If you’re looking to move your entire data center off-site or just need a little extra capacity but have no more room in your internal facility, then colocation is a popular solution that may fit your organization’s needs. But before you dive in and start signing agreements, it’s best to understand the ins and outs of data center colocation is and how it can benefit your company.
Instead of needing to focus your internal IT resources on providing power, cooling, and space to servers and other onpremises infrastructure, you can instead have it hosted off-site and focus more on running your business. However, colocation doesn’t necessarily mean that you have to move everything over to an off-site facility. In fact, according to Jenna Maertz, consulting analyst at Info-Tech Research Group, “Sixty-four percent of organizations engage in some form of data center colocation services, but over 77% do not outsource the entire data center.
Instead, they outsource a subset of physical servers that require extra recovery and availability, while leaving the rest in-house.” Colocation is highly flexible when it comes to potential use cases, but the decision to move equipment and infrastructure off-site shouldn’t be taken lightly. There are many factors that go into not only deciding whether or not to make the move, but also in selecting a colocation provider that you can trust to host your infrastructure and protect it.
WHAT TO LOOK FOR
While the basic definition of colocation revolves around renting out space to house infrastructure in an off-site facility, there are actually quite a few different types of colocation agreements. For instance, says Sophia I. Vargas, a researcher at Forrester Research, most providers will allow you to ship your equipment to the facility and then the provider’s employees will set up everything for you.
From there, you can run the equipment yourself from off-site, or you can inquire as to whether the provider “will provide more hands on services, maybe going up to monitoring and management of the infrastructure,” Vargas says. Maertz agrees, and says that typical arrangements consist of a pure location agreement where it’s your equipment at the provider’s site with you managing certain aspects of it; dedicated hosting where it’s their equipment, their site, and you still manage some aspects; managed services where “they manage every aspect of the engagement;” and cloud options consisting of software, platform, or infrastructure as a service.
Maertz says “clients that utilize a hybrid model of these services often have the most successful engagements,” so the agreement ultimately depends on how much control you’re willing to give up. And most of all, Vargas says that moving to colocation is such a major change that it’s important you trust your provider and see them as “a strategic partner for you and your company.” She adds that “whether that’s having a higher level of support and SLAs or being able to visit the site and have a comfortable experience, it’s the little things that ease that culture shift as you make this kind of decision.”
Major Benefits Of The Colocation
One thing you’ll find with data center colocation is that there are almost too many potential benefits to name. “Benefits include immediate improvements in stability and availability, physical security and operating cost,” says Mark McClelland, vice president of information technology and co-founder of Mainstream Technologies.
“Instead of having to incrementally acquire these improvements through some costly and risky build-out process, companies can move into an existing facility with the desired redundancies and economies of scale. Companies colocating their equipment also avoid costly capital expenditures for infrastructure by paying for infrastructure in consistent, predictable operating expenses as part of the colocation agreement.
Most colocation arrangements also result in increased flexibility by allowing for more granular resource consumption and monitoring than is readily available internally.” “Colocation can be a means for customers to gain better access to large amounts of bandwidth at a low cost,” says Tombs. “The selection of bandwidth providers in colocation facilities is often quite broad as well, with some facilities having over 100 carriers to choose from for bandwidth services.”
These benefits are what make colocation more economically feasible for smaller companies as well as large ones. Another big benefit of colocation is that because you’re sharing one small part of a much larger environment with other tenants, you have the potential not only to scale out at will, but also to take advantage of interconnectivity with other hosting providers. “Suddenly, you have an ecosystem of partners available for a cheaper partnership or a partnership that will have a lower latency experience because they’re in the same facility,” says Vargas.
This opens up opportunities for cloud computing integration, if you’re interested in that technology but reluctant to go all-in. “For any company that’s thinking about expanding into the cloud, going to colocation can really play into that cloud strategy plan,” says Vargas. “If you’re in a colocation facility that houses other types of service providers, that will make it an easier opportunity for a cross-connect or interconnection between your environment and that available cloud environment.
You can ease your way into the cloud and gain access to low-latency services housed in the same location as yours. It’s a way to overcome the cultural shift of moving infrastructure away from your main facility. Another one of the most common use cases for colocation is disaster recovery. Vargas says that instead of having to pick a site “that’s outside of the risk profile of your current facility” and then have to go out and build there, you can use a colocation provider that will “allow you to expand into a region with a different risk profile to build a backup site.” It can be cost-prohibitive for some companies to build an off-site facility specifically for backup and disaster recovery, so using a colocation provider as a disaster recovery strategy can save money up front and offer peace of mind.
As with any technology, there are some drawbacks to colocation that could affect some companies more than others. For instance, if you have a highly technical data center that’s arranged in a specific way, “there are going to be more limitations in terms of the layout and physical architecture of the facility” if you opt for a colocation arrangement, Vargas says.
And if your company puts an emphasis on energy efficiency and, more specifically, sustainability and environmental initiatives, you’ll have some customization opportunities. However, “because you’re generally on an open floor or in a cage, you’re subject to the environment of the lowest common denominator,” Vargas adds.
Colocation also brings up issues of latency and downtime. Latency and performance drop-offs due to networking restrictions and distance are possible. Plus, if you host quite a bit of your infrastructure off-site and a problem arises at the colocation facility, you may lose access to mission-critical systems. According to Toombs, you should also consider the long-term financial ramifications of renting a facility.
“As with anything else in life, if you have very steady, predictable long-term needs, building will typically always be cheaper than leasing in the long-run,” he says. “In some of our modeling tools we’ve built for Gartner clients, we’ve found that the break-even time frame on build vs. lease is around seven to eight years for an average data center buildout.” Vargas also warns that sometimes you only sign up for a three- to five-year contract, and if for some reason the provider becomes “overcommitted,” you may be forced out to make room for other clients.
Vargas recommends that companies also make sure that the colocation provider offers a proper level of security, whether it’s “a ram-proof fence outside, multiple security guards, or some sort of thumb print scanner on your cage,” Vargas says. If you require the highest level of security possible, that raises a different question altogether.
IS IT A FIT FOR YOU?
The answer to this question depends entirely on your company’s philosophy toward IT in general, but for the most part, companies of all sizes and in almost any industry can benefit from colocation. In fact, Maertz points out that an Info-Tech survey “found that over 50% of health care organizations, 57% of government organizations, and 67% of financial services organizations that colocated all or part of their data center experienced a successful colocation engagement.” Similar Info-Tech studies found that “a successful colocation engagement can be realized by both small and large organizations,” according to Maertz.
Vargas goes on to say that colocation is “a fit for anyone where custom-built hardware, servers, and facilities are not core competencies.” This means that if you don’t run a company that is built mainly on technology and provides technology products or services to your customers, then you should probably focus on making your internal data center(s) the best they can be rather than opting for a colocation agreement.
Even though Maertz, Vargas, and Toombs agree that companies in even the most heavily regulated industries, such as health care, government, and financial services, have seen success with colocation, it sometimes comes down to the cultural barriers of moving infrastructure to an offsite facility where you have less visibility and less control. It’s important to compare vendors, make sure they are certified to handle your infrastructure, and then take your time deciding whether or not to enter into an agreement. These services are increasingly safe and cost effective, but your comfort level will determine a lot.