What Are Colocation Services? Benefits and Use Cases

Instead of maintaining costly on-premises data centers, many organizations leverage colocation to house their servers and networking equipment. Colocation services have numerous benefits, including greater control over infrastructure costs and equipment, better security and increased bandwidth.

What Is the Difference Between a Data Center and Colocation?

A data center is a facility where organizations store and manage their computing resources, including servers and networking equipment. On the other hand, colocation is a rental service offered by third-party data center providers that allows organizations to house their servers and equipment in leased space.

Organizations that operate their own data centers are responsible for all aspects—infrastructure design, maintenance, security and power supply. However, organizations using colocation services outsource facility management to the colocation provider, while retaining ownership and control over their servers and data.

Some colocation providers deploy both cloud and colocation solutions.

Why Do Companies Invest in Colocation?

Colocation services provide organizations access to state-of-the-art infrastructure without any upfront costs. This results in significant cost savings—the primary reason 10% of organizations migrate to a colocation environment.

Here are some of the other key reasons why organizations invest in colocation:

  • Scalability and flexibility – Organizations can easily expand or shrink their IT infrastructure based on their evolving needs. This allows organizations to adapt to growth, seasonal fluctuations or sudden spikes in demand more efficiently.
  • Enhanced connectivity – Colocation facilities typically offer high-speed, redundant network connections that enable low-latency, high-bandwidth connectivity. This is crucial for industries that require uninterrupted data access.
  • Expert support and management – Colocation services often include support from experienced technicians. Companies can free their IT teams from mundane tasks like monitoring, maintenance, security and backup management.
  • Robust disaster recovery – Organizations gain access to redundant power supplies, backup generators and disaster mitigation measures. This ensures continuity of operations, even in the event of man-made or natural disasters.

Top 4 Use Cases for Colocation Services

Owning Infrastructure Without Any Upfront Costs

In regulated industries where compliance and data security are critical, owning your own infrastructure is a necessity. However, building and maintaining a data center can be complex, expensive and resource-intensive.

Colocation allows organizations to navigate regulatory challenges efficiently while ensuring the security, availability and integrity of their sensitive data. Colocation facilities offer stringent security measures, like physical security controls and video surveillance. They often also work with regulatory bodies to ensure that organizations meet the necessary compliance requirements effectively.

Scaling Infrastructure for M&A and Business Growth

Scaling IT infrastructure for mergers and acquisitions (M&A) or rapid business growth can be challenging. However, colocation services enable organizations to accommodate evolving demands.

During M&A, organizations can use a shared facility where equipment from different entities can be colocated to streamline the consolidation process and expedite system integration. Similarly, when experiencing rapid growth, organizations can quickly expand their infrastructure.

Renting space within a colocation facility gives organizations the flexibility to add servers, storage and networking equipment as needed.

Supporting High Bandwidth and Extremely Low Latency

Colocation services allow organizations to provide high-quality, uninterrupted experiences in bandwidth-intensive applications—crucial in industries like media, distribution and retail.

Colocation facilities are designed with robust network connectivity that supports high-speed data transfer and extremely low latency. Organizations using these facilities gain access to dedicated, high-bandwidth connections that result in optimal network performance and minimal latency-related issues.

Colocation providers often also have strategic partnerships with major network providers and close proximity to key network exchange points, which further reduce latency.

Operating in Hybrid Environments with Sensitive Data

With colocation services, organizations can operate in hybrid environments while maintaining stringent security and compliance standards for their sensitive data.

Colocation allows organizations to securely store and process sensitive data on-premises, ensuring compliance with privacy regulations and internal security policies. In addition, colocation providers offer robust physical and digital security measures that help organizations maintain control over their sensitive data.

Colocation facilities also enable seamless integration of hybrid environments, ensuring efficient data transfer, reduced latency and enhanced security for sensitive workloads.

Is Colocation Right for You?

Data center colocation is a viable option for organizations thinking of expanding their cloud or on-premise infrastructure or de-risking their operations. To determine whether your organization should follow suit, you may want to consider the following questions:

  • Does your organization want to own and manage its computing infrastructure while cutting down the costs of a data center?
  • Is your organization increasingly experiencing periods of growth, mergers or acquisitions?
  • Are your organization’s revenue and reputation affected by regular data center outages?
  • Are efficiency and sustainability critical to your organization’s competitive differentiation?

If you answered in the affirmative to most or all of these questions, then it’s time to consider colocation. OneNeck’s top-tier data centers provide organizations with cost savings, round-the-clock support and protection from unforeseen events. Learn more by reading about our Data Center Colocation Services.

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