Within the wholesale data center industry, it was common practice to say data center engineering was part of the supply chain. Data center developers would pick up the phone and call their engineer and say, “We have another project for you,” without competitively bidding the design. Their excuse to the shareholders was that the engineer was part of their supply chain and was familiar with the same design they had been churning out time and time again.
Recently, we have seen multiple companies restructure their design and procurement processes to meet shareholder demand. This has been a challenge for many.
Seeking the Competitive Advantage
While both public shareholders and private investors are seeking a competitive financial advantage today, they are also seeking a new approach to doing business. There are new engineering technologies introduced daily, and many of them create a competitive advantage. Having a pool of resources with different opinions opens doors to new ideas.
Also, when you develop a pool of resources, the owner can evaluate work utilization and staffing during the competitive bid process. Everyone is busy, and overselling has a very negative effect when delivering projects. By giving presentations after the competitive bid process, the owner can gauge the talent, project knowledge, and commitment to the project.
Another great benefit of competitively bidding projects is identifying who in the pool of engineers has regional experience and local knowledge. Types of materials, contractor knowledge, and permitting processes are all important parts of the project that can be flushed out during the bid process.
Unlike the wholesale data center owners, cloud providers have been competitively bidding projects for years, thanks to their public shareholders. Since their investments are so great, they have developed processes and teams to address every component built within their data center campuses. Additionally, cloud providers have procurement plans to create a speed-to-market delivery process (including inventory).
In a previous issue of Mission Critical magazine, I wrote an article titled “The Industrial Age of Hyperscale.” In the article, I discuss the development process, which includes how cloud providers create total cost of ownerships for their campuses. As you will see, the competitive bid process is very much a foundation for cost control and budgeting.
It’s great to see competitiveness and collaboration back within the wholesale industry. It keeps everyone on their toes!