Cyber Readiness Center and Breaking Threat Intelligence: Click here to get the latest recommendations and Threat Research

Colocation Data Center

What is a colocation data center.

What is a colocation data center? The term “colocation data center” refers to a data center that enables you to rent out space for your own hardware. For example, instead of using your own on-prem space for your servers, cables, networking devices, and other computing equipment, you can rent out space in a data center .

What is Colocation?

This colocation data center meaning involves including the servers and other equipment from numerous companies in a single data center. The hardware is often owned by the business renting the space, and the data center staff only houses it.

It also alludes to the idea that a business's equipment may be spread out over several locations. For instance, they might have servers spread over three or four colocation data centers. This is crucial for international businesses that want to ensure their computer systems are situated close to their physical offices.

How Colocation Data Center Works?

This is how a colocation data center works: Enterprise customers use colocation data centers to store their servers and other gear required for regular business operations. Colocation ensures adequate bandwidth while providing shared, secure areas in cool, controlled surroundings suited for servers.

Difference Between a Data Center and Colocation

The primary difference between a data center and a colocation data center is that colocation refers to a service while a data center is a physical place. When thinking about cloud vs colocation, this is the most important distinction. A data center is a physical location that houses equipment used to power the cloud. Whereas colocation is a service you can use to set up your own cloud infrastructure or components in someone else’s data center.

Types of Colocation Data Center Facilities

The three main types of data centers in a colocation facility include retail, wholesale, and hybrid cloud-based colocation.

Retail Colocation

With retail colocation, you lease space inside a data center, typically either a rack, an area inside a rack, or your own caged-off room.

Wholesale Colocation

With wholesale colocation, on the other hand, you also get data center space but at a lower rate. As a result, the power the data center provides for running your equipment, as well as the space available, is less than what the data center would make available to a retail customer.

Hybrid Cloud-based Colocation

Hybrid cloud colocation involves setting up a combination of in-house data center space and that which you rent from another data center.

Fourteen Benefits from Colocation Data Centers

Using colocation space comes with many benefits, and if you need any of the following benefits for your organization, you may want to consider a colocation service.

1. Reliability

Colocation facilities provide reliable power, cooling systems, and communication that guarantee dependable connections. Companies can invest in the tools and procedures necessary to develop comparable systems internally, but doing so can be expensive, especially when it comes to paying employees and providing adequate in-house space.

2. Performance

Electronics function best in a climate-controlled, dust-free setting. The cooling and air filtering systems that professional data centers offer are superior to those of even the cleanest offices.

3. Physical Security

Data centers are built to secure your systems from theft and other threats that could jeopardize the security of your data and systems. They enforce strict data center security procedures and higher degrees of physical protection, such as video surveillance, private suites, and fire suppression systems.

4. Third-Party Maintenance

To guarantee that servers are operating at peak efficiency, data centers have specialized systems, employees, and resources that they use to create, monitor, and manage comprehensive support systems. This means you can rest easy, knowing your equipment will be properly taken care of by experienced professionals.

Colocation facilities enable high throughput and offer affordable connections directly to numerous internet service providers (ISPs). Having access to several ISPs gives you multiple options if you need more speed.

6. Skilled Staff

To monitor and manage servers, data centers include on-site, highly-trained, experienced IT personnel. These professionals design and implement modern reliable infrastructure to house your components.

7. Scalability

With colocation, you can scale your business up or down while only paying for the bandwidth and space you need.

8. Risk Management

Natural disasters and data breaches can certainly happen, but when your most important equipment is housed in an off-site data center, there are safeguards and backups in place to keep everything running.

9. Better Connectivity

Data centers have redundant network connections to guarantee the continuous operation of your most mission-critical applications.

10. Capability

Customers have the option of increasing their bandwidth without having to make additional investments. In this way, you can adjust how much bandwidth you use if, for instance, you deploy an application that needs to process a lot of data.

11. Premium Network Security

Data centers use the most recent firewalls to identify and stop illegal access to your systems. By using a colocation service, you benefit from the high level of cloud security that data centers establish for all of their customers.

12. Redundant Power Supply

Colocation centers make sure they have power by using a combination of several power grids, battery backup systems, generators, and rigorous maintenance procedures.

Colocation makes it possible to expand data storage to meet a company's changing needs. As a result, businesses can expand their networks without having to invest in additional hardware or real estate.

14. Stepping Stone

Colocation enables a seamless transition for businesses interested in transitioning core systems to the cloud. Moving your equipment to an off-site location can give you a seamless transition from an in-house to a cloud-based environment. This is because your most important systems are already running on the servers you shift to the data center. With colocation, you just have to connect to your existing applications, storage, and other resources through the internet.

Top 5 Considerations While Selecting Colocation Data Center

Here are the top five things you want to keep in mind when choosing a colocation data center:

Security Pros and Cons of Colocation

Colocation comes with some important advantages and drawbacks when it comes to security:

Market Forecast For Data Center Colocation: Market Trend Analysis

The colocation market is poised to grow significantly over the next few years. For example, the overall colocation market size is projected to climb at a year-over-year rate of 13.3% between now and 2028. This is likely due to the increased use of cloud services by both enterprises and smaller businesses. In addition, many companies need to be able to scale up their data centers as their needs change, and the projected growth of the colocation market reflects this need as well.

How Fortinet Can Help?

Fortinet’s data center solution  delivers data center security using FortiGate Next-Generation Firewalls, which can provide as much as 520 Gbps of throughput while filtering out dangerous data packets before they can harm your system. This enables you to manage risks in enterprise hyperscale networks by incorporating security into your hybrid IT infrastructure . As a result, you can provide automated protection of your network assets, as well as manage your entire system from behind a single-pane-of-glass.

What is a colocation data center?

The term “colocation data center” refers to a data center that enables you to rent out space for your own hardware.

What are the types of colocation data centers?

The three main types of colocation data centers include retail, wholesale, and hybrid cloud-based colocation.

Quick Links

links image 1 139x100

Free Product Demo

Explore key features and capabilities, and experience user interfaces.

resource center icon 139X159

Resource Center

Download from a wide range of educational material and documents.

links image 2 139x121

Free Trials

Test our products and solutions.

contact sales icon 139x85

Contact Sales

Have a question? We're here to help.

colocation (colo)

Brien Posey

A colocation facility, or colo, is a data center facility in which a business can rent space for servers and other computing hardware.

Typically, a colo provides the building, cooling, power, bandwidth and physical security, while the customer provides servers and storage. Space in the facility is often leased by the rack, cabinet, cage or room. Many colos have extended their offerings to include managed services that support their customers' business initiatives.

There are several reasons a business might choose a colo over building its own data center, but one of the main drivers is the Capex (capital expenditure) associated with building, maintaining and updating a large computing facility. In the past, colos were often used by private enterprises for disaster recovery (DR). Today, colos are especially popular with cloud service providers.

For some organizations, colocation might be an ideal solution, but there can be downsides to this approach. Distance can translate into increased travel costs when equipment must be manually handled and colo customers can find themselves locked into long-term contracts, which might prevent them from renegotiating rates when prices fall. It's important for an organization to closely examine their colo's service-level agreements ( SLAs ) so as not to be surprised by hidden charges.

Colocation features

Every colocation provider has its own way of doing things, so features tend to vary from one colocation hosting company to the next. Even so, there are features that are relatively common among colocation providers. Some of the features that colocation data centers commonly provide include:

This article is part of

Download this entire guide for FREE now!

Advantages of colocation

Businesses can capitalize on several benefits by taking advantage of colocation services. Some of these benefits include:

Building and facilities

Just as there are differences between office buildings, there are also differences between data centers. Some of these differences are related to the way that the data center was constructed, while others have more to do with the data center's operational efficiency .

Typically, a colocation data center will provide its tenants with an SLA guaranteeing a specific amount of availability. Although a data center might simply guarantee a specific amount of uptime -- such as five nines of uptime -- data center uptime is more commonly expressed in terms of these four tiers:

Data centers commonly express their efficiency through a score known as their power usage effectiveness ( PUE ). This score reflects how efficiently the data center uses power. Those data centers with a good PUE score are friendlier to the environment and, generally, charge their tenants lower rates for power consumption.

As previously noted, it's also important to consider how a data center was constructed. Every location in the world is susceptible to at least one type of natural disaster, so it's necessary to make sure that a colocation provider's data center was constructed in a way that will help it to survive such a disaster. Data centers in hurricane-prone areas, for example, are often rated to withstand 150 mph winds.

Data center outage causes

Just as security is of paramount importance to cloud providers, good security is also essential to colocation providers. Colocation providers go to great lengths to ensure the physical security of their data centers.

Some colocation providers erect fences in the data center as a way of isolating their tenant's hardware. Each fence has a locking gate so that tenants are only able to access their own data center hardware.

Security also tends to be implemented in such a way as to require tenants to pass through multiple security checkpoints prior to being able to access data center hardware.

Some colocation providers, however, don't allow their tenants physical access the facility. All hardware maintenance and installation is performed by data center staff through a process known as remote hands .

Each colocation provider has its own pricing model. Some, for instance, bill their tenants based on the amount of rack space that they consume. Other providers lease data center floor space by the square foot. The pricing model isn't the only factor that determines the overall cost of leasing space in a colocation facility. Some of the other factors that can influence the total cost include:

Colocation vs. public cloud

There are major differences between a colocation data center and a public cloud provider , even though both enable businesses to run workloads in a remote data center.

Colocation centers provide businesses with physical data center space. These facilities provide power, cooling and network connectivity, but it's up to the tenants to provide their own hardware such as servers, storage and supporting infrastructure.

Cloud providers, on the other hand, use their own hardware. Tenants run workloads on the cloud provider's hardware, which is in a cloud data center. The cloud provider then bills the tenant for the compute, storage, network and other resources that their workloads have consumed.

Public clouds are the preferred option for organizations that want consumption-based pricing and that would prefer not to have to purchase or maintain server hardware. Colocation facilities are geared toward organizations that want to run workloads on their own hardware but in a remote data center.

Colocation vendors

There are numerous colocation vendors, both in the United States and around the world. Some of these vendors are small boutique vendors that operate only one or two data centers. Others are massive, multinational providers with dozens -- or even hundreds -- of data centers and tens of millions of square feet of leasable data center space.

Five of the largest and most well-known colocation vendors are:

Continue Reading About colocation (colo)

Related Terms

Dig deeper on data center ops, monitoring and management.

colocation data center business model

Top 5 colocation providers of 2023


Valmont Industries tests network as a service to improve WAN


Partners see growth in maturing on-premises cloud technology


Assessing colocation vs. cloud for hybrid IT infrastructure

PowerShell's Pester troubleshooting tool lets users write and run tests. Learn how to install the tool and examine a step-by-step...

An upgrade to the latest Exchange version will bring added functionality for end users and security enhancements. But it will ...

An unauthorized permissions change on a file share could lock out other users. Learn how to automate a report that shows ...

Azure management groups, subscriptions, resource groups and resources are not mutually exclusive. Businesses can -- and often do ...

Amazon CodeGuru reviews code and suggests improvements to users looking to make their code more efficient as well as optimize ...

Establishing sound multi-cloud governance practices can mitigate challenges and enforce security. Review best practices and tools...

Pure Storage expanded its storage offerings with FlashBlade//E designed for the unstructured data market with an acquisition cost...

Data governance manages the availability, usability, integrity and security of data. Follow these best practices for governance ...

Vast Data Universal Storage brought out data services, including set performance, metadata cataloging, better security, container...

Network Test and Certification

Wireless Test

Railway and MCx Assurance

Service Assurance

Compute, Storage, Transport

Optical Manufacturing

Network Equipment Test

Wireless performance, performance and threat visibility.

Test and Certification

Avionics test.

Custom Optics

Products by Family

Products by A-Z List

Discontinued products.

Virtual and Cloud Infrastructure

Performance Management and Security

Physical and Network Infrastructure

VPN Management

Network Equipment Manufacturers

Government and Defense

Custom Optics and Pigments



Learning Center

What is Data Center Colocation?

Technical and Product Support

Customer Operations

Quick References

SCA Knowledge Center

News and Events

Colocation data centers are a cost-effective outsourced solution for businesses of all types and sizes. We work with colocation providers and operators to maximize uptime, successfully scale services, and apply the latest test and monitoring innovations to optimize the customer experience.

Data center colocation.

Data center colocation is an IT business model where multiple clients rent floor/white space and/or equipment from a third-party provider to supplement their own data center needs. In some cases, an entire facility is leased to one client with the colocation operator providing ongoing monitoring, upgrades and maintenance.

Also referred to as a “colo”, a colocation data center allows smaller businesses with limited IT resources to cost-effectively scale computing power and storage.

What are Colocation Services? 

Managed colocation services range from basic rack or floor space sub-leasing to full-service data center operation including application management, network performance monitoring , and data storage optimization. Typical colocation services also include:

Threat Hunter

What are the Benefits of Colocation Data Centers? 

With new businesses emerging and existing companies expanding, third-party data centers can be a logical and expedient option. The benefits of using a colocation center include: 

Colocation vs Hyperscale 

According to IDC, a hyperscale data center utilizes at least 5,000 servers and 10,000 square feet of floor space, although many centers are significantly larger. Beyond these capacity thresholds, hyperscale also defines a flexible data center architecture that utilizes software-defined networking (SDN) and specialized load balancing to scale resources quickly.  

Although colocation data centers can reach hyperscale proportions, and hyperscale operators might lease resources to multiple clients, there are important differences between the two concepts: 

Unmanned Data Centers

Data Center Tier Classifications  

Data center tiers are based on a standardized ranking system created by the Uptime Institute . Each colocation data center receives a classification ranging from level 1-4 based on factors like fault tolerance and uptime guarantees, with level 4 bestowed on only the highest performing data centers. 

Types of Colocation Facilities 

Beyond the performance-based tier classification, colocation data centers are distinguished by size, available services, and location. As the industry has evolved, three distinct categories of colocation facilities have emerged: 

Colocation Data Center vs Cloud 

Although colocation and cloud both fulfill specific computing, security, and capacity needs for customers leveraging external resources, they are two very different concepts:  

Data Center Colocation

Colocation Data Center Testing from VIAVI  

Data centers rely on flawless hardware, software, and fiber link performance to ensure SLAs are met and customer satisfaction is assured. At the same time, the trend towards “lights out” operation can leave colocation cloud providers with limited options for ongoing verification. Innovative VIAVI test solutions have brought automated workflows and ease-of-use to a suite of handheld test and monitoring solutions for fiber certification, network monitoring, and real-time reporting.   

colocation data center business model

How Does Colocation Data Center Pricing Work? 

Cost reduction is a primary motivation for colocation customers. Pricing models and plans for managed colocation services continue to evolve along with the available options and hosting methods. The factors included in data center pricing include:  

The "Colo" Market

The global data center colocation market is expected to exceed $200 billion by 2030, as data center occupants seek out flexible and reliable options to ramp up or relocate network capacity. Maintaining a competitive edge in this emerging market requires a dedication to testing, monitoring, and security throughout the data center lifecycle.  

As the ecosystem expands, we partner with data center operators and service providers to meet the demanding uptime, performance (throughput and latency), and data integrity requirements of colocation data centers. Our commitment to innovation and ongoing collaboration with customers and standards bodies have combined to yield the industry’s most comprehensive data center testing toolkit and automation solutions. 

Explore More Today!

What is a Colocation Data Center?

With a colocation data center, also known as a “colo”, businesses can rent data center infrastructure from a third party. While this transfers responsibility for most if not all of the infrastructure, businesses still need to secure data center assets such as cyber assets that do not fall to the colo’s responsibility for securing access to the physical infrastructure.

Gartner Report Hybrid Data Center Security

Colocation Data Center Definition

Many organizations see in-house data centers or hosted infrastructure as an either-or. However, colocation data centers provide a third option that splits the difference between the two. In a colocation data center, an organization is leasing space from a third-party provider similar to a cloud-based deployment model. However, unlike the cloud, the servers and network infrastructure used by a company are privately owned and operated by that company.

Types of Colocation Facilities

Colocation data centers come in a few different types, including:

Benefits of a Colocation Data Center

By deploying IT assets in a colocated data center, an organization can take advantage of a number of benefits compared to an on-premises data center, including:

Colocation Data Center vs Cloud

In both colocation data centers and cloud environments, an organization’s IT assets are housed in third-party provider’s facilities, which offers improved cost, scalability, and reliability. However, these two data center deployment models have significant differences.

In a colo data center, an organization can own and control its own physical assets, including computers and network hardware. Under this arrangement, the company is wholly responsible for managing and securing its complete infrastructure stack.

In a cloud environment, the underlying physical assets belong to and are managed by the cloud provider. Customers have access to virtual assets, and the breakdown of access and control between the provider and the customer depends on the cloud service model used (PaaS, IaaS, SaaS, etc.). Under this model, the cloud provider and customer share responsibility for managing and securing the infrastructure stack.

Data Center Security with Check Point

A colocated data center enables an organization to take advantage of the benefits of hosted infrastructure while maintaining control over its IT systems. While this provides significant benefits, it also leaves an organization responsible for protecting its systems against cyber threats.

Protecting a data center against modern cyber threats requires data center security solutions that can scale with an organization’s IT infrastructure and offer strong threat prevention, detection, and response. This includes the use of automation, AI, and an integrated security management system to maximize the efficiency and effectiveness of an organization’s security personnel.

Check Point’s data center security solutions offer protection for all types of data centers, including on-premises, colocated, cloud-based, and hybrid deployments. By unifying security across the enterprise, Check Point enables an organization to take advantage of the full benefits of colocated data centers without the risk of additional security complexity or missed threat detections.

To learn more about the benefits of colocated data centers and how to reduce data center costs, check out the Check Point data center security solutions . You’re also welcome to sign up for a free demo of Check Point Maestro to learn how to better scale and secure your corporate data center.

Recommended Resources

Get started.

Hybrid Data Center Security

Hyperscale Network Security

Unified Cyber Security Platform

Related Topics

What is Hyperscale?

Data Center Security Best Practices

Data Center Threats and Vulnerabilities

Alert icon

How Data Center Colocation Works

colocation data center business model

Data Center Colocation (aka “colo”) is a rental service for enterprise customers to store their servers and other hardware necessary for daily operations. The service offers shared, secure spaces in cool, monitored environments ideal for servers, while ensuring bandwidth needs are met. The data center will offer tiers of services that guarantee a certain amount of uptime.

The decision to move, expand, or consolidate your data center is one that must be weighed in the context of cost, operational reliability and of course, security. With these considerations in mind, more companies are finding that colocation offers the solution they need without the hassle of managing their own data center.

Data center colocation works like renting from a landlord: Customers rent space in the center to store their hardware.

(This article is part of our Data Center Operations Guide . Use the right-hand menu to navigate.)

Benefits of data center colocation

Data center colocation could be the right choice for any business of any size, in any industry. Let’s look at the benefits.

Server uptime is a big advantage enterprise businesses have in data center colocation. By buying into a specific tier, each enterprise server client is guaranteed a certain percentage of uptime without the payroll cost to maintain or other maintenance fees.

colocation data center business model

Risk management

Utilizing a colocation facility ensures business continuity in the event of natural disasters or an outage. This means that if your business location loses power, your network traffic will not be affected.

Its key to success is redundancy . The layers of redundancy offered at a data center colocation are far more complex than many companies can afford in-house.

Some enterprise companies will consider the off-site location as their primary data storage location while maintaining onsite copies of data as backup.

(Read about enterprise risk management .)

Data centers are equipped with the latest in security technology including cameras and biometric readers, check-in desks that welcome inbound visitors, and checks for security badges are commonplace.

These facilities are monitored 24/7/365, both in the physical world and on the cloud to ensure that unauthorized access does not occur.

One of the main advantages of colocation is that it results in significant cost savings especially when measured against managing a data center in-house . This means that for many companies, renting the space they need from a data center offers a practical solution to ever-shrinking IT budgets. With colocation, there is no need to worry about planning for capital expenditures such as:

Apart from these capital expenditures , there are also ongoing maintenance costs associated with maintaining and managing an in-house server.

colocation data center business model

Colos issue the bandwidth that enterprise client servers need to function properly. With large pipes of bandwidth to power multiple companies, data center colocations are primed to support businesses in a way their office location likely cannot—something that’s increasingly important to remote work.

Support & certifications

Data center colocation offers the benefit of peace of mind.

When you partner with a data center colocation, your enterprise business may be able to reduce potential payroll costs by relying on the data center experts to manage and troubleshoot major pieces of equipment. Enterprise businesses can rely on expert support from experts who are certified to help.


As your business grows, you can easily expand your IT infrastructure needs through colocation.

Different industries will have different requirements in terms of the functionalities they need from their data center as it relates to space, power, support and security. Regardless, your service provider will work with you to determine your needs and make adjustments quickly.

In-house data center vs data center colocation

While data center outsourcing offers many benefits, some enterprise organizations may still prefer to manage their own data centers for a few reasons.

Control over data

Whenever you put important equipment in someone else’s charge, you run the risk of damage to your equipment and even accidental data loss . Fortunately, data centers are set up with redundancy and other protocols to reduce the likelihood of this occurring, as discussed above.

But some enterprise businesses with the knowledge and resources to handle data in-house, feel more comfortable with being liable for their own servers.

They also benefit from being able to fix server issues immediately when they occur. Enterprise businesses who seek to outsource instead must work closely with their service providers to ensure issues are resolved in a timely manner.

Contractual constraints

Enterprise business owners may find that they are unpleasantly surprised by the limitations of the contract between their company and a colo facility. Clauses that include:

Choosing a data center

Here are eight considerations enterprise IT Directors should think about before moving their data to a co-located data facility.

If an enterprise business leader can answer ‘yes’ to the above questions, it may be the right time to make the change.

Cloud services vs colocation

The cloud is another option over data center colocation:

Cloud services are great for allowing a business to focus more on their business requirements and less on the technical requirements for warehousing their data . In this case, cloud services can be cheaper, and enable new businesses to get off the ground quicker.

More established businesses are considered to be better suited to handle their own data center needs through colo or in house means, and the costs to establish and maintain their colo will be cheaper in the long run than cloud services options.

Cloud services also allow access to quick start-up times, less technical knowledge required to get going, easily scalable (both up and down) server needs, and then integrated services with all the other options a cloud service provider might offer such as:

(Accurately estimate the cost of your cloud migration .)

What’s next for data center colocation?

The biggest push in the industry comes from cloud service providers who use colo as a way to meet their hefty equipment storage needs. At the same time, the industry has been and will continue to remain fluid as laws change with regard to cloud storage requirements.

While soaring demand from cloud service providers has made the need for data center colocation increase, new technology offers rack storage density options that allow colo facilities to mitigate the demand for hardware space.

Related reading

Discover the next evolution in capacity, resource, and cost optimization

86% of global IT leaders in a recent IDG survey find it very, or extremely, challenging to optimize their IT resources to meet changing business demands.

colocation data center business model

These postings are my own and do not necessarily represent BMC's position, strategies, or opinion.

See an error or have a suggestion? Please let us know by emailing [email protected] .

BMC Brings the A-Game

BMC works with 86% of the Forbes Global 50 and customers and partners around the world to create their future. With our history of innovation, industry-leading automation, operations, and service management solutions, combined with unmatched flexibility, we help organizations free up time and space to become an Autonomous Digital Enterprise that conquers the opportunities ahead. Learn more about BMC ›

You may also like

colocation data center business model

Power Outages at Public Cloud Data Centers: How To Mitigate Risks

colocation data center business model

How to Use Automation in Event Remediation

colocation data center business model

Predictive Insight and Prescriptive Action Drive Positive Business Outcomes

colocation data center business model

Real User Monitoring vs Synthetic Monitoring: What’s The Difference?

colocation data center business model

Using Redundancy to Remove Risk from IT Ops

colocation data center business model

What Is SDI? How Software-Defined Infrastructure Works

About the author.

' src=

Jonathan Johnson

Jonathan Johnson is a tech writer who integrates life and technology. Supports increasing people's degrees of freedom.

' src=

Stephen Watts

Stephen Watts (Birmingham, AL) contributes to a variety of publications including, Search Engine Journal , ITSM.Tools , IT Chronicles , DZone , and CompTIA .


Data center colocation is an outsourced data center solution that businesses typically use to expand past the capacity of their own data center. Most typically, smaller companies with limited IT resources choose this option over building their own data center because it’s a cheaper option.

With colocation, several organizations place their servers in – or lease servers – from the same physical colocation data center provider. Colocation tends to include network connections and the associated bandwidth, redundant power, cooling and physical offices. Geographically dispersed businesses may use several colocation facilities to ensure that the respective data center locations are nearby their office locations.

Colocation is sometimes called “colo” for short. Alternatively, colocation may be referred to as “carrier hotels.” A point of confusion is the difference in terms, colocation data centers vs. colocation server racks, which are not the same thing. Colocation server racks house servers used by multiple companies.

With data center colocation, even an advanced Tier 4 data center can be mirrored in a remote location.

Colocation Benefits

The benefits of colocation should be compared with other alternatives, such as public clouds and private clouds , so a business can make the best investments. Colocation benefits include:

Cost control. Costs are pre-determined in the service provider’s contract.

Headcount control. Infrastructure setup and maintenance, including cooling, power, and interconnections between resources tend to be handled by the colocation provider.

Scalability. Colocation providers tend to have ample space to expand resources within a given data center. When negotiating with a service provider, the customer should always inquire about this.

Reliability. Colocation data centers provide redundancy and disaster recovery, bandwidth connections through several service providers, uninterrupted power supplies and backup power generators.

Security. Since colocation providers are maintaining equipment for several companies, they necessarily provide multiple layers of security to protect the infrastructure.

Lower costs. Colocation is cheaper than building a data center from scratch.

OpEx vs. CapEx. Leasing equipment is an operational expense, while buying equipment is a capital expenditure. Accounting rules treat the two options differently. OpEx is said to be preferable over CapEx because OpEx is fully tax-deductible, whereas CapEx costs are amortized. Colocation can involve both in situations when a company owns the servers and storage and leases the bandwidth, floor space, cooling, power and security.

24/7/365 support. The systems are maintained by knowledgeable IT staff and engineers.

Flexibility. Some companies opt for a private data center suite within the data while others opt for shared facilities.

Newer vs. older infrastructure. Colocation providers use state-of-the-art equipment to stay competitive. In-house data centers tend to have aging infrastructure.

Data Center Colocation Costs

Colocation costs may vary among data center companies . Costs are also determined by a customer’s unique requirements. Essentially, it’s the cost of leasing whatever is required, which can include:

Colocation vs. Cloud Computing

Colocation and cloud computing both provide a shared facility. However, colocation customers usually own the servers, which the colocation provider manages. And they lease physical space and other components such as network connections, redundant power supplies and cooling from the colocation provider.

Cloud companies own and manage all the infrastructure components and make them available as a service via the Internet to customers that subscribe to the service. Since IT doesn’t manage cloud infrastructure, it has more time to focus on strategic work and innovation. In short, colocation is tangible, meaning that a customer’s servers exist in a readily-identifiable location. Cloud is intangible because infrastructure is made available as a service.

Colocation can be used as a stepping stone to cloud for data center migration or used simultaneously with cloud, depending on a company’s preferences and requirements. For example, some organizations hesitate to put sensitive information in a public cloud environment because they believe it’s more secure in an on-site data center.

Colocation can provide non-cloud experience with third-party managed infrastructure. Some colocation providers offer cloud services to provide customers with greater migration and task flexibility. Usually it’s not a choice of colocation vs. cloud, it’s colocation and cloud. The service provider may or may not charge a customer for moving some or all their resources from colocation to cloud, depending on which hybrid cloud provider contracted. Alternatively, the colocation provider may not offer migration services or even managed services.

Colocation may be cheaper than cloud, which may seem surprising. A common mistake is to believe that cloud is necessarily cheaper than other options. This is especially true when one is not familiar with the “gotchas,” like leaving resources up and running vs. tearing them down after they are no longer needed.

That said, cloud offers on-demand resources whereas the point of colocation is to have dedicated resources. It is far easier to dynamically scale resources in a cloud environment.

Small companies are more likely to go directly to the cloud because they lack internal IT resources. Larger companies that want to maintain tight control over some servers choose colocation usually as part of a hybrid data center architecture strategy that provides greater overall more efficient data center . To get visibility into the colocation data center, customers take advantage of data center management software .

Colocation Facilities

Customers can choose from several colocation facilities options including:

Why Data Center Tiers are Important

Data center tiers reflect a degree of robustness. Tier 1 is the lowest tier; Tier 4 is the highest tier.

See Full Table

Colocation Service Providers

Colocation service providers offer a diverse set of services. Some are very hands on, others less so. If you’re in the market for a provider, this is one area where it truly helps to do your homework. A data center’s link to its colocation facility must be secure and seamless.

Similar articles

What is raw data definition, examples, & processing steps, oracle opens cloud region in chicago, oracle and telmex partnering on cloud services in mexico, latest articles, artificial intelligence (ai) in..., best open source software..., what is a thin..., what is network detection....



  1. Secure, Reliable Colocation Data Centers For Your Business

    colocation data center business model

  2. Top 5 Data Center Colocation Considerations

    colocation data center business model

  3. The top data center colocation trends for 2019

    colocation data center business model

  4. What is a Colocation Data Center?

    colocation data center business model

  5. 6 Key Benefits of Local Colocation Data Centers

    colocation data center business model

  6. 5 Factors to Consider when Choosing a Colocation Provider for your Business

    colocation data center business model



  2. Applying Data, Analytics & AI to Enterprise Business Processes via a Center of Excellence Model

  3. Data Runs Your Business

  4. Data Centers Delivered Closes Gap Between Field-Built and Containerized Data Center Construction

  5. Cologix K-4 Rated Fence

  6. Video 4


  1. What is a Colocation Data Center? Types & Benefits

    The three main types of data centers in a colocation facility include retail, wholesale, and hybrid cloud-based colocation. Retail Colocation With retail colocation, you lease space inside a data center, typically either a rack, an area inside a rack, or your own caged-off room. Wholesale Colocation

  2. What is Colocation (Colo)?

    Colocation centers provide businesses with physical data center space. These facilities provide power, cooling and network connectivity, but it's up to the tenants to provide their own hardware such as servers, storage and supporting infrastructure. Cloud providers, on the other hand, use their own hardware.

  3. Colocation Data Centers, What Are They? Test and Monitoring

    A colocation data center will lease floor space and computing services to companies of all types and sizes, whereas a hyperscale data center will be occupied only by large organizations like internet content providers (ICPs) and telecommunications companies.

  4. What is a Colocation Data Center?

    In a colocation data center, an organization is leasing space from a third-party provider similar to a cloud-based deployment model. However, unlike the cloud, the servers and network infrastructure used by a company are privately owned and operated by that company. Types of Colocation Facilities

  5. How Data Center Colocation Works

    Data Center Colocation (aka “colo”) is a rental service for enterprise customers to store their servers and other hardware necessary for daily operations. The service offers shared, secure spaces in cool, monitored environments ideal for servers, while ensuring bandwidth needs are met.

  6. What is a Colocation Data Center? Purpose, Benefits & Cost

    Data center colocation is an outsourced data center solution that businesses typically use to expand past the capacity of their own data center. Most typically, smaller companies with limited IT resources choose this option over building their own data center because it’s a cheaper option.