Colocation: The Ideal Middle Ground for Enterprise IT

Colocation In-house or off-site? Managed locally or handed off to a third party? In a maturing technology market that includes both reliable clouds and powerful on-premises servers, IT professionals have the opportunity to choose which option best suits their budgets and their needs; staying local gives control, while public and hybrid clouds offer scalable, on-demand resources.

But there’s another option — a way to meet in the middle and, ideally, get the best of both worlds: colocation.

Colocation Basics

Colocation, also known as colocation hosting, or simply “colo,” provides a way for businesses to rent space in a data-center facility for their IT equipment. If this sounds similar to the cloud, it should. But instead of relying on the hardware of cloud providers, companies bring their own servers and other critical equipment needed for installation. The colocation data center then supplies power, bandwidth and an IP address. IT professionals are responsible for the maintenance and upgrades of their servers but don’t have to pay for any other data-center costs. In other words, all the benefits of dedicated hosting but with full server ownership.

History of Colocation

This type of hosting got its start in the early 1990s. 1994 saw the removal of commercial restrictions that had limited the Internet’s ability to function as a business-to-business (B2B) and business-to-consumer (B2C) tool.

As a result, companies like Hurricane Electric were created to offer colocation hosting for businesses looking for a foothold in the growing e-commerce market. The number of colocation companies rose quickly, but many fell by the wayside with the dot-com bust. For example, in 2002, web hosting provider AboveNet declared bankruptcy, leaving IT professionals without access to their servers when the company’s data center was repossessed.

Alongside cloud computing, colocation has once again started to emerge as a viable — and stable — hosting option.

The Benefits and Challenges of Colo

There are several benefits to choosing collocation, and cost is the most critical. A 2010 Data Center Knowledge article estimated that cloud services for an average company could cost more than the same workload would cost in a colo facility. Ideally, colocation provides a balance between capital expenditures (CAPEX) and operating expenditures (OPEX), while still offering greater server control than a managed cloud solution.

Choosing a colo data center also means IT professionals can upgrade, patch or alter their server on demand rather than waiting for a third-party administrator to do the job; if companies want to install new software tools, they can do so without any restrictions. Colocation also acts as a form of disaster recovery, with many services offering 99.99 percent uptime. In addition, providers take care of physical security and server cooling, and most offer ongoing technical support.

It’s also worth mentioning several colocation challenges. Distance plays a critical role: Companies need to find a host that’s close by — close enough that they can easily make the trip to fix or upgrade a server. IT administrators also need to remember the “AboveNet risk”: What happens if a colocation provider goes out of business? Make sure any service level agreement (SLA) includes provisions for servers and data in the event of a provider shutdown or data center disaster.

On-premises hosting means total control, while the cloud offers total freedom — at least from CAPEX. Colocation hosting provides a middle ground — a way to leverage the bandwidth, power and security resources of a third party while retaining ownership of critical hardware.

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