The Paradox of Colocation Solutions

Colocation Solutions

According to Aberdeen Group and Ventana Research, one out of four enterprises surveyed expect their data to grow by more than 30 percent in the next year. In order to cope with the explosive increase in data, we can anticipate that the number of enterprises migrating to the cloud will continue to rise at a blistering pace. This will be the year when even the most conservative CIO and IT manager will shift their attitude toward cloud adoption from, “Let me think about that,” to cloud being perceived as a mission-critical business requirement.

A driving force in this transformation is the need to get out from under the burden of aging infrastructure, which is causing many enterprises to look at alternatives to traditional On-Premises data center approaches. Namely, colocation and cloud-based infrastructure services.

Make no mistake, cloud-based applications and services increase organizational efficiency, reduce CapEx expenditures, are ideal for businesses with growing or fluctuating bandwidth demands, eliminate the high cost of hardware, and increase workforce collaboration and productivity across globally dispersed offices and employees. The cloud is even good for the planet. When a company’s cloud needs fluctuate, server capacity can be scaled up or down to match demand, thereby saving energy and reducing an organization’s carbon footprint.

Cloud and colocation offer companies comparable benefits, but each is best suited to satisfy different scenarios. For example, both help reduce costs through the use of shared facilities. However, the choice of one versus the other should be based on an organization’s specific requirements.

Not All Clouds Have a Silver Lining

For companies in certain sectors, not all clouds have a silver lining. For instance, the healthcare industry has been generating large volumes of data due to the rapid digitalization of manual patient records, spurred by legislative regulations and the need to provide better patient care at lower costs. For enterprises in the healthcare, banking and insurance sectors that deal with sensitive information, the cloud may not offer the necessary security to meet with regulatory and compliance requirements. If a company is subject to data privacy and protection regulations such as HIPAA, PCI DSS, or financial mandates such as Sarbanes-Oxley, it will have to ensure its cloud provider is able to demonstrate compliance, have appropriate certifications, maintain a high level of physical and cyber security, and follow mandated procedures to pass an audit.

Colocation: A Primer

The colocation data center market is big business and expected to hit almost $40 Billion by 2017. With colocation, companies own, use, and maintain their own equipment, but share the cost of power, cooling, communications, and data center floor space with other tenants. Colocation is a good choice for an enterprise that needs complete control over their equipment. This might be the case if it must maintain a level of control to satisfy regulatory or data protection requirements based on its specific industry standards.

Another reason to use colocation is to address the limitations of an existing data center. One industry survey found that 36 percent of data center facilities will run out of space, power or cooling capacity in the near future. If that dire prediction becomes true, the logic is that, rather than building a new data center, an enterprise can cost-effectively augment their current facility by using space in a colocation facility. Additionally, many enterprises use colocation to have a secondary site for disaster recovery purposes, avoiding the need to build a second data center.

Keep in mind, colocation still requires companies to purchase their own servers, storage, switches and software. Secondly, the enterprise IT staff must monitor and manage the equipment while conducting backups and maintenance. That said, many providers also offer managed services that can be leveraged to monitor and manage a company’s infrastructure. A provider that offers à la carte options allows a company to select what functions it wants a third-party to manage and those over which it chooses to maintain control.

Why the Cloud, Anyway?

There are some distinct differences with a cloud-based infrastructure service. Like colocation, cloud-based infrastructure services offer cost savings through the use of a shared facility. But there the resemblance ends. With cloud services, the cloud provider supplies and manages the enterprise’s full hardware infrastructure, including servers, storage and network elements. This eliminates CapEx costs and reduces OpEx costs, since the provider’s staff, not enterprise IT staff, are responsible for day-to-day administration, routine maintenance, troubleshooting and problem resolution.

Companies might turn to cloud services for a number of reasons. Many enterprises simply want to offload infrastructure management chores to free up their IT staff to work on projects that would help grow the business. Some companies select a cloud provider because they prefer the flexibility of being able to rapidly scale capacity up or down based on business needs.

So, Colocation or Migrate to the Cloud?

Colocation and cloud services offer companies alternatives to traditional in-house data center approaches. Based on the specific requirements of an enterprise’s particular deployment, each offers unique benefits and has its own criteria to consider. A company will want to examine their compliance and privacy needs, its need for direct control, as well as the need for always-on availability and uptime when deciding between colocation and cloud.

The major caveat to keep in mind is that whether a company is choosing colocation in a data center or migrating to the cloud, it’s likely its IT staff will lack the necessary expertise to execute either alternative. Some companies will need colocation and access to cloud Service Providers such as Microsoft Azure, Amazon Web Services (AWS) and Google Cloud. But a lot of the enterprises won’t know how to connect the dots. They’ll need the right connectivity to reach the cloud or other specialty hosting applications.

In Equinix data centers, for example, AWS Direct Connect customers can cut data transfer costs to AWS considerably, depending on data volume. Equinix has facilities in 11 metro area around the world offering AWS Direct Connect services, which provide ways to leverage high-performance private access. But if an enterprise IT staff is not versed in AWS’ peering points, they won’t be able to effectively access the world’s most popular cloud service.

As Katie Broderick, a Director at 451 Research, has stated, “Colocation is quickly becoming the nexus of both cloud and enterprise IT. The colocation market is serving as ‘data center arms dealer’ to both enterprises and the cloud. In this process, colocation is often becoming the strategic connection point between the two.”

Whether an enterprise is considering migrating to the cloud, hosting its data in a colocation facility, or some hybrid solution, an international Managed Services Provider (MSP) specializing in colocation and IP services solutions is the best bet to ensure its cloud or colocation strategies align with its business requirements and strategic objectives.

By Michael Hollander

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