Colocation Data Center vs. Private Data Center: Which Is Right for You?

There are both benefits and drawbacks to choosing a colocation data center over a private data center. Here are situations where colocation may or may not be the right choice for hosting workloads.

Christopher Tozzi, Technology Analyst

June 8, 2023

4 Min Read
businesswoman standing in a data center

Table of Contents:

Once upon a time, every business that needed a data center built and operated it itself.

Those days are gone. Today, companies can take advantage of colocation, a practice that allows them to deploy IT equipment in data centers owned and managed by a third-party provider.

That doesn't mean, though, that a colocation data center is always the best choice. Keep reading for an overview of how colocation works, along with tips on deciding when it does and doesn't make sense to migrate workloads to a collocation facility instead of creating your own data center to house them.

What Is a Colocation Data Center?

Colocation, or colo for short, is the use of third-party data center facilities to house IT equipment. Companies that use colocation choose a data center operated by a colocation provider, then set up their own servers or other infrastructure inside one of the provider's facilities.

Typically, a business that uses a colocation facility is responsible for purchasing, deploying, and maintaining its own infrastructure inside that facility, although the colocation provider may offer managed services to cover some or all of those tasks. Either way, the colocation provider handles management of the physical facility, including keep it powered, ensuring physical security, providing access to network infrastructure, and so on.

Related:5 Factors to Consider When Choosing a Colocation Provider

Importantly, colocation is different from using a public cloud. In the cloud, workloads are hosted on infrastructure that is fully managed by a cloud provider. That's different from colocation, where you usually rent data center space from a third-party provider, but not the infrastructure.

Why Do Companies Use Colo?

Compared with operating your own data center, a colocation data center offers several benefits:

  • Lower cost of entry: Building an entire data center can cost many millions of dollars, which means you pay a large upfront cost. With colocation, you can avoid this initial investment by renting data center space as you go.

  • Scalability: Colocation makes it easy to increase your data center space consumption as you go, without worrying about expanding your data center.

  • Less maintenance: Although you still have to maintain your hardware, colocation frees you from having to manage a physical data center facility.

  • Location flexibility: Because colocation centers exist around the world, they are an easy means of deploying IT infrastructure in specific locations without having to set up a new data center. This is advantageous for companies that need to operate in certain geographies to reduce latency or meet compliance requirements.

Related:Colocation Managed Services: Pros and Cons for Providers

The list of colocation benefits could go on, but these points summarize the main advantages.

Challenges of Colocation

On the other hand, colocation can have its drawbacks:

  • Less control: Although colocation gives you more control over your infrastructure than you would typically get in the public cloud, you don't have the complete control that you'd enjoy if you operate your own data center. That means you are limited to the networking, power, and other options that your colocation provider supports.

  • Physical access: Deploying staff to a colocation center to set up or manage servers can be more complicated because you need to work around the colocation provider's schedule and physical security controls.

  • Migration challenges: Moving workloads from an existing private data center or on-prem site to a colocation facility is no simple task. You either have to move your physical infrastructure into the facility, or stand up new servers and migrate your workloads to them. Either way, it's a process that could take many months, if not years, and that requires careful planning and expert personnel.

Conclusion: Is Colocation Right for Your Workloads?

Do the benefits of a colocation data center outweigh the drawbacks? The answer depends, of course, on what your use cases and priorities are.

Colocation is typically a better approach for companies whose workloads are small in scale and are not likely to grow significantly. If you don't have enough servers to fill up your own data center, it makes more sense to host them in a colocation facility.

Colocation is also a benefit to companies with limited IT staffs, since the colocation model effectively makes it possible to outsource some data center management tasks to a third-party provider.

And if you need to deploy infrastructure in several disparate locations, colocation is often the most cost-effective way to do it. That's a benefit if, for example, you have users concentrated in different geographic areas and you want to host your workloads in close geographic proximity to each of them.

But if you have a very large-scale infrastructure or you only need to operate your servers in one specific area, colocation probably doesn't make as much sense to you. You're likely to be better off by investing in your own data center.

About the Author(s)

Christopher Tozzi

Technology Analyst, Fixate.IO

Christopher Tozzi is a technology analyst with subject matter expertise in cloud computing, application development, open source software, virtualization, containers and more. He also lectures at a major university in the Albany, New York, area. His book, “For Fun and Profit: A History of the Free and Open Source Software Revolution,” was published by MIT Press.

Subscribe to the Data Center Knowledge Newsletter
Get analysis and expert insight on the latest in data center business and technology delivered to your inbox daily.

You May Also Like