Along with cloud computing, colocation has become a popular option for companies seeking to reduce the burden of maintaining an in-house data center. According to a prediction by Market Research Future, the global colocation market is expected to reach $63 billion by 2023, an annual growth rate of 14%.

Who uses colocation services, and why?

Almost any company, of any size, may benefit from colocation, which is the concept of hosting your equipment at a third-party facility. Colocation enables an IT department to keep its own hardware without the burden of running an entire data center. The colocation provider handles the facility maintenance, security, utilities, networks, racks, cages and IT staff. The provider will also help maintain the customer’s hardware, if asked.

Another benefit of colocation is that it typically also comes with a variety of additional services, ranging from migration planning to disaster recovery and cybersecurity, as well as access to cloud services. A colocation facility can be a kind of one-stop-shop for companies that need a variety of data center services and a great way to diversify your hybrid IT infrastructure.

Colocation first became popular during the “dot.com” era in mid 1990s, when businesses were scrambling to buy and manage web servers. Today, other trends are driving the colocation market, including:

  • the explosion of data which companies must store, secure and manage. Some of this data must be kept available for immediate access, straining server capacity. Also, increased regulations covering data privacy and security add to the costs of maintaining so much data in-house.
  • the need for speed and flexibility to quickly meet changes in market demands or the economy. With digital transformation a priority for many executives, IT departments must be ready to support new market strategies.
  • the increased complexity of IT environments, including cloud services and hybrid environments which creates a need for expert help with migration, management, security and disaster recovery of these complicated data center environments.
  • the increased recognition that outsourcing some or all IT functions can both improve quality and reduce the cost of staff, hardware, software and facility maintenance. Through colocation, smaller organizations can have higher quality IT environments then they could afford on their own.

Why do businesses choose colocation?

Colocation offers four major advantages for busy IT departments that can enable them to stay flexible while also keeping IT costs in check. 

Support for hybrid IT environments

Businesses today have highly diverse IT environments, with a mix of public and private cloud, on-premise and off-premises applications, and often multiple platforms. While cloud migration is growing, many organizations have applications and workloads that can’t be moved to a cloud environment or will have to be moved in stages. In many cases, it’s legacy applications what support critical business operations and can’t be phased out or migrated to a new platform.

Moving legacy applications and hardware to a colocation facility can be a “best of both worlds” solution, allowing an IT department to retain the value of the legacy system without the expense and time-consuming labor of integrating and maintaining it.

In addition, colocation facilities can enable an IT department to house their cloud and non-cloud applications under one roof. Most major colocation providers have partnerships with various cloud services providers, so that customers can take advantage of cloud resources such as cloud bursting, cloud storage and cloud-based applications.

Flexibility for digital transformation

Market demands, and customer expectations are changing constantly, and businesses must be able to change with them. While same-day shipping may be today’s challenge, tomorrow it could be one-hour shipping by drones. IT departments don’t always have the budgets or time to keep up.  

However, many colocation providers, such as TierPoint, have the staff and capacity to help a customer to implement new infrastructure quickly. Most also have IT experts in a wide variety of specialties to speed implementation and troubleshoot issues. 

Colocation providers may partner with cloud platform providers like Microsoft Azure or Amazon AWS to better support their customers’ existing cloud needs as well as enable them to quickly spin up new infrastructure on the cloud.

Greater resilience and reliability

Companies can’t afford disruptions to their IT services. Unfortunately, IT disruptions are all-to-common occurrences. A power outage, equipment failure, ransomware or denial of service attack can cut off access to email, customer service software, ecommerce and other critical systems.  

A top-tier colocation facility can provide the security and disaster recovery protections to ensure that their customers can continue in even the worst situations.  

For example, a colocation provider may have physical security such as biometric scanners and video monitoring, as well as 24x7 cyber-security monitoring for potential threats.

Disaster recovery services are another critical aspect of resilience in a data center. Colocation facilities, unlike an in-house data centers, are outfitted with redundant power sources and cooling equipment, power distribution units and connections to multiple Tier 1 or Tier 2 network carriers.  

In addition, some colocation providers specialize in disaster recovery or cybersecurity and provide additional, managed services to customers.

Managed services and support

A colocation provider may offer managed disaster recovery, cybersecurity and compliance services, cloud migration or other services to help customers that are too busy or lack expertise in an area.

For instance, a managed security service might include 24x7 threat monitoring, vulnerability testing or patch management. Disaster recovery services might include an evaluation, replication of data and applications and the triggering of a DR response when disaster is reported.

Look for a colocation provider with a portfolio of managed services that will help your IT department fill in gaps in expertise and provide the kind of long-term support you will need to execute your company’s digital transformation plan. A good colocation provider can be a trusted partner in implementing your future IT strategies.

Colocation Next Steps

Want to learn more about how colocation works and how it could work in your hybrid infrastructure? Read our Guide to Colocation and Data Centers.

The Strategic Guide to the Data Center and Colo: colocation as a key component of an optimized hybrid IT strategy.  Read more.

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