What is a colocation data center?

A colocation data center is a shared facility where organizations can rent space for servers and networking equipment. These installations offer businesses a flexible, secure, and cost-effective alternative to owning and operating their own data center.

In this guide, we’ll explore how data center colocation works, the benefits of colocation, and what to consider before partnering with a colocation provider.

What is a Colocation Data Center?

Many businesses rely heavily on data centers to power their IT infrastructure, manage data storage, and support daily operations. However, maintaining an on-premises or one’s own data center can be expensive, complex, and energy-intensive.

Some organizations want the power of a data center without the hassle and expense of having their own. In this case, it can resort to a colocation data center, or colo.

Colos allow businesses to benefit from economies of scale in a secure, professionally managed environment.

A colocation data center provides secure, reliable space for IT equipment such as servers and equipment. An organization rents space, usually a rack or cabinet, inside a secure, climate-controlled facility containing the latest technology. This building or facility is operated by a professional data center provider.

In such a facility, businesses share several resources such as power and cooling systems. The data center provider handles all the heavy work, from keeping equipment running to ensuring data security.

What are the main features of a colocation data center?

A typical colocation data center offers:

• Physical space such as private suites, racks, or cabinets to host your IT hardware.
• Reliable power with power redundancy, backup generators, and connection to multiple power grids.
• Advanced cooling systems that maintain optimal temperature and energy efficiency.
• Robust physical security through video surveillance, access controls, and on-site security staff.
• Managed services and remote hands support for technical maintenance and troubleshooting.

This setup enables companies to benefit from enterprise-grade infrastructure without the capital expenditures and operational burden of running their own facility.

What are the different types of Colocation Data Center?

There are several styles of colocation solutions to suit different business needs:

Retail colocation

Businesses rent smaller portions of a shared colocation facility, such as individual racks or cabinets. This model suits smaller businesses seeking scalability and flexibility.

Wholesale colocation

Larger companies rent entire facilities or floors, giving them greater control and privacy while outsourcing maintenance.

Hybrid cloud-based colocation

Combines a private cloud and public clouds with data center colocation, enabling direct access to cloud providers for better agility and reduced latency.
Each model supports different requirements in terms of IT infrastructure, security, and scalability. This way, they can offer a flexible solution for businesses with both on-premises and cloud-based needs.

Why choose a colocation facility?

Here are just a few of the many advantages of opting for a colocation data center:

Benefit	Why does it matter?
Cost-Efficiency	Colos offer a pay-as-you-go option, reducing capital expenditures by renting only the data center space you need. This frees up capital for other business needs.
Sustainable Infrastructure	Data centers use a lot of power. However, modern colos increasingly implement sustainable data center strategies such as using renewable energy and efficient cooling systems. This helps businesses reduce their IT footprint.
Scalability	Easily scale up or down by adding racks, cabinets, or other resources as your business grows.
High Reliability	Data center operators ensure power redundancy, generator backup, and connectivity to multiple networks for maximum uptime.
Enhanced Data Security	Colocation facilities implement multiple layers of protection, including video surveillance, access control, and managed security services to safeguard sensitive data.
Disaster recovery and business continuity	Many colocation providers offer disaster recovery options with defined recovery point objectives (RPOs) to minimize data loss.
Direct Access to Cloud Providers	Hybrid cloud services enable seamless integration with private or public clouds, improving flexibility and performance.
Operational Reliability	Outsourcing to a colo center can improve uptime and reduce risk from natural disasters or security threats.
Compliance Support	Professional data center providers help businesses meet regulatory compliance requirements efficiently.
Low latency	Colocation data centers are often located near major internet hubs, providing lower latency for your applications.

Colocation vs. In-House Data Centers

Owning a data center gives full control over your IT environment, but it also requires managing power, cooling, physical security, compliance, and disaster recovery. This increases operational costs and complexity.

By contrast, colocation data centers provide access to shared infrastructure and professional management. Colocation offers a way to ensure reliability, compliance, and efficiency while freeing up internal IT professionals to focus on core business goals.

Traditional Data Center	Colocation Data Center
High upfront costs	Lower upfront costs with leasing options
Ongoing maintenance expenses	Provider handles maintenance and security
Limited scalability	Easily scale up or down your server space

Why do businesses choose colocation?

Many businesses, from SMBs to large-scale enterprises, choose colocation services for their reliability, flexibility, and robust physical security. Colocation is ideal for businesses that:

• need secure, scalable data storage for sensitive data
• want to reduce operational costs and avoid managing on-prem space
• require proximity to users to reduce latency and gain access to major internet hubs
• seek cost-effective alternatives to owning an on-site facility
• value robust managed services, backup generators, and disaster recovery options to ensure business continuity

Data center outsourcing can benefit a range of companies, especially those with limited budgets and space. For this reason, small and growing businesses may be the most obvious contenders to get the most out of colos.

 

What can you share in a colocation data center?

Exactly what you can share depends on the specific colocation provider and the type of service you choose. Here are some common elements:

• Physical building space: You rent a rack or cabinet to house your servers and other equipment.

• Power: The colocation provider ensures a reliable and consistent power supply for your equipment.

• Cooling: Data centers generate vast amounts of heat. Colocation providers therefore have sophisticated cooling systems to keep equipment from overheating.

• Physical security: Colocation facilities have strict security measures in place to protect equipment from theft or damage.

Some providers may also offer additional services, such as:

• Network connectivity: Connect your equipment to high-speed internet and network services.

• Storage: Rent additional storage space for your data.

• Management tools: Some colos offer tools for managing your IT infrastructure within the facility.

What should you consider before choosing a colocation facility?

Not all colocation service providers are created equal. Here are some key factors to consider when making your choice:

Power density

How much power can the colocation facility provide per square foot? This is an important factor if the organization has high-powered servers. Ensuring sufficient power per rack for your IT equipment will avoid issues such as power outages and poor communications.

Floor space

Does the provider offer a variety of rack and cabinet sizes to accommodate your needs? Make sure the colocation data center can grow with your IT footprint. This will be crucial in the case of business expansion.

WAN redundancy

Does the colocation facility have multiple internet connections to ensure uptime in case of outages?

Multiple connections mean that if one network component fails, the services continue to function, avoiding a loss of productivity.

Contract flexibility

Look for adaptable terms as your needs evolve. This will facilitate scaling and minimize the risk of hidden costs. Choosing a provider with flexible contracts allows you to scale your space up or down as needed.

Location

Organizations should consider the location of the colocation facility in relation to their business needs and latency requirements. The closer the facility is to your operations or end-users, the lower the latency. This means smoother audiovisual communications, faster response times, and more reliable online transactions.

Hidden fees

It’s important to understand all the costs involved. These include setup fees, power charges, and bandwidth usage fees.

Security and compliance

Does the colocation facility meet any industry-specific compliance requirements your organization may have?

Companies should evaluate the physical and logical security measures in place to protect their data. This safeguards your sensitive information from exposure, minimizes the risk of data loss or corruption and keeps your business compliant.

On-site support and services

What additional services does the colocation provider offer? These can include backup and disaster recovery, monitoring, managed security services or remote management of your company’s equipment.

Professional IT services provide quick, expert support in case of unexpected problems, or may help avoid issues altogether.

Is the Security of my IT infrastructure guaranteed?

Security is a top priority for any business considering colocation. Colocation providers typically offer a high level of physical and logical security, including:

• 24/7 security personnel: Trained security guards monitor the facility around the clock.

• Access control: Only authorized personnel have permission to access to the colocation space.

• Video surveillance: Security cameras monitor the facility.

• Fire suppression systems: The colocation facility has fire suppression systems in place. These protect the equipment it houses from damage.

Pros and Cons of Colocation Security

Pros	Cons
✅ High level of physical and logical security	❌ You are not in complete control of the physical security of your equipment
✅ Regular security audits	❌ May not meet all industry-specific compliance requirements
✅ 24/7 security personnel	❌ Security breaches can still happen

Colocation vs. Cloud vs. Enterprise Data Center: Which is the Best Choice?

Choosing between colocation, cloud computing, and an on-premises data center depends on an organization’s specific needs. Here’s a quick breakdown:

Colocation

Ideal for businesses needing elevated control over their IT infrastructure, without the expense of maintaining their own data center.

Cloud

A good option for businesses that:

• need a scalable and flexible IT solution
• are comfortable with their data residing off-site

Enterprise data center

The best choice for large businesses with highly specific or complex IT needs and which manage high volumes of data.

How do colocation data centers work?

Colocation data centers operate in a few key steps:

1. Choosing a colocation provider and selecting the type of service you need.
2. Installing your servers and equipment in the colocation facility.
3. The colocation provider takes care of the power, cooling, security, and network connectivity.
4. You can access and manage your equipment remotely.

Which Are the Best Colocation Data Center Providers?

You can find many reputable colocation data center providers around the world. Here are a few to consider:

• Equinix

• Digital Realty

• Iron Mountain

• CyrusOne

Evernex Can Help You Scale Your Digital Future

Colocation data centers offer a secure and cost-effective way to house your IT infrastructure. If you’re considering colocation, Evernex can help you find the right provider, hardware and financing solution for your needs.

 

Frequently asked questions on colocation data center