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What Is Colocation? Our Guide to Colo Hosting & Data Centers

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What is colocation hosting? Why use a colocation data center? We answer all your colo questions to help you understand colocation and determine if it is right for you.

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A Brief History of Colocation

In the early 1990s, preceding the dot com bubble burst in the early 2000s, many internet companies were born. These companies were betting big on the internet and needed to scale up infrastructure at its growth speed. The cloud as we know it had not come into existence yet. These companies decided to offload a lot of work by sharing the data center facilities and many utilities like power, network, and more; this was the first heyday of colocation. Of course, most internet companies couldn’t survive the dot com bubble. Unfortunately, they also took down data centers and colocation providers with them.

What is Colocation?

Colocation is when many companies share physical space to host their infrastructure to cut down the cost of the security and management of the data center facility.

Colocation is, by definition, the location of many things in the same space. Consequently, colocation space is the data center facility, which connects the business to the internet's backbone networks, enabling the companies to interact with their customers with very low latency. In addition to security and management of different co-located organizations' infrastructure, a colocation space also provides essential utilities like power and cooling.

What is a Dedicated Server?

In contrast to colocation, a business can also go for a dedicated server. A dedicated server is:

An enterprise-grade physical server is used to host the applications and services of a single hosting client.

Dedicated servers are high maintenance and cost a fortune. For businesses that understand traffic inflow and performance requirements and can optimize their applications to get the most out of the dedicated hardware, using dedicated servers makes perfect sense. In a world where cloud hosting and colocation hosting are available, it doesn’t make sense for most consumer businesses to use dedicated servers. 

The difference between Colocation Hosting and Cloud Hosting

Colocation has been defined earlier as the infrastructure deployment where businesses buy their own servers and lease physical space and utilities to run them. While compromising on control, cloud hosting takes it one step further. In cloud hosting, businesses don’t have to spend money acquiring servers, consequently reducing capital expenditures. This also means that the corporations won’t own any infrastructure assets. Every piece of infrastructure in the cloud is on lease.

Advantages of Colocation

Setting up and maintaining infrastructure can get costly when companies are in high-growth or scale-up mode. Not only do they have to worry about setting up the infrastructure, but they also have to make sure that everything is working fine after the equipment is set up. To make sure everything runs smoothly, many skilled and dedicated data center engineers are needed. Colocation hosting is an elegant solution where the businesses, i.e., colocation customers, more than just sharing space and utilities, can share a skilled and dedicated workforce to ensure the infrastructure is reliably up and running.

The degree of sharing depends on one colocation hosting provider to another. Different managed colocation services have different security offerings, uptime, SLA (service level agreements), cost of power, location proximity, etc. Just like in the cloud landscape, you have an option to choose from a lot of cloud providers; similarly, you can choose from a significant number of managed colocation service providers based on several factors, including cost, location of the data center, etc. Aside from the physical security, one of the other benefits of using a colocation data center is setting up security to comply with regulations and audit requirements. Some of the enterprise applications aren’t designed to run on multi-tenant hardware. Running specialized IT infrastructure with custom security is something that businesses can achieve when choosing a colocation facility over the cloud. The decision to be co-located or not eventually comes down to the business requirements. Let’s talk about who should choose colocation over the alternatives and how.

Who should choose colocation?

A business needs to understand why it is moving away from cloud hosting. Hosting infrastructure in a colocation data center makes sense for organizations that have a clear way forward for their business and want to invest in the infrastructure as assets. An organization may also choose to host its servers in colocation facilities when it wants full control over the infrastructure and IT equipment. In the colocation center, a business can enjoy physical access to the racks while not worrying about the day-to-day functioning of the infrastructure. Colocation benefits the organizations by enabling them to save costs on electricity, cooling, security, and general management of the infrastructure. Because of the scale, colocation service providers get discounted prices on electricity, construction, and basic data center infrastructure. These savings trickle down to every customer benefiting them based on economies of scale. Moving away from dedicated hosting reduces capital costs, but if overlooked, colocation can also cost a lot; that's why choosing the right colocation provider is very important for a business moving its servers to data center colocation.

How to choose a colocation provider?

When choosing a colocation provider, a business must go through many considerations like the cost and availability of floor space, cooling efficiency, power supplies, battery backup systems, size of the racks, network connectivity, network equipment, spatial organization of racks, other IT hardware, location of the colocation data center, physical security & compliance certifications, disaster recovery planning, and more. Businesses have to consider that choosing a colocation hosting provider is a long-term decision. Moving infrastructure from one data center to another is a painful job and could come with potential downtime. For business growth and continuity, the business also has to consider the growth plans, stability, and roadmap of the colocation service provider. Moreover, significant consideration should be placed when deciding on the terms of the contract, agreeing to the SLA, and availing the best possible discounts.

Another primary consideration should be given to the location of the colocation data center. Two factors can help decide if the location of the colocation center is good for the business. First, if the colocation data centers are close to the business's customers, it would ensure ultra-low latency and a great user experience. Second, for disaster recovery and backup retention planning, the redundant colocation data centers' location should be chosen at least more than 100 miles apart. In case the business wants to send expert IT staff to look into problems, the data center should be close enough to avoid increased travel costs. Flexibility in all of these considerations usually increases the cost of the contracts. Some offerings in terms of colocation pricing might make more sense than others for a business.

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Justin Blanchard

Justin Blanchard

Justin Blanchard is the CMO of ServerMania.