The movement to colocation—or colo—is accelerating and will have profound implications for enterprises and service providers. Colocation involves renting space in a third-party data center and can also include a mix of hardware, software, and services. The tactic is surging at a 16% compound annual growth rate through 2020, from $25.70 billion in 2015 to $54.13. By 2018, 65% of companies’ IT assets will be off-site in colocation, hosting, and cloud data centers, according to IDC, while 33% of IT “staff” will be employees of third-party service providers.
“Colocation continues to be the bedrock for much of Cloud 2.0,” says Katie Broderick, research director, 451 Research. “The global colocation market is the physical (facilities and networking) underpinning of both enterprises’ off-premises computing, as well as hosting and cloud service providers’ value-add services.”
A big reason for colocation’s success is the opportunity to shift from a pricey CapEx (capital expense) budget line item to a much less expensive OpEx (operating expense) model. However there are a number of other benefits—and implications—to consider before going colo.
Top considerations when deciding to go colo—and picking the right partner—include location, pricing, security, and offerings. Location is key, because the facility has to be easily accessible by your IT staff, close to a power source, and should be in a safe area—i.e. hurricane belts, flood plains, and earthquake zones should be avoided.
Pricing is important because colo users are typically looking to lower their costs and make them more manageable from a budgeting perspective, i.e. usage-based pricing and monthly fees. Other factors that come into play include real estate, power, redundancy, and risk mitigation costs.
Power usage deserves special consideration. By moving to colocation and utilizing best practices, the National Resources Defense Council (NRDC) estimates that electricity consumption can be slashed by up to 40%.
Security is a vital concern when it comes to putting your data in a third-party data center. Systems and processes must be in place to ensure that only authorized personnel get access to the facilities and resources. Monitoring systems and physical barriers can also increase peace of mind.
Shifting to a colocation model is no more inherently better for disaster recovery (DR)
or business continuity (BC) than an in-house solution, but they should be essential elements to consider when selecting a colo partner. And if you go colo, then having a second colocation relationship in a widely separated location will go a long way to addressing your DR/BC requirements.
In addition, there are other requirements, i.e. scalability and cloud, as well as hidden costs that need to be considered when calculating the colo’s total cost of ownership, including hardware maintenance, network bandwidth, service and support, and escalation charges.
But the biggest consideration is that you are profoundly changing how you handle IT, shifting from procurement to administration and orchestration of internal and externally sourced IT assets with increasing degrees of co-management with third-party service providers. The prospective rewards of colocation are huge, so it is natural many factors need to be considered before you make the move.