Ottawa County staff: data-center consolidation now estimated at $2.29 million due to tariffs, VMware subscription costs

Paul Rosemond, a county staff member who presented the project at an Ottawa County IT workshop, told commissioners the county plans to consolidate two data centers — one in Fillmore and a smaller site in Grand Haven — and refresh the equipment that supports file stores and virtual servers. Rosemond said the updated budgetary estimate is about $2,286,000, an increase from a previously approved FY23 capital improvement project budget of roughly $1,200,000.

Why it matters: The estimated increase would require changes to the county’s Capital Improvement Plan (CIP) funding and could require a budget amendment or reallocations from other CIP projects or fund balance. Rosemond said the county must act soon because support for current VMware licenses ends at the end of the month, creating an operational risk for county systems.

Rosemond said the cost growth stems from two main changes: a 25% tariff applied to equipment assembled in Mexico and a switch from perpetual VMware licenses to subscription pricing after Broadcom’s acquisition of VMware. “We need to replace it… we’re at risk,” Rosemond said, summarizing the immediacy of the support and security issue.

Details from the presentation and discussion: - Infrastructure and scope: Rosemond said the county currently operates two data centers and that the planned consolidation would cover the county’s file stores and virtual servers; he mentioned both “about 300 servers” and, later in the presentation, “about 500” virtual servers while describing current capacity and refresh cycles. - Cost drivers: Rosemond said he built the updated estimate from a vendor quote and added a 25% tariff that increased equipment costs by about $278,000. He said adding VMware subscription licensing increased the estimate by about $460,000. He also said a five-year bundled subscription option would save an estimated $361,000 over five years compared with year-by-year subscription purchases. - Timing and operational risk: Rosemond told the commissioners that current perpetual VMware licenses will no longer be supported after the end of the month and that the county has been applying patches and temporary measures but cannot wait long. “VMware support will end at the end of this month,” he said. - Vendor and procurement status: Rosemond said the county issued an RFP and the vendor People Driven Technologies provided an updated budgetary quote. He said staff expects to return with a recommendation for contract award (beginning with a design phase) and that procurement and contracting steps remain. Commissioners discussed using a phased, not-to-exceed design contract so the county can begin design work while final costs and full procurement are completed. - Funding options discussed: Karen (fiscal staff) said there are multiple potential funding sources, including reallocated CIP savings from other projects, an administrative assignment of funds recently used for prosecuting-attorney systems (about a half-million dollars), and existing fund balance. Karen said the county has previously committed about $42 million for specific purposes, the administrator has assigned about $8 million for specific purposes, and roughly $35 million remained unassigned fund balance in the financial statement excerpt Rosemond read aloud. Karen said, “I know that there’s money there,” while noting that unassigned fund balance is one-time money and not ongoing revenue. - Alternatives and risk management: Commissioners and others suggested considering alternatives — shifting more services to cloud providers, evaluating other hypervisor platforms (a resident comment suggested Hyper-V), or delaying nonessential projects — but Rosemond and staff emphasized the county is discussing budgeting and design now and will analyze alternatives during design and procurement. Rosemond said the tariff environment and Broadcom/VMware subscription changes are broader market issues that may persist.

Next steps: Staff will return to the board with a procurement recommendation and an award request for an initial design phase (a professional services contract, likely on a not-to-exceed basis). Karen was asked to provide a list of likely funding sources and proposed reallocations ahead of the next board meeting so commissioners can assess how much of the increased cost could be covered from existing CIP funds and fund balance.

What was not decided: The board did not take any formal vote or approve a budget amendment during the workshop. Commissioners did not approve any contract; staff said they will present a formal contract award and any required budget changes at a future board meeting.

Ending: County staff framed the issue as a planned capital refresh accelerated and stressed that timing, rising licensing costs and tariffs make early planning and a staged procurement important. Staff and commissioners agreed the county will proceed with design-phase procurement work and present funding options and a contract recommendation to the board for formal action.