Despite the consolidation trend, some companies are continuing to branch out with their data centres for reasons including redundancy of the centralized data centre for backup, a more comprehensive disaster recovery plan and better uptime at regional offices.

Indeed, some companies actually prefer this approach, and experts say it makes sense for organizations such as those with branch employees who can act as IT technicians or firms with locations dispersed on different continents.

"The satellite data centre model is alive and well in companies that support multiple regional offices, such as banks, chain stores and insurance companies," said Charles King, a principal analyst at US-based Pund-IT. "The benefits are substantial for any industry where it's important and advisable to keep workers close to data and their IT infrastructure."

George Hamilton, an analyst at US-based Yankee Group Research, said he's also in favor of satellite data centres in some instances.

"The advantage is leveraging existing space, rather than having to build additional data centre capacity," he said. "With virtualization, you can make the satellite data centres appear as one big data centre - the users have no idea where the physical devices reside, nor do they care. It also builds in local redundancy - unless the entire building is affected. You can also shut down one satellite data centre and have another pick up the functionality during technology refreshes and upgrades."

Three kinds of satellites

One type of satellite data centre is a "data room" on each floor. This was formerly known as an intermediate distribution frame (IDF) and is now commonly called a tenant technology room (TTR). Granted, these are not true data centres. However, the TTR of a large organization might be larger than an entire data centre in a small company.

A second type is a regional office with a local data centre that provides a subset of services, such as e-mail and document servers. Law firms are well known for having data centres at each office, serving just a few hundred employees.

A third is a data centre located in a different state from the main data centre entirely, usually to reduce constantly escalating utility costs. In this approach, the IT organization might be relocated to the remote data centre, with the home office staying in the original location.

Business continuity is key

In all cases, decentralizing can help organizations minimize the consequences of a catastrophe, said Steve Novak, CIO at US-based law firm Kirkland & Ellis.

For some mission-critical applications, such as e-mail and instant messaging, the firm runs a data centre in each office that is redundant with the centralized data centre. "If we lose e-mail in the local office, we know the secondary server is available and vice versa," Novak said.

In the Kirkland & Ellis model, a 10 square metre TTR on each office floor handles basic networking, a 93 square metre satellite data centre handles mission-critical services such as e-mail, and a 900 square metre global data centre in Chicago handles most companywide services.

That said, however, Kirkland & Ellis stores all documentation - the intellectual capital that forms the lifeblood of the company - in a centralized data centre where long-term redundancy is more important than uptime. The other option, which is less reliable, would be to store documentation in each regional office.

With a move to server virtualization, the firm is building a global data centre next year that will further unify data services but still not change the regional data centre strategy with regard to e-mail and instant messaging.

Power savings too

Another reason some companies use satellite data centres is the escalating cost of power, especially in New York and California.

Ken Brill, founder and executive director of the US-based Uptime Institute, sees a trend with the data centre being located in a different state from headquarters, or even in another country such as India.

The Google and Microsoft model is to build server farms in states where energy costs are low, Brill explained. These sites do not always provide data services for the corporation itself - in Google and Microsoft's cases, the server farms are intended to deliver improved performance for external customers. But Brill noted that even major data centres don't necessarily have to be located at a company's headquarters.

One Uptime Institute client that Brill declined to name is building a global data centre in a market where utility costs run only about 4 cents per kilowatt-hour. Compared with New York, for instance, which costs around 15 cents per kWh, that's a savings of $US30 million per year.

In general, Brill advises customers weigh the risks of data centre location carefully. Centralization reduces management and staffing costs, yet "the more centralized you are, the greater the consequences from a single event," he said. "The challenge for CIOs is to weigh the economies of scale with reliability."

Brian Babineau, a senior analyst at US-based Enterprise Strategy Group, said that the main reason companies build regional data centres is to save power.

Further, Babineau said, when a company builds a new satellite data centre, the company typically uses it only for data, not for telecommunications. The customer leaves its existing equipment at the main data centre until it has moved to IP. When that happens, the satellite data centre can handle both voice and data, all in one space, making it more efficient.

An added benefit, according to Babineau, is that because the computing load can be spread among multiple locations, power bills can be reduced in each location, particularly if the satellites are in areas with lower power costs.

Decentralization pitfalls

Babineau said the biggest downside to regional data centres is that customers have to disperse the workforce. But the cost savings from locating a data centre in a relatively low-cost area such as Arizona or the Pacific Northwest could outweigh the detriments of having employees spread out across the country.

Of course, there are higher management and staffing requirements in a decentralized environment - reasons that one Gartner analyst is vehemently against the notion. "Gartner's view is that clients need to move to the smallest number of data centres and make them as large as possible - and to limit the number of satellite locations," said Rakesh L. Kumar, an analyst in Surrey, England. "This way, an organization is able to streamline its people resources and operational processes."

Steve Sams, an IBM vice president for site and facilities services in New York, agreed. "We do not see a trend in moving to satellite data centres," he said. "In fact, the trend is just the opposite, with customers moving toward data centre consolidation."