Colocation facilities have evolved with the onset of cloud services, shifting from shared "extra" data centers to more strategic partnerships for businesses. Many organizations must now decide whether to use a colocation facility or the cloud to handle workloads that their data centers can't.
You can use either or both. In many cases, colocation confers advantages that can help you achieve success both on premises and in the cloud.
Colocation vs. cloud
"[Colocation] is no longer just a hoteling experience for your hardware; colo addresses key things like distance and latency," said Matt Brisse, an analyst at Gartner.
Latency and throughput are derivatives of distance, which makes a colocation provider's physical location crucial. The cloud cannot host many workloads, legacy applications or applications with vulnerable data for regulatory or corporate policy reasons. Colocation enables you to direct a larger budget and more staff toward strategic company functions, rather than IT. Colocation also provides a useful backup strategy if your organization leans heavily on the cloud.
"I use the term distributed cloud to refer to the need to achieve [operational] consistency … across cloud services and on premises," said Mark Bowker, an analyst at Enterprise Strategy Group (ESG), a division of TechTarget. Colocation often helps both to function optimally.
Organizations with 100% cloud-native operations typically consume resources through a hyperscaler. But if you require hybrid architecture, colocation can provide proximity to your business and sort out latency and traffic issues. Furthermore, colocation providers often invest in strategic locations near where major network infrastructures come together.
"In many cases, they are housing infrastructure from the hyperscalers, and that in turn brings value to colo customers because they can gain nearly direct access with very little latency to key cloud capabilities," Bowker said.
Managing multiple cloud and colocation providers
Although you might choose to go all-in on one cloud provider, the vast majority of businesses distribute workloads across an ecosystem consisting of multiple cloud environments.
"The offerings differ by provider, and that means they will need a blend of cloud environments as well as on prem," said Eric Hanselman, an analyst at 451 Research.
Colocation provides a middle ground that gives organizations the ability to optimize how they use their existing infrastructure and cloud environments. Colocation facilities often possess their own network operators, which enables them to support a remote workforce as well.
"Colo environments almost always have better connectivity options than one's own data center," Hanselman said.
How colocation can support cloud environments
The cloud can become costly fast, and customers often accumulate cloud charges from tasks such as running VMs or services they purchased but no longer use. Cloud providers also tend to make data ingress inexpensive but egress very expensive.
"One of the aspects of managing data movement costs is managing where you need to place that data to have it to get value without incurring high costs," Hanselman said.
For example, if you conduct large-scale analytic work, you can keep your data sets in the collocated facility and move data to your cloud when you require it. This creates a large data set of input but a small output in the form of analytic conclusions. In other words, if you have the original data in the colocation, you can simply process it without downloading it back from the cloud.
"Some of the colo providers are actively promoting this concept," Hanselman said.
Colocation enables companies to avoid the traditional costs of operating their own data centers.
"It is similar to cloud, but in a colo you run your own systems for your own business," said Brian Gottbetter, director of transformation and management at Grant Thornton LLP.
Selecting a colocation provider
Colocation providers should provide their customers with regional access to hyperscale cloud services -- such as AWS, Microsoft Azure or Google Cloud Platform -- which can help to address network latency, bottlenecked network traffic and governance or security challenges. Providers also need to enable their customers to scale without investing in on-premises Capex infrastructure. A colocation provider should feature reduced startup costs for new applicants and new businesses as well.
The major players in the colocation market include Equinix, Cologix, Lumen, Digital Realty, NTT Communications, Cyxtera and BT.