Whether or not colocation offers a cost advantage over cloud computing depends on what a business wants from its IT resources. For light and/or intermittent use, the cloud is likely to be the better option. Using the cloud eliminates the need to invest in IT equipment (and the personnel needed to manage it). It also facilitates maximum scalability.
By contrast, the more a workload increases, the more attractive it becomes to use colocation, especially when the workload is predictable. The cost of buying and managing IT equipment is increasingly offset by the lack of usage-based costs and data egress fees. Moreover, the nature of colocation means that its pricing tends to be either fixed or highly predictable. This can make budgeting much easier.
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