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What is colocation: Everything you need to know

Chances are you've heard of colocation. But what exactly is it? And why might it be important for your organization? In this blog post, we'll answer those questions and provide everything you need to know about colocation.

05 / 23 / 2023
10 minute read
Colocation benefits

Colocation data center definition

A data center is vital to the modern enterprise, necessary to support the demanding enterprise applications that drive today's business. Traditionally, a company would build its own data center; however, full-featured data centers are complex and expensive to maintain, so rather than building and operating a private data center, businesses can choose colocation. 

Colocation, or "colo," is renting space in a data center to store your company's servers, networking equipment, and other hardware. Colocation allows you to outsource your data center needs to a third-party provider, who will manage the physical infrastructure required to keep your equipment up and running.

At the lowest level, most colocation customers rent or lease space in the facility and move in their own computing, storage, networking, other gear, and personnel. This model eliminates the expense of building and operating a data center facility while maintaining ownership and operation of the IT equipment. However, increasingly, companies are looking at colocation to gain advantages like on-site IT support. Sharing facilities with other organizations comes with significant cost reductions for enterprises and perks like state-of-the-art redundancy, proper security, lower power costs, and increased bandwidth.

Before deciding if colocation is a good option for your company, you need to understand how it differs and the advantages and disadvantages of other types of data center hosting, including on-premises, managed, and cloud.

Colocation vs. on-premises data centers

As we discussed in our post, What is a Data Center? An on-premises data center consists of servers that are privately built, owned, and operated in-house within an organization’s business infrastructure. Conversely, with colocation, servers are held in a remote facility or colocation center.  

While both on-prem and colocation can provide a business with the IT infrastructure it needs, the choice will likely depend on your organization's security requirements and cost. Let’s look at colo and on-prem to see how the two compare. 

The pros and cons of on-premises

  • Greater control: On-premises gives companies complete control and access to their data and systems, which is especially beneficial for companies with strict compliance regulations. 
  • 24/7 access: With on-premises, staff has around-the-clock access to physical servers for maintenance or troubleshooting, allowing issues and failures to be addressed quickly. 
  • High cost of labor: Hiring and retaining an internal IT staff is time-consuming and expensive with an on-premises data center.
  • High capex: An enterprise data center comes with increased construction and operation costs. 
  • Limited space: Without additional investment, organizations can quickly outgrow their on-prem footprint, limiting business growth.  

Colocation data centers vs. dedicated hosting

While colocation features shared space and resources, dedicated server hosting is a single-tenant hosting environment with hardware and resources specific to the user. Additionally, in managed dedicated server hosting, the provider handles the setup, administration, management, and support of the server, operating system, and server software. The objective is that only your data is in your environment without issues arising from colocation vendors sharing resources.

The pros and cons of dedicated server hosting

  • Hardware support: Dedicated server hosting eliminates the need for maintenance or backup hardware in case of failure.
  • 24/7 staff support: Dedicated servers always have staff available to ensure the servers run, reducing downtime.
  • Higher long-term investment: Value-added features of dedicated hosting are beneficial; however, costs can add up over time.
  • Lack of customization: While some tailoring is possible with dedicated server hosting, you may have to settle if you require a set up your provider doesn’t offer.

Colocation vs. cloud computing

The terms colocation and cloud hosting are often used interchangeably but are functionally very different. While colocation involves the leasing or renting of floor space in a data center space, cloud hosting involves service providers administering resources in a cloud environment. And like colocation, the shared facilities of a cloud-based infrastructure offer cost savings. However, the way data is managed is quite different. Let’s explore the advantages and disadvantages of each.

The pros and cons of cloud computing

  • Consumption-based pricing: A cloud provider allows companies to pay as they go or grow and for only the services consumed.
  • Server management: With cloud services, the provider manages the servers, storage, and network, taking on all responsibility for setup and operating costs.
  • Flexibility: Organizations often prefer cloud providers because of the flexibility to rapidly scale data capacity up or down based on business needs.
  • Expanding costs: While cloud providers offer flexibility, expansion means additional storage and expenses that can quickly get out of hand.
Pros and cons of colocation

The pros and cons of colocation

Now that we have looked at the other options let's compare the advantages and disadvantages of a colocation data center.

  • The economy of scale: Colocation service plans provide comprehensive benefits that include support, security, redundancy, and connectivity at a reduced volume discount. 
  • Increased security: Top-notch security and technology provide more protection with colocation than what organizations can afford on-premises. 
  • Choice of hardware: With colocation, you control the components of your server; therefore, you are guaranteed to get what you need.
  • Improved connectivity: Colocation offers multiple provider options that allow organizations to optimize their infrastructure for improved speed and functionality. 
  • Scalability: With colocation, IT infrastructure can expand to meet unforeseen needs or accommodate sudden growth with a significantly smaller investment.
  • Less control: Colocation access is limited, potentially interrupting regular maintenance and troubleshooting. 
  • Higher start-up costs: While capex is lower, the initial investment in colocation is higher due to set-up fees and licensing costs. 
  • Managing hardware: While colocation offers control, it also comes with a cost. If a hardware failure occurs, your team is responsible for fixing the issue.
  • Managing software: While mostly remote, software management is the responsibility of your in-house team and may come at a cost when choosing colocation.

Benefits of colocation and why it’s important for your business

A business might choose to colocate its equipment rather than manage its own data center for a few key reasons. Let's look at the top reasons to choose a colocation provider's data center.

Cost savings

Setting up and managing your own data center can be expensive. You must purchase or lease a physical space, install and maintain the necessary infrastructure (such as battery backup systems such as generators, and cooling systems), and hire staff to manage the equipment. By choosing colocation, you can save on these costs while enjoying the benefits of a high-quality data center.

Businesses lower their initial investment and enjoy ongoing savings by sharing costs with other colocating companies—all while enjoying heightened security, on-site IT personnel, and increased bandwidth that they might be able to afford on their own. Unless your operation requires vast space, the savings your company will realize through data center colocation will be significant.


If your business is growing quickly, you may find that your in-house data center needs help to keep up with your needs. Colocation providers are designed to be scalable, meaning that they can quickly and easily accommodate your growing needs as you add more equipment and require more resources.

Savvy operators can also enlist colocation services to manage growth before their volume of business data outgrows their physical facility resources and bursts to higher bandwidth levels during peak traffic times without planning ahead. Because data spikes are distributed over time across numerous users, bandwidth costs are shared across tenants.


One of the most significant risks of managing your own data center is that a power outage or other disaster could cause a significant amount of downtime. Colocation providers typically offer redundant systems to ensure your equipment remains up and running even if there is an issue with one part of the infrastructure.

As a single outage can cost a company millions of dollars, colocation data center facilities minimize downtime and ensure the computing hardware functions optimally, even during an unforeseen event.


Data breaches and cyberattacks are a growing concern for businesses of all sizes. Colocation providers typically have robust physical security measures in place to protect your equipment from theft or damage and advanced cybersecurity measures to prevent unauthorized access to your data.

Colocation data centers employ cutting-edge cybersecurity protocols, including next-generation firewalls and managed backup services, which ensure physical and virtual data recovery in a disaster.


Managing a data center requires a high level of expertise, and colocation data centers provide 24/7 support personnel for everything from facility maintenance and monitoring to reporting, troubleshooting, and disaster prevention. Also, with a colocation strategy, a provider can be relied upon to ensure your equipment is managed correctly.

The provider's on-site IT team ensures that minor incidents don't become major, protecting your budget and freeing up your team to focus on the enterprise, positively impacting your bottom line. Explore even more benefits of colocation services here.

Features of an effective colocation facility

When choosing a colocation facility, it's essential to ensure that it will meet your business needs and provide a reliable, secure, and scalable environment for your equipment. Here are five essential features of an effective colocation facility:

1. Robust physical security

One of the most important features of any colocation facility is robust physical security. Your equipment contains sensitive data and business-critical applications, so protecting it from theft, vandalism, and other physical threats is essential. Look for a colocation provider that offers 24/7 security personnel, closed-circuit television (CCTV) monitoring, biometric access controls, and other security measures to keep your equipment safe.

2. Redundant power and cooling

Power outages and equipment failures can cause significant downtime and disruption to your business, so choosing a colocation facility that offers redundant power and cooling systems is essential. This means the facility should have backup generators, uninterruptible power supplies (UPS), and redundant power cooling and systems to ensure that your equipment remains up and running even if there is an issue with one part of the infrastructure.

3. High-speed, reliable connectivity

In today's digital age, connectivity is crucial to the success of any business. Look for a colocation provider offering high-speed, reliable network connectivity to ensure your equipment can communicate with your other business systems, cloud providers, and customers without interruption. The facility should have multiple fiber-optic connections to major carriers and internet service providers (ISPs) to ensure that you have redundancy and ample bandwidth.

4. Scalability

As your business grows and evolves, your colocation needs may change. Look for a colocation provider that offers scalability, meaning that you can easily expand your space and resources as your needs change. The provider should offer flexible pricing options and allow you to add or remove equipment as needed without incurring hefty fees or downtime.

5. Expert Support and Service

Finally, an effective colocation facility should offer expert support and service to ensure that your equipment is always running smoothly. Look for a provider that offers 24/7 support from experienced technicians and proactive monitoring and maintenance to prevent issues before they occur. The provider should also have a track record of providing excellent customer service and be responsive to your needs and concerns.

Flexential colocation solutions for your business

Flexential is a leading provider of colocation solutions for businesses of all sizes. With data centers across the United States, Flexential offers a range of colocation options to meet the needs of companies, from startups to large enterprises.

With highly connected and reliable retail colocation data center solutions, the Flexential portfolio of data center facilities offers flexible options that expand to meet your business requirements. Flexential colocation data centers offer a wide range of space options, managed services, and edge capabilities tailored to your IT infrastructure.

If you are looking for a wholesale data center colocation partner, the Flexential model is designed to enable your current and future requirements with access to crucial connections to hundreds of carriers via the fastest and newest subsea cables and cloud on-ramps and direct connections to all major hyperscale providers.

In addition to these solutions, Flexential offers various add-on services to enhance its colocation offerings, from disaster recovery, data backup and replication, and network and connectivity services, to compliance and security consulting. You can also call on Flexential Remote Hands for help with any facet of colocation, from planning to logistics. We're here to help.

Switching to a colocation center means your business can focus on revenue projects and improvements instead of managing an on-site data center. At the same time, you maintain complete control over your own server. And finding the right colocation services might be one of the best investments your organization can make.

Designed to meet the needs of businesses of all sizes and industries, Flexential has a solution to meet your needs. Let's talk!

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