 9

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Summary
IT operations are a crucial aspect of most organizational operations. One of the main concerns is business continuity; companies rely on their information systems to run their operations. If a system becomes unavailable, company operations may be impaired or stopped completely. It is necessary to provide a reliable infrastructure for IT operations, in order to minimize any chance of disruption. Information security is also a concern, and for this reason a data center has to offer a secure environment which minimizes the chances of a security breach. A data center must therefore keep high standards for assuring the integrity and functionality of its hosted computer environment. This is accomplished through redundancy of both fiber optic cables and power, which includes emergency backup power generation Data centers have their roots in the huge computer rooms of the early ages of the computing industry. Early computer systems were complex to operate and maintain, and required a special environment in which to operate. Many cables were necessary to connect all the components, and methods to accommodate and organize these were devised, such as standard racks to mount equipment,

elevated floors, and cable

trays (installed overhead or under the elevated floor). Also, a single mainframe required a great deal of
power, and had to be cooled to avoid overheating. Security was important computers were expensive, and were often used for military purposes. Basic design guidelines for controlling access to the computer room were therefore devised. During the boom of the microcomputer industry, and especially during the 1980s, computers started to be deployed everywhere, in many cases with little or no care about operating requirements. However, as

information technology (IT) operations started to grow in complexity, companies grew aware of the need client-server computing, during the 1990s, microcomputers (now

to control IT resources. With the advent of

called "servers") started to find their places in the old computer rooms. The availability of inexpensive

networking equipment, coupled with new standards for network cabling, made it possible to use

a hierarchical design that put the servers in a specific room inside the company. The use of the term "data center," as applied to specially designed computer rooms, started to gain popular recognition about this time, The boom of data centers came during the

dot-com bubble. Companies needed fast Internet connectivity

and nonstop operation to deploy systems and establish a presence on the Internet. Installing such equipment was not viable for many smaller companies. Many companies started building very large facilities, called Internet data centers (IDCs), which provide businesses with a range of solutions for systems deployment and operation. New technologies and practices were designed to handle the scale and the operational requirements of such large-scale operations. These practices eventually migrated toward the private data centers, and were adopted largely because of their practical results. Ernakulam being the commercial capital of Kerala would be the best location for such a venture. This holds good as there are several professional institutes in and around Ernakulam, moreover there are several service segments having the corporate offices in Ernakulam and basing its business out of Ernakulam.

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Business Description
Name of the Business: Type of Business: Type of Customers: Centralized Data Center (CDC) Medium Scale Medium scale businessmen / software professionals who need high class server capabilities and backup of their data A data center (sometimes spelled datacenter) is a centralized repository, either physical or virtual, for the storage, management, and dissemination of data and information organized around a particular body of knowledge or pertaining to a particular business. The National Climatic Data Center (NCDC), for example, is a public data center that maintains the world's largest archive of weather information. A private data center may exist within an organization's facilities or may be maintained as a specialized facility. According to Carrie Higbie, of Global Network Applications, every organization has a data center, although it might be referred to as a server room or even a computer closet.

Marketing Segment
Centralized Data Centre places itself in the medium scale industry. The pioneers in data centre services in India includes Reliance and Tata's. While these large players are focussing on the big business houses in the metro cities, the small players are catering to the local market and the requirements of start-up firms. CDC would like to place itself in the middle level segment catering the data protection needs of small scale industries, schools, colleges etc. These people who have less amount of data would find it highly costlier to invest in high precision servers, internet connectivity and networking solutions. They even have fear about the backup and management of their data. Still procuring servers enough won't satisfy their individual needs, they need to maintain a good technical team to cater the needs and maintenances of these servers. Ultimately the goal is to maintain the 100% percent uptime of these servers. More over they need to maintain an infrastructure to hoist these high precision servers and then maintain 24hour power supply for these servers. Also the customers need to pay for the licensing fees and annual maintenance costs.

Customer: CDC targets those customers who uses IT applications in their business but don't have sufficient data centre capabilities. These customers will be provided with high class data centre facilities at an affordable rate and ensuring 99.99% uptime of these servers other than planned shutdown for regular maintenances.

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Marketing The marketing strategies for CDC is a bit different from other products. Here a marketing team will be formed whose target will be to identify potential customers who can afford to outsource their data centre activities. They will shortlist those potential customers around Ernakulum who need better server capabilities and then approach them personally and convince them about the services offered by CDC and its reliability. Also marketing strategies include a campaign drive for the targeted customers with representatives from sever providers (IBM), Network service provides (Data Craft Technologies) highlighting the capabilities of CDC Advertisement: Key areas for advertisement will be in the forums of organizations, web and occasional advertisements in the newspapers. Methods of advertisements include: Online advertisements through sites Presenting the project in selected forums Free demonstration for potential customers Classified advertisements in the news papers Direct approach and canvassing of organizations.

Cost Of Advertisement: TABLE 1 S No. 1 2 3 4 Particulars Cost for direct approaching organizations / forums Cost of travel for demonstrations News paper advertisements (Rs.1,20,000/- pa) per month Advertisements through web adverstisements (Rs,36,000/- pa) per month Total advertisement expenses 27,000/Cost (Rs.) 12,000/2,000/10,000/3,000/-

Pricing Strategy:
Considering the present market rates for various server hosting technologies, the quality and the uniqueness of the CDC, the following pricing is being adopted: Processor Cost(for 4 CPU's) Server Space(fixed 500GB space in Hard Disk) Network cost (up to 1Mbps) Data Backup Cost : : : : Rs. 3000/- per month Rs. 5000/- per month Rs. 4000/- per month Rs. 1200/- per 500GB

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Considering the present trends number of occupants for servers for every month is as given below: Occupants for processor Occupants for server space : : 20 50 50 3

Occupants for Network Traffic : Occupants for data backup :

Total earnings from these programs are as given below:

TABLE 2 S No. 1 2 3 4 Particulars Earnings from processor renting Earnings from server space renting Earnings from network bandwidth renting Earnings from data backup Total earnings per month Earnings (Rs.) 60,000/2,50,000/2,00,000/54,000/5,64,000/-

Operations:
Location: CDC will be established at Ernakulam. Ernakulam is the commercial capital of Kerala. Ernakulam is well connected by roads, rail and air. Being the commercial capital several businesses locate their regional headquarters at Ernakulam. There are several schools and commercial istitutions in Ernakulam. Therefore Ernakulam offers CDC its customer base and provides basic facilities required by the customers of CDC. CDC will require approximately 5000 sqft of area for basing its operation in the suburbs of Ernakulam. Departments & Operations: ECC will have three departments during the initial phase. Two more departments will be added as the organization expands. These departments are: General Administration Department: Administration Department will be taking care of following activities: Implementing the marketing and advertisements Reception and introduction formalities of customers Day to day administrative and financial operations Maintaining statutory and regulatory records

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Number of employees in this department: 2 (Clerk cum cashier and a janitor) taking into consideration that the initial marketing and advertisement will be done by the Directors (Marketing & Admin). As the organization grows, a specific person will be recruited for taking care of marketing and advertisement. System Administration Cell: System Administration cell takes care of day to day system administration tasks for the servers Uptime of servers Adequate Memory and CPU's in servers Frequent maintenance of servers Copy of data at another near location Disaster Recovery Plan in case of any disaster. Database mangament Backup Management

Employee structure of this department is as follows: Network Admin Database & Hardware Admin Backup Admin : : : 1 3 1 5

Total Employees in this department: Electrical Cell:

This department takes care of uninterrupted power supply to servers. This department also ensures that dual supply is provided to all servers and frequent planned switching between between the power supplies are done to ensure that servers are provided with power from both supplies. They also maintains the temperature inside the server rooms at the prescribed temperatures and takes care of the false ceiling and false floor arrangement of data centre. Estimate of Operation Cost: TABLE 3 Particulars Rent for 2000 sq.ft area in the Suburbs of Ernakulam for a month Electricity and water charges a month Salaries for Administrative department for a month Salaries for Sysadmin Cell for a month Salaries Electrical Department for a month

S No. 1 2 3 4 5

Cost (Rs.) 12,000/1,000/14,000/1,50,000/15,000/-

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6 7 8 9

Maintenance charges for servers Travel , telephone, and other office expenses per month Stationery expenses per month Security arrangements for a month Total operating expenses for a month

30,000/5,000/2,000/40,000/2,69,000/-

Financials:
Capital outlay for this venture is as given below: TABLE 4 Particulars Capital (Rs.) Advance for leasing the property 50,000/Development of reception area and offices, including tables chairs 50,000/and seating arrangements Development of server rooms 1,50,000/Computers and other peripherals required for office use 30,000/Total Capital Costs 2,80,000/-

S No. 1 2 3 4

Capital Structuring: The capital required for this business will be funded by promoters as well as the banks. One third of the capital required will be provided by the Directors and the share holders. Remaining two third of the capital will be sourced from the bank. Banks will also be approached for funds for working capital management. As the business has a large portion of fixed operating expenses during initial months, working capital during initial months needs to come from external sources. It is envisaged that working capital funds from external sources. TABLE 5 S No. 1 2 Particulars Capital contribution from Shareholders Capital contribution from Banks Total capital contribution Capital (Rs.) 1,00,000/1,80,000/2,80,000/-

Working capital requirement: From the breakeven analysis attached, it is clear that a total working capital of Rs. 4,70,000/- is required for the business from external sources. This working capital will also be partly infused by the shareholders as well as by availing working capital support loans from the bank. TABLE 6 S No. 1 2 Particulars Working capital contribution from Shareholders Working capital contribution from banks Total capital contribution Unused working capital loan from banks Capital (Rs.) 2,20,000/2,50,000/4,70,000/2,50,000/-

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Anticipated Risks
The following are the critical risks in this business:Inability to source adequate number of servers as per plan would lead to requirement of additional working capital. Operating expenses are largely fixed, variation in the number of servers offered would adversely affect on the profitability. Success of the business lies in installing high end servers and maintaining and updating the latest server technologies Price cutting by competitors.

Business Strategy:
Asset of the company involves high power servers with high processing units which are mostly custom build to suit the requirements of the current business needs of ernakulam. The real asset of the organization is the high capabitiy of the servers which can hold data for atleast 10years with minimum maintainance. The organization is envisaged to be a closely held private limited company with options for shareholders to transfer shares among each other before approaching public or outsiders for the same. Organization also envisages growing by starting similar centres in other cities of Kerala like Trivandrum, Calicut. The organization also envisages future growth by the utilization of internet and World Wide Web.

Critical Milestone
Month 1 2 3 5 7 10 12 Particular Leasing of the premises and capital expenses and initial recruitment Recruitment of staff and Installation of servers Power Supply and UPS arrangements Starting of functioning for customers First positive cash flow Break even Achieving full payback including the capital expenses

Appendix
1) 2) 3) 4) 5) 6) Cost of Advertisements (Table 1), Total Earnings (Table 2) Operating Cost (Table 3) Capital Costs (Table 4) Capital Outlay (Table 5) Working Capital Outlay (Table 6) Page 4 Page 5 Page 6 Page 7 Page 7 Page 7

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