All about Colocation Services for Business

What is Colocation Service?

Colocation or “colo” refers to the practice of renting out the server space along with other computing hardware situated at a third-party provider’s data center premises. Colocation services usually comprise the physical infrastructure where everything can be housed along with networking, physical security and the cooling components needed to support the server and storage provided by customers. With a colocation data center in place, it eliminates the CAPEX needed to build and maintain the facility, thereby allowing the businesses to have a retained ownership and complete control of the physical servers. Although, with colocation services, it requires the businesses to share the costs of upfront hardware.

A colocation service can be made available in the following two ways

  1. The customer buys the hardware and then physically gets it to the facility where colocation data centers are present


  1. The provider of colocation data centers buys and installs and the server along with other hardware equipment based upon the customer needs and then on-hand bills the customers

Usually, the colocation providers have the capability to house several servers, generators, and an uninterrupted power supply. The providers are also standardized with the pre-defined industry certifications in a similar way like the typical hosting providers.

Benefits of Colocation Services

  1. Colocation services help businesses of any size to save on the initial infrastructure investments and leverage the savings by having shared costs with other enterprises. These savings are coupled with a state-of-the-art service that couldn’t be fully afforded by the enterprises. Some of these services include- heightened security along with on-site IT personnel, redundant bandwidth. The small businesses can gain the advantage of bigger IT departments without incurring heavy expenses. The medium and large-sized enterprises look to expand their capacities without undertaking expensive costs like facilities construction or leasing.
  1. One of the financial benefits of colocation could include minimizing downtime. Downtime for a few seconds could result in the company with huge losses. With supporting resources like bandwidth, Internet, diversified power sources, cooling, etc. the colocation data centers ensure minimal downtime and making sure that the hardware functions optimally in case of a physical disaster.
  1. Companies are always looking to secure their data with strict security policies in place. The providers of colocation ensure tighter and smarter security mechanisms by deploying protocols for both physical infrastructures as well as cybersecurity. Colocation data centers are strategically placed at a distance from the client’s on-site. Additionally, an on-site IT support team is placed for monitoring the security of technology assets with round the clock reporting in case of any irregularities. Colocation providers also deploy top-notched cybersecurity protocols such as firewalls with offerings on managed backup services, ensuring easy restoration of both- physical and virtual data in an undue event of disaster or loss.
  1. Any emerging enterprise is strived to accommodate dynamic expansions. Operations of small and medium-sized enterprises use colocation services much before the expansion of the volume of business data supported by the outgrowth of their key resources. Colocation data centers ensure the enterprises with an enhanced level of bandwidth during the traffic-surge periods. The spikes in data are shared with time with a number of users, thereby, reducing the bandwidth costs of tenants of colocation.
  1. Many colocation service providers ensure round-the-clock support personnel for diversified roles in a colocation facility. The physical presence of an on-site IT team can be used for averting any minor incidents from getting converted to bigger issues by protecting the business’s IT budget and freeing the IT team to focus on the growth of their business.

Factors to Consider for Selecting Colocation Services

When going for a colocation host, the user needs to have a checklist that abides and confirms the different aspects of a data center. The checklist should comprise of key factors like- full availability of near hundred percent uptime, security measures, assured technical support, SLAs to name a few. Also, the user needs to make sure that the service provider is a sound and reputed one in terms of reliability and flexibility services pertaining to colocation.

Following are vital outliners to consider when a user selects a colocation provider

  • A distance of Colocation Center

Easy accessibility of the colocation center becomes an important factor to consider when selecting a colocation provider. There might be situations where there is a demand to travel to the location performing server maintenance. Another key factor that one needs to consider is the redundancy of services by having the presence of multiple data centers.

  • Security Policies

Colocation hosting enables their users with access to top-notched security that might not be possible at their own site. Besides natural disasters, the servers need to be protected against outages because of a number of factors along with redundant backups and power arrangements.

Colocation Migration Key Considerations

Whenever there is a migration of user’s data assets, users need to keep in mind the following-

  • Colocation services are a shared facility. With colocation services in place, the companies tend to share the costs related to power, cooling, communication along with data center floor space with other tenants. It proves to be a cheaper option with respect to building a new data center.
  • Colocation services essentially need full control of the businesses. The colocation provider companies can maintain the in-house equipment in a similar way the servers are installed.
  • Colocation services can overcome the shortcomings of an existing data center. Rather than going for a new data center, the businesses and users can enhance their current data center by encashing on the space present in the colocation facility.
  • With colocation services in place, the housing of data hardware enables companies with access to a higher level of bandwidth as compared to a normal office server room at lower prices.
  • Colocation services are more reliable. They hold greater protection in case of power failures as numerous data backups are providing low-latency networking options.
  • Colocation centers are enabled with more strict measures for securing key data using CCTV monitoring surveillance and measures to counter any events of disaster occurrence.

Difference between Colocation and In-house Data Centers

Service/Parameter Colocation Services In-house Data Centers
Definition A colocation facility can be defined as a shared data-center space where business and other ‘tenant’ organizations can rent out their space for servers along with other hardware. The in-house data center refers to an on-site IT facility that is fully managed by the business’s IT department. It can exist in the form of space within the business organization’s offices or campuses.
  • WIth a shared colocation facility in-place, there can be a reduction in various operations and associated costs. All these costs are shared amongst the tenants of colocation and tend to have better contracts with the network providers as compared to a single company.
  • Redundant Internet and power connections can be offered for maximizing uptime.
  • Colocation providers can act as data centers for any disaster recovery purposes so that there is a low loss of operations in any case of outages or disasters.
  • Most of the colocation providers offer high-end physical security, which might be difficult for the in-house data center providers.
  • The biggest benefit of an in-house data center is that it completely belongs to the data center provider.
  • The hardware remains on-site, thus allowing the staff with convenient access related to maintenance and troubleshooting.
  • The concerns related to security and uptime remain the responsibilities of the company’s IT department providing the implementation of tailored measures
  • There is no need to worry about any licensing costs or SLAs
  • IT equipment is located at some distance from the troubleshooting and maintenance staff.
  • Depending on the contract signed the client might not have access to scheduled maintenance downtimes and the physical access might also vary.
  • Bandwidth present between the company and associated equipment may decline and there can be the emergence of latency problems.
  • The construction costs are the responsibilities of the provider and operation costs for an in-house data center prove to be higher than colocation operation costs.
  • Redundancy is a challenge for in-house data centers. Small and mid-sized enterprises may find it struggling to afford the diversified Internet connections with robust emergency backup facilities.
  • In-house facilities can emerge as a barrier to geographic expansions.


With a colocation hosting service in place, the user avails several intangible benefits. Customers of colocation services can strengthen their business with an additional layer of security and redundancy. Colocation holds tremendous capabilities of a Disaster Recovery plan on the occasion of major outages. A customized colocation plan ensures that users get all the important requirements of the desired IT infrastructure. Bigger colocation facilities hold the potential of reducing the user’s IT spend using the economies of scale.

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