5 Benefits of Colocation Services

January 8, 2019

The demand for colocation data center services by companies large and small continues to surge—and new numbers prove it.

A newly released report projects that the worldwide data center colocation market will grow from its 2018 value of $13 billion to a whopping $90 billion-plus by 2024.

So, what’s behind this tremendous growth?

First, a primer on colocation services: Colocation, often referred to as a 'colo,' is the renting of space from a data center services provider to house your physical servers and network hardware and—increasingly—to gain advantages like on-site IT support.

Server colocation allows companies to bypass initial infrastructure investment that comes with building their own facilities and instead “share” facilities with other organizations. All this sharing comes with significant (ongoing) cost reduction for enterprises across a wide range of industries, bundled with perks like state-of-the-art redundancy, proper security, lower power costs and increased bandwidth.

Sounds like a no-brainer, right?

If your company hasn’t yet explored whether colocation is right for your business, you probably should. To get you started, we’ve broken down the five benefits of colocation.

  1. Cost savings
    Colocation enables businesses large and small to save on initial infrastructure investment and realize ongoing savings by sharing costs with other colocating enterprises. These savings come with state-of-the-art services that many businesses could not afford on their own, from heightened security and on-site IT personnel to redundancy and increased bandwidth.

    Small businesses gain the advantage of a large IT department without the headcount expense. Medium- to large-sized enterprises can expand their capacities without undertaking costly facility construction or leasing. In short, unless your operation requires a vast amount of space (e.g., Microsoft-level “vast”), the savings and value your company will realize through data center colocation will be significant.

  2. Redundancy/reduced downtime
    Among the many financial benefits of colocation services, perhaps the most significant is the value of minimizing downtime. A single outage can cost a company millions of dollars — In the case of Amazon, one hour of downtime on Prime Day 2018 may have cost the company up to $100 million in lost sales.

    With buttressed resources including bandwidth, internet connectivity, diversified power sources, cooling, physical security and more, colocation data center facilities minimize downtime and ensure hardware is functioning optimally, even in the event of a physical disaster.

  3. Security
    Companies want to know that their data is being guarded and monitored 24/7. Colocation providers are answering the call for tighter and smarter security by employing up-to-the-minute protocols in both physical infrastructure and cybersecurity.

    Multi-layered protocols for physical security start with location: Colocation data centers are typically located a strategic distance from their clients’ headquarters. Add to that an on-site IT support team that’s monitoring the security of your technology assets 24/7 and preemptively reporting any irregularities. Other physical security measures can include electronic access cards, vehicle access barriers, 24/7 camera monitoring and more, bolstered by ongoing upgrades in personnel monitoring, physical-attack prevention, and fire detection and control.

    Colocation data centers also employ cutting-edge cybersecurity protocols including next-generation firewalls and an offering of managed backup services, which ensure the restoration of both physical and virtual data in case of disaster or loss. With massive corporate data breaches on the rise, you might want to seriously consider making data center colocation the cornerstone of your company’s own disaster recovery plan.

  4. Flexibility and scalability
    A growing company needs a strategy for accommodating dynamic expansion. (Even behemoth enterprises like Google began with colocation data centers for economy of scale until their data needs required they build their own location!)

    Savvy small- to medium-sized operations enlist colocation services to manage growth before their volume of business data outgrows their resources. Colocation data centers enable companies to burst to higher bandwidth levels during peak traffic times without them having to plan ahead and allowing them to only pay for what they use. Data spikes are distributed (shared) over time across numerous users, reducing bandwidth costs for colocation “tenants.”

  5. 24/7 IT support
    Many colocation data centers provide 24/7 support personnel for everything from colocation facility maintenance and monitoring to reporting, troubleshooting and preventing potential disasters like system failures, security breaches, outages and more. The presence of an on-site IT team can prevent minor incidents from becoming major ones, all while protecting your IT budget and freeing up your IT team to focus on serving the enterprise, which directly impacts your bottom line.

The bottom line: Your bottom line

Making the switch to a colocation center means your business can focus on revenue projects and improvements instead of managing an on-site data center—all this while you maintain full control over your own server. Colocation hosting can also be a step toward cloud migration, if that's a direction your organization is headed. And we’d remiss if we didn’t mention the most important benefit of all—peace of mind for you and your company.

Finding the right colocation services might be one of the best investments your organization can make. Next step: Find the right provider for your business’ unique needs. The returns will be immediate.

Mike Krza, Chief Operating Officer of Colocation Services

Mike Krza

Chief Operating Officer of Colocation Services

Mike leads all data center operations for Flexential, including construction, engineering and facility management. He focuses on growing the colocation business and offering a consultative approach to customers.

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