More efficient to build data center or use server hosting?
 

More efficient to build data center or use server hosting?

Which would be more efficient and cost effective for approximately 20 quad core servers, a blade chassis with 4-6 blades, a SAN and various tape drives and storage? Should we keep these servers on site or co-locate?

Colocating the servers in an external data center is the best. It is less expensive and can be customized as you grow. You could get 2x full 42U racks and a 1G dedicated bandwidth. May be an additional cross connect for redundant setup.

If you plan to establish a similar setup in-house then the budget required would be three times more.

Building your own data center is rarely the best option anymore, unless you're looking at building out 500+ kw of power (enough to support about 5000 servers). You'd probably be best going with colocation, assuming you can afford to purchase or lease those servers. Still, remember that with colocation you'll be fully responsible for the hardware, a base network configuration, etc. if you don't want to worry about those things or don't have access to the upfront capital for the servers themselves, dedicated servers can make a ton of sense.

Karl's got some great experience.

I'd also suggest that the level of redundancy required is a major factor. Many enterprises don't necessarily need the kind of redundancy and scalability offered by a colo provider. Is there good telecom access from your office? Is your infrastructure growing rapidly? t's not a simple analysis, but if a simple UPS is enough to handle your servers, then installing some racks and augmenting the cooling in your office may be the lowest cost solution.