What have you Decided – Colocation or Cloud Computing?


Data is one of the most valuable assets for any business. Being significant it’s also greatly vulnerable resource which can subject to possible loss via theft, natural disaster, viruses and power outages. Building an in-house data center consumes more time and capital investment. And to avoid this, many companies are moving towards alternative data-security approaches. There are several options to manage and store company data and applications which makes difficult to choose a perfect one. Colocation and cloud are the two popular services preferred by organizations but you need to choose which one best suits yours?

Let’s understand the difference between the two.

What is Colocation?

Colocation is a setup that allows companies to maintain in-house data centers including own equipment but sharing the price of communications, cooling, power and data center floor space with other tenants. It is a good choice for those enterprises that require complete control over their equipment. In colocation, a provider offers space in the data center and supplies bandwidth, network, security, cooling and backup to run IT equipment.

Addressing the limitations of an existing data center can be the second common reason to use colocation. As per an industry survey, around 36% of data center services will have no space, power or cooling capacity in coming years. So, instead of planning for a new data center, it will be a common sense to enhance the current data center by renting a space in a colocation facility. Enterprises that have invested heavily in IT equipment can plan to move their infrastructure into colocation facility and reap the benefits of disaster recovery and redundancy needed for compliance.

You need to keep two points in mind while opting for colocation. One is, in colocation, you need to purchase your own servers, switches, storage and software. Other is the organization’s IT staff will have to invest time in managing and monitoring the equipment as well as conducting backup and maintenance. There are several providers that offer managed services that can be appointed to monitor and manage the infrastructure. Ensure that provider gives you choice on prices and functions that you want the third party to handle and which you need to have self-control over.

What is Cloud?

Though you might be very well known to this term but explaining it is essential to understand the difference between colocation and cloud. In cloud computing, hardware isn’t shared and all resources and facilities are controlled by the service provider. In addition, there isn’t any upfront capital cost involved but a monthly fee is charged for the delivery of services. Thus, one of the benefits of using cloud is cost reduction which is impossible in the colocation facility. Numerous cloud service providers offer different options as per requirements – pay as you go and fixed term contracts.

Cloud computing is best for smaller organizations and startups. Other than cost the second benefit of cloud computing is scalability. When you opt for cloud services, you can start with a small server setup and when your venture requirement grows, new instances of servers can be turned up immediately. It’s an ideal solution for those companies that aren’t technologically expertise but it is required in colocation to work.

When you have decided to go for cloud services, you need to consider three things. If your company is handling significant or confidential data such as PCI, DSS, HIPAA or financial mandates such as Sarbanes-Oxley, you have to make sure that the provider has appropriate certificates, is able to demonstrate compliance, is capable of security physical and cyber security at high levels and follows assigned procedure to pass an audit. Lastly, the burden of compliance still lies on you. Secondly, the point is availability of services. Check out if the cloud service provider offers services with the guarantee of availability, depending upon the service level agreements and how he reports change management, controls access in to environment and manages infrastructure resources. The last point is the ability of the provider to solve your problem. Whether their staff is helping their clients 24/7 and what are the process they are using to solve the queries and lessen human error.

The bottom line is all depends on your business. Colocation and cloud primarily differ from each other in terms of assets as in colocation you are dealing with physical assets and in cloud with virtual assets which aren’t cheap. Both these solutions are cost-effective to in-house data approaches. If the data center costs is high and building your own isn’t possible then it’s better to choose colocation as it will be valuable in terms of cost and flexibility. Cloud computing will be best choice when your budget is low and want to free up additional resources to focus on other aspects related to operations.