Colocation vs. Cloud Computing

Colocation Defined Although you are most likely familiar with the terms cloud computing and colocation, let’s define them to ensure that we are on the same page.

Cloud Computing or Cloud Hosting

Cloud computing, in its most simple terms, refers to the delivery of computing services via the internet. It can also be referred to as cloud hosting because of the way computing resources such as applications and virtual machines are stored and managed, or “hosted” in a third-party data center and provided to companies over the internet. These cloud services are used on an as-needed basis and are paid for monthly, similar to a utility like electricity.

Colocation Data Center

Colocation refers to a third-party data center facility which enables companies to rent space for their servers and other IT resources. In a colocation environment, a business owns their computing technology and the data center provides the infrastructure including the physical space, electricity, air conditioning, bandwidth, and security. Because the data center contains state-of-the-art resources, organizations can utilize a best-in-class infrastructure at less cost than it would take them to build a similar facility themselves.

Cloud Computing vs. Colocation – Considerations for Each

As you can see, both cloud computing and colocation involve the storage of IT resources and data in a secure data center, enabling you to access that data remotely over the internet. Now we will look at the benefits of each service and some things you will want to take into consideration when evaluating cloud computing and colocation data center providers.

Cloud Computing

The cloud has been embraced by many businesses for the cost savings, efficiencies and productivity benefits that it brings to both their organization and their employees. Although used by companies of all sizes, cloud computing is often used by small and mid-size companies who have no or limited technical resources in house. The cloud enables them to utilize IT resources that were traditionally only available to large enterprises without the need to have a large team of technical professionals on staff. 

Benefits of cloud computing include:

• No Upfront Expenses: Since cloud services do not require you to purchase any hardware there are no upfront expenses, just a monthly fee based on the resources and services used. From a financial perspective, this turns a capital expense for technology into an operating expense.

• Cost Savings: In addition to not having any upfront expenses, cloud computing can also deliver significant cost savings using the economies of scale. Not only is the cost of computing resources spread across multiple companies but those companies are only required to pay for the services used at any given time. For example, there is no need to purchase additional server hardware in anticipation of future business expansion. It can be purchased on an as-needed basis.
• No IT Worries for Small Businesses: All hardware, software, and infrastructure resources are controlled and managed by the service provider. They store, monitor and maintain all equipment, applications, and data so you don’t have to. This is useful for businesses with no in-house IT expertise.
• Offload Daily IT Workloads: Larger companies with an in-house IT team can offload tactical IT responsibilities like daily email management to a cloud solution provider, enabling the company’s IT team to focus on more strategic technology initiatives.
• On-Demand Access: Since company data, applications, and other resources are stored in the cloud making them available at any time, users have on-demand access from any device with an Internet connection. This dramatically increases productivity and ensures users are working with the most up to date computing tools.
• Scalability and Elasticity: Because the cloud enables you to use only the services you need, you can start small and add more services as your business grows. Alternatively, you can just as easily scale back the number and types of services needed if your business demands decrease. For example, companies that grow their business over the holidays can quickly and easily enable additional IT resources for many new seasonal employees and then just as quickly and easily remove those same resources after the holidays are over.

When evaluating a provider of cloud hosting services, here are two additional items to take into consideration.

Is your business in an industry such as healthcare, legal, or financial services where you are required to comply with strict government regulations? If so, it is critical that the cloud hosting provider you select is certified to meet rigorous security and protocol standards such as HIPAA, PCI DSS, SSAE 16, SOC 2 and ISAE 3402. These certifications confirm that the provider has been audited for compliance and demonstrated a high level of organizational controls and operational capabilities. The provider’s audit reports should be available for you to review and should be provided to you upon request.

Your electronic data is vital to the operation of your business. So, you need a cloud solution that delivers “always-on” availability. Unfortunately, not all clouds are created equal. Most standard cloud computing providers offer between a 99.8% and 99.99% uptime guarantee. That sounds pretty good until you realize that settling for a 99.8% uptime means that you will have 17.52 hours of unplanned downtime over the next year. That is more than two days of being unable to access critical files, communicate with colleagues and clients, close deals and support customers. Consider how much revenue and potential business could be lost during that time.

Data centers like Evocative provide cloud computing services in an enterprise-grade environment. This means that all clients, whether cloud or colocation, receive the same guarantee of high availability at 100%.

Colocation

More and more companies are embracing colocation due to its low latency, high availability, increased security measures and rigorous compliance standards. These are important components of enterprise technology which most organizations cannot achieve within their own facilities. 

Benefits of colocation include:

• Maintain Total IT Control: Colocation is a great option if you want to take advantage of data center infrastructure and security but continue to monitor, maintain, upgrade, and replace your own equipment as if it was installed in-house.
• Renting is Cheaper than Building: If you were to build your own server room or standalone data center, all the costs associated with the facility would be the sole responsibility of your company. In a colocation data center, all companies share the facility’s costs by “renting” electricity, air conditioning, floor space and other items. This is a more cost-effective option and quicker to deploy than building your own facility.
• Supplement to Your Facility: If you already have a dedicated server room or data center which your company has outgrown, colocation can supplement the facility that you already have. There is no need to incur the time and expense to expand an existing facility or move your entire network infrastructure to a new location. Colocation provides a state-of-the-art facility which can work seamlessly with your current IT infrastructure.
• Greater Bandwidth, Greater Performance: A colocation data center can provide greater levels of bandwidth and performance than most businesses can achieve in their own facility and at a reduced cost.
• Flexible Computing: Since a colocation solution involves the purchase and management of all hardware, software and other resources by you, it enables you to purchase and install any IT tools you need for your business, such as specialized line of business applications or a proprietary CRM system. Unlike cloud computing where businesses are limited to using the applications and hardware the provider is selling, with no modifications or additions, colocation delivers endless flexibility.

When evaluating a colocation data center, here are three additional items to take into consideration.

As we discussed above, not all cloud or colocation providers are created equal. A superior colocation data center should have greater defenses against power outages, disaster recovery safeguards, a low latency infrastructure and meet the rigorous security and protocol standards for regulatory compliance. When selecting a colocation data center, be sure to choose a facility that has also consistently achieved 100% uptime – not just over a period of a few months or a year but over many years.

Although the issue of where your company’s data is physically stored is not as important when you are considering cloud computing, geography is important when you are considering colocation. Because your company will own the hardware, software and other IT resources, and you will need to install and maintain them, you should consider the physical distance between your office and the colocation data center. How quickly can you get to the facility if there is a hardware failure?

A colocation data center can provide a greater level of physical security than almost any company’s dedicated server room. It has multiple layers of security including key cards and biometric access, video surveillance and recording, contractor background checks, 24/7 onsite staff, and strict visitor policies, just to name a few. The decision to transfer your physical hardware and mission-critical data to a third-party data center requires that you scrutinize their security policies and procedures to maximize your protection and eliminate unauthorized access or damage to your IT assets.

The Bottom Line

While both cloud computing and colocation utilize a third-party data center for data storage and delivery, how that data is managed is the key differentiator. So, which solution is better? Each has its pros and cons and the final decision will be based on your specific requirements and priorities. Are you looking to cut IT costs and have someone else manage your computing resources? Are regulatory compliance and an always-on, high availability infrastructure critical to your success? Never let a provider pressure you into one solution or the other. It is important that they partner with you as a trusted advocate, build an individual solution that will work well for you today and help you achieve your future goals. Understanding the differences between cloud computing and colocation and then evaluating data center providers based on your individual needs will help you determine which solution and provider is right for you.