Today, businesses leverage cloud computing as either a game-changing “technology disruptor” or a powerful “capacity enabler,” says Gartner Inc. in a 2023 report. But the research firm says that’s going to change and fast, predicting that cloud will be a “business necessity” by 2028.
As organizations increasingly recognize cloud computing’s strategic importance, spending on public cloud services will rise from $679 billion in 2024 to more than $1 trillion by 2027.
With the cloud’s accelerating growth, some have predicted that colocation is dead. However, that claim couldn’t be further from the truth. Of course, some enterprises have gone “all in” and moved IT to the cloud, but it turns out that not every application performs well in a cloud environment. Remember, the cloud is only a tool for your digital business, not an end goal in itself. Colocation solutions still have a place in your enterprise IT environment – more often than not as part of a hybrid data center strategy
Cloud vs. Colocation
To understand how cloud and colocation play well together, it’s helpful to know what they are and how they’re related.
- Cloud is simply the delivery of computing infrastructure (e.g., servers, storage, databases) and applications—over the internet rather than through assets on-premises at your enterprise. You can source cloud services from hyperscale cloud providers like Amazon Web Services, Microsoft Azure and Google Cloud, or other specialty cloud providers. Cloud services enable you to scale your computing resources, access applications, and store data on demand without managing physical infrastructure yourself.
- Colocation (or “colo”) involves renting physical space in a third-party data center to house your company’s IT infrastructure. In this scenario, you own and maintain your equipment but rely on the colocation provider for the physical infrastructure, such as power, cooling and security. You retain control over your hardware while benefiting from the efficiencies and reliability of a professionally run, dedicated data center.
While cloud and colocation are distinct, they’re both alternatives to hosting IT infrastructure on-premises. Colocation lets you manage your systems in a secure, scalable space, while the cloud offers virtualized resources without the need to invest in or manage physical infrastructure. In some cases, you may combine the two approaches, using colocation to host specific hardware, such as legacy systems, while tapping cloud platforms for scalable, on-demand resources.
Benefits of Cloud
Cloud computing offers several benefits to your data center strategy, including:
1. Cost efficiency
Cloud services are often more affordable because you only pay for what you use, cutting unnecessary costs. Cloud also removes the need to make significant upfront investments in hardware and reduces ongoing maintenance expenses.
2. Scalability and flexibility
The cloud offers your business flexibility and scalability. You can quickly adjust resources to match your business’s growth demands or manage fluctuating workloads without worrying about physical infrastructure limitations.
3. Accessibility and collaboration
Cloud services give you access to your data and applications from anywhere. Whether your team is remote or spread across multiple locations, collaborating is simpler and more seamless.
4. Managed Services and maintenance
Cloud providers manage IT infrastructure — from updates to security patches, freeing your IT team to focus on strategic initiatives rather than routine maintenance tasks.
5. Disaster Recovery and redundancy
Cloud models inherently protect against data loss from local hardware failures or disasters. However, they can also be set up with data backup or full replication as part of a recovery plan.
6. Innovation and advanced technologies
Cloud services give your business instant access to leading-edge technologies like AI, machine learning, and big data analytics –without investing in new hardware or specialized expertise.
Benefits of Colocation
Colocation also offers unique benefits to your data center strategy, including:
1. Enhanced control and customization
With colo, you own and manage your hardware, so you have complete control over server configurations and can implement specialized security measures to meet regulatory compliance requirements.
2. Predictable costs
Colocation is a predictable and cost-effective option for your business because it offers fixed monthly fees for space, power and cooling with no unexpected costs from cloud usage spikes or data transfer fees.
3. Compliance and data sovereignty
With colo, you can store your data locally, maintaining greater control over data sovereignty and enabling custom security protocols in compliance with industry regulatory mandates.
4. Performance and reliability
Colocation’s dedicated hardware resources ensure consistent reliability for your company’s sensitive workloads. You also can optimize hardware for specific applications while benefiting from high-performance power, cooling and connectivity.
5. Hybrid and multi-cloud flexibility
Finally, colocation is ideal for supporting your hybrid IT strategy. Colocation facilities not only provide a home for your dedicated hardware but also direct network connections to major cloud providers to facilitate your hybrid and multi-cloud environments.
Why choose a hybrid model?
Now that you understand the strengths of colocation and cloud, why should you choose a hybrid approach? As mentioned, a hybrid cloud-colo model gives your business the flexibility and scalability of the cloud plus control and customization over critical infrastructure in a colocation facility. It’s the best of both worlds, including:
1. Cost efficiency and flexibility
Combining colocation and cloud services allows your business to optimize costs by running predictable workloads in a colo facility while using the cloud to scale up resources during peak demand.
2. Improved reliability and redundancy
A hybrid strategy boosts uptime by distributing workloads between colocation and cloud environments, ensuring failover and continuity if one environment experiences disruptions.
3. Customization with scalability
Hybrid models offer balance so your organization can tailor colocated infrastructure to your unique requirements while leveraging the cloud’s elasticity for growth.
4. Enhanced security and compliance
Maintain sensitive or regulated data within your colocation facility, where you have more control over physical security and compliance while leveraging the cloud for less sensitive workloads.
5. Optimized performance
With a hybrid approach, your ability to choose where to place workloads (e.g., latency-sensitive applications in colocation and less critical workloads in the cloud) ensures better overall performance and efficiency.
6. Disaster Recovery and Business Continuity
A hybrid setup enables your company to designate colo for your primary infrastructure and the cloud for data backup, minimizing downtime and ensuring business continuity in emergencies.
The benefits noted above are the general advantages of a hybrid colo-cloud data center strategy, but your company may prize different benefits depending on its needs or priorities. Here are a few examples:
- Cost-conscious – If cost efficiency is top of mind, running predictable workloads in colocation while scaling with cloud on demand would be most attractive.
- Heavily regulated – If security and compliance are paramount, the ability to keep sensitive data in the colocation facility while utilizing the cloud for other workloads is most valuable.
- Tech-dependent – If performance is critical, the ability to customize hardware configurations in colo while scaling non-critical workloads in the cloud are primary advantages.
Hybrid model deployment
Once you have committed to a hybrid model for your applications and data, the next step is to prepare and schedule the transition to ensure your applications remain up and running throughout and that the move is successful.
1. Plan
Making a plan requires complete knowledge of your data and applications, which can move and which to control more closely. It’s important to understand what services you need, the level of connectivity and latency, and network size. For example, a company that delivers apps to their customers may need a data center that is highly connected, with a lot of carriers and private peering exchanges.
2. Physical environment
In addition to digital infrastructure, it’s also important to understand the physical facility and environment. Think about energy costs and cooling requirements, how the facility is maintained, track record of outages and how they were handled, redundancies and backup generators. You’ll also need to understand how to access the data center itself and the ability to use remote hands to ensure you can manage your equipment in the data center.
3. Expectations
Another key step in ensuring a smooth transition from all-cloud to hybrid, using colocation, is to set expectations with the data center. Who is responsible for what parts of the process? For example, if you have equipment delivered to the location, it’s vital to know which team—yours or the data center’s—will be installing the gear.
4. Staff
Educate staff on policies and procedures in the new environment to enable them to troubleshoot, move and migrate the data and applications, and be ready to support the new model. The transition can take longer than expected and ideally is included as a budget item for the move.
5. Test
Test the equipment, data and applications in the new environment to ensure everything performs as expected and meets the service level agreement (SLA).
6. Security
No matter where you deploy your data and applications, you’ll encounter security challenges. It’s up to your business and IT teams to ensure the correct measures are in place to protect endpoints and control access, whether you’re hosting the resources on-prem, in the public cloud, or using a data center.
As enterprises realize that dispersing workloads using a hybrid environment is strategically a better choice than “all cloud,” more are moving their workloads to data centers. Colo is the best of both worlds—on-prem and cloud—and gives your business the agility to manage your digital workloads and gain a competitive advantage in an ever-evolving business environment.
Why choose UPSTACK for Colocation
When considering data center outsourcing, turn to UPSTACK for:
- Industry-leading expertise
UPSTACK’s advisors are technology industry veterans with decades of experience in data center strategies and longstanding relationships with top data center providers to provide the best recommendations for your specific needs.
- Comprehensive, global reach
UPSTACK has access to thousands of data centers worldwide, offering a wide selection of international colocation options whether your business requires multisite deployments, hyperscale cloud onramps, disaster recovery sites, or edge data centers.
- Efficient, technology-driven process
UPSTACK advisors use advanced technology to streamline the complex sourcing process—from researching provider specifications to comparing quotes—saving you time while ensuring all options are carefully vetted.
- Tailored solutions
UPSTACK considers your needs, including power, location, network performance, security and compliance, so your colo solution aligns with your goals, whether supporting high-density workloads, multi-megawatt deployments, or connecting directly to hyperscale clouds.
- End-to-end support
UPSTACK offers a variety of support, such as move-in assistance, remote hands, hybrid cloud integration, and data center infrastructure management to help deploy and maintain your critical infrastructure efficiently and securely.
- Scalability and flexibility
UPSTACK is equipped to handle everything from single-site deployments to multisite, multi-megawatt expansions, and we can help you source scalable solutions to meet your evolving infrastructure demands.
At UPSTACK, we have completed hundreds of data center, hybrid cloud and complex networking projects. Our experience with a wide range of solutions enables us to drive positive business outcomes when designing and ultimately selecting a solution for your business.
