What Is an Enterprise Data Center

Data centers are at the heart of our digital economy. Everything we do online passes through these facilities, from the shows we stream to the transactions we make.

As the amount of data we create grows exponentially, data centers are just getting more important.

Global data creation is projected to reach up to 181 zettabytes (about a trillion gigabytes) by 2025. Processing that data on such a large scale just isn’t feasible with a traditional data center.

To keep pace with ever-growing data processing and storage demands, more companies are building their own enterprise data centers.

But what are enterprise data centers? And does building them make sense for your company?

This article will cover what an enterprise data center is, including its advantages and disadvantages and the components that make up these facilities. We’ll also look at the tools you can use to manage your compute infrastructure.

What Is an Enterprise Data Center?

An enterprise data center is a facility that an organization operates to support its data processing and storage needs.

It houses physical computing equipment like servers, network systems, and storage devices, as well as supporting infrastructure like power, cooling, and environmental monitoring  systems.

Organizations can build enterprise data centers on-premises or off-premises. Each option has distinct advantages and disadvantages.

Building a data center on-premises gives you direct access to your servers and more control overall. But without the right physical infrastructure in place, you won’t be able to efficiently and securely operate a data center.

Many companies build off-premise data centers in locations based on factors like connectivity, reliability, and accessibility to end-users. For example, some companies build data centers in colder climates to save on energy costs. However, the costs to build these facilities make them financially unviable for most companies.

Other types of data centers include:

  • Colocation: A colocation data center is a data center that allows companies to rent space for servers and other equipment. These servers are highly scalable, meaning they can scale up or down based on your application traffic.
  • Hybrid: A hybrid cloud setup is a mix of on-premise infrastructure and private cloud services. For example, you might store sensitive data on local servers, but outsource your processing needs to a cloud provider like Amazon Web Services (AWS).
  • Edge: An edge data center is a smaller data center that’s placed closer to the end-users it serves. With more companies deploying Internet of Things (IoT) devices, edge computing helps reduce latency and increase overall speed.
  • Hyperscale: A hyperscale data center is a data center that major companies like Apple, Amazon, and Google operate to deliver services worldwide. What sets these facilities apart is their massive size and scalability to meet high computing demands.

What Are the Core Components of an Enterprise Data Center?

Enterprise data centers consist of three main components: compute, storage, and network. These work together to deliver the processing power that organizations need to run their applications and deliver digital services.


Compute is the hardware that provides the memory and processing power that companies need to run their applications.

Some organizations deploy purpose-built servers for data-intensive workloads like Artificial Intelligence and Machine Learning.


Enterprise data centers produce a large volume of data. Storage refers to the devices and software technologies that data centers deploy to store this data.

These include:

  • Hard disk drives and solid-state drives
  • Backup and recovery software
  • External storage facilities
  • Storage Area Networks (SAN) and Network Attached Storage (NAS)


Enterprise data centers rarely exist in a vacuum. They rely on networking infrastructure to bring the servers online. These include routers, switches, cables, and firewalls.

These three primary components allow companies to manage their IT operations and store important data. There’s also critical infrastructure that support these components.

These include:

  • Uninterruptible power sources (UPS)
  • Environmental monitoring sensors
  • Cooling and ventilation systems
  • Building security
  • Backup generators

Monitoring each of these systems is key to keeping costs down and ensuring uptime. 25% of organizations report that the average hourly cost of unexpected downtime is between $301,000 and $400,000.

Average Hourly Cost Of Downtime

Given these figures, organizations build multiple layers of redundant systems into their data centers. One of the most widely adopted standards is ANSI/TIA-942 — a rating system that grades the reliability of a data center from Tier 1 to Tier 4.

Tier 1 data centers are adequate for most small businesses, as they cost less to implement and have an annual uptime of 99.671%.

But enterprises with higher processing demands opt for Tier 4 data centers to ensure minimal downtime and prevent data loss. These facilities have an uptime of 99.995%.

What Are the Advantages of an Enterprise Data Center?

While building an enterprise data center comes with significant costs, it offers a number of advantages over cloud computing.

Complete Control

An on-premise environment gives organizations direct access to their servers and more control over their infrastructure. You can install proprietary hardware and deploy applications that are specific to your organization.

An enterprise data center also allows companies to retain their data in-house and hold their own encryption keys. It’s for this reason that many organizations hesitate to move to the cloud.

Increased Visibility

Another benefit of a dedicated enterprise data center is the visibility it provides. Companies can install extensive monitoring tools and track metrics in real-time with data center infrastructure management (DCIM) software.

Tracking the usage of resources over time can help companies estimate future needs and know when to purchase new equipment to scale their operations.

Compliance Assurance

Organizations that handle sensitive information have to adhere to certain standards. For example, companies that store patient health information must have multiple safeguards in place according to the Health Insurance Portability and Accountability Act (HIPAA).

By keeping everything in-house, companies can ensure their servers are compliant and provide the documentation to prove it. Companies that store sensitive information can still use cloud providers, but they must comply with all regulatory mandates.

Software Compatibility

Even as more of the world adopts modern technology, moving to the cloud could prove problematic for companies that still rely on legacy software.

Enterprise data centers allow companies to continue running legacy systems that may not be supported elsewhere.

What Are the Disadvantages of an Enterprise Data Center?

A dedicated enterprise data center offers many advantages, but there are also some downsides to consider with this computing model.

Extremely Expensive

Building an enterprise data center can cost between $10 million to $12 million. That figure doesn’t even take into account ongoing costs for maintenance and labor.

These high expenditures are why companies opt for cloud providers, as many simply don’t have the capital to build their own IT infrastructure.

Potentially Obsolete

Facilities that were built in the early years of the internet are likely to be inefficient in terms of their Power Usage Effectiveness or PUE.

An inefficient infrastructure with obsolete hardware means you’re using more resources with minimal performance improvements.

Unexpected Outages

Common causes of data center outages include equipment failure, cyber attacks, and human error. Natural disasters like floods and earthquakes can also cause outages.

Unexpected downtime can result in significant revenue loss and cause customers to lose trust in your business. Managing an enterprise data center means planning for these scenarios and taking steps to mitigate their impact.

Managing Your Enterprise Data Center

Operating a dedicated enterprise data center is a complex undertaking. Here are some tips to manage your facility and increase its efficiency.

  • Use DCIM software: DCIM software provides complete visibility across your entire IT infrastructure. It helps you maintain a centralized database, perform capacity planning, and automate your workflows. You can also track key resources in real-time and analyze historical trends.
  • Monitor environmental factors: Unplanned outages are often tied to environmental factors. High temperatures can cause hardware to overheat and shut down. Deploy monitoring sensors in your facilities and set thresholds.
  • Have a power management strategy: A power management strategy allows you to optimize power distribution across your facility. It also helps you identify stranded servers that are wasting energy.
  • Increase efficiency: A more efficient data center translates to more cost savings in the long-term. Monitor metrics like PUE and aim to get this score as low as possible. Examples include improving airflow and replacing inefficient equipment.
  • Plan for hardware lifecycles: Computing equipment advances quickly. Replacing hardware allows you to take advantage of more efficient designs. 42% of respondents in one survey said they refreshed their servers every two to three years. Have a plan when upgrading and replacing hardware in your facility.


Enterprise data centers are ideal for companies that operate in heavily regulated industries and have intense data processing needs. But given the capital needed to build these facilities, an organization needs to be certain that such an investment will be viable in the long-term.

Whether you deploy applications in an on-premise facility or rely on colocation services, you’ll need the right tools to manage your infrastructure and optimize your workloads.

View a demo on how Nlyte’s DCIM software can help optimize your workloads and automate the management of your assets.

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