As IT demands grow, enterprises often turn to colocation to manage infrastructure. Colocation lets you maintain control over your hardware while using the advanced facilities of a third-party data center. It’s a cost-effective way to scale, improve security, and ensure high availability without the overhead of building and maintaining your own data center.

Colocation provides access to top-tier infrastructure, strong security, and reliable connectivity, allowing you to focus on optimizing IT operations while a specialized provider handles the physical hardware storage.

Article features include:

  • What is colocation?
  • How colocation works
  • Benefits of colocation
  • Colocation use cases
  • Challenges of colocation
  • Comparing colocation with other solutions
  • How to choose the right colocation
  • Why the right choice is Meter Connect

What is colo?

Colocation, or "colo," is a service where businesses lease space in a third-party data center to house their own hardware, including servers, storage, and networking equipment. This arrangement allows companies to leverage the advanced infrastructure of the data center, which typically includes:

  • Redundant power supplies
  • Climate-controlled environments
  • High-speed connectivity

Additionally, colocation facilities provide enhanced security measures, such as 24/7 monitoring and biometric access controls, offering a secure environment for your equipment. Facilities that are carrier-neutral offer connections to multiple Internet service providers, supporting reliable and low-latency connectivity.

Colocation allows businesses to maintain control over their IT infrastructure while avoiding the significant costs and complexities of building and maintaining an in-house data center.

How colocation works

When businesses choose colocation, they rent physical space in a third-party data center to house their IT infrastructure. The space can be as small as a single rack, a larger cage, or even an entire room, depending on the scale of their needs.

The data center operator provides essential services like power, cooling, physical security, and network connectivity. Meanwhile, the business retains control over its own servers and other hardware, managing and maintaining these assets as needed.

Colocation allows businesses to leverage the advanced infrastructure of a data center—such as redundant power supplies, climate control, and robust security—without the overhead of building and maintaining a facility themselves.

In practical terms, it's similar to leasing space in a state-of-the-art facility where the landlord takes care of the building’s core infrastructure, while tenants focus on optimizing and managing their specific equipment and operations.

Benefits of colocation

Colocation offers several important benefits for businesses, particularly from an engineering perspective:

  1. Cost efficiency: By utilizing colocation, businesses can share the expenses associated with high-end data center infrastructure, including those for colo servers. The economies of scale offered by colocation are especially beneficial for smaller enterprises that may not have the resources to establish a sophisticated infrastructure independently.
  2. Advanced security: Colocation facilities are equipped with state-of-the-art security measures, including biometric access controls, 24/7 surveillance, and on-site security personnel.
  3. Scalability: Colocation provides a flexible solution for businesses experiencing growth. As IT needs expand, additional racks can be added, or a move to a larger space within the same facility can be made.
  4. High reliability: Colocation data centers are designed with redundancy to maintain high levels of uptime. Features such as dual power supplies, backup generators, and multiple Internet connections reduce the risk of downtime.
  5. Access to premium infrastructure: Businesses colocating in data centers gain access to advanced infrastructure that might be prohibitively expensive to develop independently. High-speed Internet connections, sophisticated cooling systems, and reliable power management are all available within these facilities.

Use cases for colocation

Colocation stands out as a strategic choice in various scenarios, offering unique benefits for businesses needing specialized infrastructure, security, and compliance solutions.

Disaster recovery

Businesses looking to protect their operations from unexpected disruptions often turn to colocation. By placing important infrastructure in a colocation facility—whether near or distant from the primary business site—companies can maintain operations even if their primary data center is compromised.

Hybrid cloud setups

As businesses increasingly adopt hybrid cloud models, colocation plays a significant role in these strategies. Colocation facilities can host private cloud components, offering the security and reliability needed for sensitive workloads. Integrating these private cloud resources with public cloud services allows companies to achieve greater flexibility and control over their IT environment.

Meeting compliance requirements

Industries with strict regulatory requirements, such as finance, healthcare, and government sectors, find colocation facilities particularly beneficial. These facilities are often designed to meet rigorous data protection and privacy standards, providing a secure environment that aligns with industry regulations.

Using colocation helps businesses maintain compliance, reducing the risk of penalties and demonstrating strong governance over their IT infrastructure.

Each of these scenarios demonstrates how colocation can serve as a powerful tool in a company’s IT strategy, providing the resilience, flexibility, and security needed to support important operations.

Challenges of colocation

Colocation offers significant advantages, but it comes with challenges that require careful management, especially in network engineering.

Physical access requirements

Colocation necessitates physical access to your hardware, unlike cloud solutions managed remotely. Because of this, complications in routine maintenance, upgrades, or troubleshooting can arise, particularly if the data center is far from your operations.

To mitigate this, invest in remote management tools like Meter’s proprietary Dashboard, which allows for remote monitoring and control of your hardware. You may also wish to consider using local "remote hands" services to handle on-site tasks, minimizing the need for your team to travel.

Dependence on the colocation provider

Your uptime and reliability hinge on the colocation provider’s performance. Issues such as power outages or network failures on their end can directly impact your operations.

To reduce this risk, thoroughly vet providers for their track record, service level agreements (SLAs), and redundancy measures. Implementing a multi-site strategy or hybrid cloud setup can also ensure that your operations continue smoothly, even if one location encounters problems.

Cost implications

While colocation can be cost-effective, it’s essential to consider all expenses, including:

  • Hardware transportation
  • Setup
  • Ongoing maintenance

To manage these costs, conduct a comprehensive total cost of ownership (TCO) analysis and compare it with alternatives like cloud hosting or maintaining an in-house data center. Optimize your hardware to avoid over-provisioning, and consider leasing or buying pre-configured racks to reduce setup time and costs.

Comparing colocation with other solutions

Choosing the right data hosting option involves understanding the key differences between colocation, cloud services, and on-premises data centers. Each option brings its own advantages, particularly in control, cost, and complexity.

Colocation vs. cloud services

Cloud services involve virtualized resources managed by a third party, while colocation allows businesses to maintain direct oversight of their physical hardware. The setup is particularly beneficial for companies with unique hardware requirements or those that need dedicated equipment to meet specific compliance standards.

With colocation, you have the flexibility to choose and manage your own servers, storage, and network devices, offering a degree of customization that cloud solutions often do not.

Colocation vs. on-premises data centers

Compared to on-premises data centers, colocation offers a more cost-effective and less complex alternative. The capital investment required for building and maintaining an on-premises data center is substantial, including expenses for physical space, power, cooling, and security.

Colocation mitigates these costs by providing access to an established, high-quality infrastructure, allowing businesses to pay only for the space and resources they need.

The operational responsibilities of managing an on-premises data center—such as maintaining power, cooling, and security—are managed by the colocation facility, allowing internal IT teams to focus more on core business objectives rather than the complexities of data center management.

Choosing a colocation provider

Selecting a colocation provider requires making a well-informed choice, especially for network engineers responsible for maintaining reliable and secure infrastructure.

Here’s how you can approach the decision:

Location

The physical location of the colocation facility significantly impacts your operations. If your applications are latency-sensitive, proximity to your business and customers becomes a deciding factor.

A well-situated data center can reduce latency, leading to better performance and an improved user experience. Also, consider the facility's exposure to potential natural disasters that could disrupt services.

Connectivity

Network connectivity is a fundamental aspect of colocation services. Examine the provider’s connectivity options, focusing on whether they offer multiple carrier connections. Redundant carrier options provide resilience, allowing operations to continue without interruption if one network fails.

Look for direct peering options, low-latency connections, and scalable bandwidth to accommodate future growth.

Security

The security measures in place at the colocation facility should be thoroughly evaluated. Key areas to consider include:

  • Physical security: Features like biometric access controls, 24/7 surveillance, and on-site security personnel are important.
  • Cybersecurity: Look for measures such as firewalls, intrusion detection systems, and regular security audits.
  • Compliance: The provider should adhere to relevant industry standards and regulations, such as PCI DSS or GDPR, depending on your needs.

Support services

The level of support offered by the provider can have a significant impact on your operations. Consider services like:

  • Remote hands: Availability of technicians to assist with on-site tasks, reducing the need for your team to visit the facility in person.
  • 24/7 monitoring: Continuous monitoring of your equipment to detect issues early.
  • Technical support: Access to knowledgeable support staff who can provide timely assistance, especially during incidents that require immediate attention.

Choosing the right colocation provider involves carefully assessing these factors to ensure that the facility aligns with your technical and operational requirements. Each element contributes to maintaining the reliability and efficiency of your network infrastructure.

Next steps: Simplify colocation with Meter Connect

Meter can help you understand not only what colo is and what it offers, but we also simplify the colocation provider selection process with our Meter Connect service. Designed to align with your specific needs, Meter Connect helps you identify the most suitable colocation facility by matching your requirements—whether it's reducing latency, enhancing security, or planning for future growth—with the right providers.

The service provides access to a wide range of carrier-neutral connectivity options, allowing you the flexibility to choose the best network providers for your operation.

Meter also offers a complete Network as a Service (NaaS) solution, further reducing the workload on your IT team and network engineers by handling everything from network management to ongoing support. With Meter, you can focus on your core business while confidently relying on a partner that takes care of your network needs.

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