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What is Colocation? Ultimate Guide to Colocation Benefits, FAQ [2024]

What is Colocation? Ultimate Guide to Colocation Benefits, FAQ [2024]

This comprehensive article will give a thorough but straightforward explanation of colocation. It will explain what colocation is, the various types of colocation, its functioning principles and notable features, and the myriad benefits it offers.

Colocation Definition

What is colocation?

In simple terms, colocation is the practice of renting physical space within a data center to host servers and other IT equipment. This physical space, known as a colocation facility or data center, is designed to provide the necessary environment for optimal operation of servers and networking gear. These facilities typically feature redundant power sources, efficient cooling systems, robust security measures, and high-speed internet connectivity.

Types of colocation

When exploring the world of colocation, it’s essential to understand the various types of colocation services available. Providers offer different options to accommodate the diverse needs and preferences of businesses. Here are the six most common types:

Rack space: This is the most basic form of colocation, where businesses rent a certain number of racks or cabinets within a data center. Each rack provides space for servers, switches, and other networking equipment. Rack space colocation is suitable for businesses with moderate IT infrastructure requirements.

Cage: In this type, a data center provider allocates a dedicated cage within their data center facility to a specific client. The cage is surrounded by security fencing or mesh, providing an added layer of physical protection. Cage colocation offers more privacy and security than rack space, making it suitable for businesses with higher security needs.

Private suite:   A private suite is an exclusive and self-contained space within a data center, prioritizing privacy and security. It offers extensive customization options to cater to specific needs. This enables the accommodation of a greater number of racks, additional equipment, and even dedicated meeting rooms. This type of colocation is particularly well-suited for larger enterprises or organizations seeking a tailored and personalized environment that aligns precisely with their unique requirements.

Wholesale: This type of colocation caters to businesses with extensive infrastructure needs. Wholesale providers offer a large-scale, dedicated space within their data centers, typically an entire floor or building. This option allows businesses to have complete control over their environment, including power, cooling, and infrastructure and provides the flexibility to scale rapidly.

Cloud: The increasing popularity of cloud computing has led some providers to offer cloud colocation services. This allows businesses to colocate their IT equipment within a data center while also connecting to cloud service providers for additional resources or hybrid cloud setups. Cloud colocation offers the benefits of both colocation and cloud computing, enabling organizations to optimize their infrastructure and workloads.

Edge: As the demand for low-latency applications and edge computing grows, edge colocation has emerged as a specialized form of colocation. Edge data centers are strategically located closer to end users or specific geographical locations. This helps minimize latency and improve performance for latency-sensitive applications and IoT devices.

Key features

Some businesses are happy to run their entire operations on public cloud infrastructure. Many businesses, however, do need or at least want to have their own private infrastructure. These businesses need to choose between running their own private data centers and using colocation. Here are 8 key features of colocation that make it an attractive choice for them.

Robust physical infrastructure: Data center facilities are designed with state-of-the-art infrastructure to ensure optimal performance. They typically feature redundant power systems, backup generators, advanced cooling mechanisms, fire suppression systems, and physical security measures such as access controls, surveillance cameras, and 24/7 monitoring.

Reliable power availability: Data center providers prioritize uninterrupted power availability by leveraging redundant power feeds, uninterruptible power supply (UPS) systems, and backup generators. This ensures that critical IT equipment remains operational even during power outages or fluctuations.

Scalability and flexibility: Colocation services offer scalable solutions to accommodate the evolving needs of businesses. As companies grow, they can easily expand their infrastructure within the data center facility by adding more racks or upgrading to larger colocation options, avoiding the hassle and cost of building or renovating their own data center.

High-speed network connectivity: Data center facilities are equipped with multiple network carriers and robust internet connectivity options. This enables businesses to establish reliable and high-speed connections for their servers and networking equipment, ensuring optimal performance and minimal latency.

Enhanced security measures: Data center providers prioritize the security of the hosted equipment. Data centers are equipped with advanced security systems. Typical security features include surveillance cameras, biometric access controls, locked cabinets, and restricted entry to authorized personnel only. These measures help safeguard sensitive data and protect against unauthorized access or physical threats.

Professional remote hands support: Data center facilities often provide remote hands support, offering technical assistance for routine tasks such as server reboots, cable management, and equipment replacement. This service can help businesses minimize downtime and ensure the smooth operation of their IT infrastructure, even when physical presence is not possible.

Cost efficiency: Colocation eliminates the need for businesses to invest in building and maintaining their own data center facility. Instead, they can benefit from shared infrastructure and operational costs, which are distributed among multiple clients. This cost-sharing model makes colocation a more affordable option compared to establishing and managing an in-house data center.

Disaster recovery and business continuity: Data center facilities are designed to withstand a range of disruptions, thus ensuring continuity of operations. They feature redundant power systems and backup mechanisms and are strategically located in different geographical areas, offering a dependable environment for disaster recovery and business continuity planning. In the event of a local power outage or natural disaster, businesses can rely on the data center facility to maintain uninterrupted functionality and operational resilience for their IT infrastructure.

“Colocation providers offer the infrastructure to minimize delays and enable real-time data processing and transmission,” said Gregory Ryman, DataBank Solutions Engineer. “As the demand for microseconds over milliseconds continues to grow, enterprises can rely on colocation data centers to provide the required low-latency connectivity to thrive in today’s fast-paced, interconnected world.”

What is colocation in a data center?

Colocation in a data center refers to the practice of renting physical space within a specialized facility to house and operate servers, networking equipment, and other IT infrastructure. In this arrangement, businesses place their own equipment in the data center provided by a third-party colocation provider.

How do data centers work?

How data centers work depends largely on the agreement between the data center and the client. At one end of the scale, clients can take full charge of managing their own equipment. At the other end of the scale, clients can (generally) use the data center staff to take care of everything for them.

For clarity, clients taking full charge of managing their own equipment does not necessarily mean that they employ their own in-house staff. They may choose to use one or more third-party vendors. These vendors will, however, not be directly connected to the colocation provider.

How secure is colocation?

Data centers are designed with robust security measures to ensure the protection of the hosted IT equipment. Here are 7 key ways that data centers ensure security.

Physical security: Data center facilities implement multiple layers of physical security to prevent unauthorized access and protect the equipment. This includes measures such as biometric access controls, surveillance cameras, locked cabinets, mantraps, security guards, and restricted access to authorized personnel only.

Facility design: Data centers are built with security in mind. They feature sturdy construction, reinforced walls, and secure entrances to prevent unauthorized entry. Access points are monitored and logged, ensuring a record of individuals who enter and exit the facility.

Redundant power and backup systems: Data center facilities place the utmost importance on the availability and reliability of power. They employ redundant power systems, including backup generators and uninterruptible power supply (UPS) systems, to guarantee a continuous and uninterrupted power supply to the equipment housed within, even during power outages or disruptions.

Network security: Colocation providers establish strong network security protocols to defend against cyber threats. They deploy a range of protective measures such as firewalls, intrusion detection and prevention systems, continuous traffic monitoring, and comprehensive security protocols. These measures collectively safeguard the connectivity and data transmission within the facility, ensuring the integrity and confidentiality of the hosted infrastructure.

Surveillance and monitoring: Data centers employ advanced surveillance systems and 24/7 monitoring to keep a close watch on the facility. Surveillance cameras are strategically positioned to monitor critical areas, and security personnel continually monitor activity and respond to any potential security breaches or incidents.

Environmental controls: Data center facilities maintain appropriate environmental conditions to ensure the optimal performance of the hosted equipment. This includes temperature and humidity monitoring and control systems, preventing overheating or other environmental factors that could adversely affect the servers and networking gear.

Compliance and certifications: Respected colocation providers uphold industry standards and regulations, demonstrating their dedication to security and compliance. They acquire certifications such as ISO 27001 (Information Security Management) or SOC 2 (Service Organization Control) as evidence of their commitment to maintaining robust security practices and meeting stringent compliance requirements.

Colocation vs. the cloud

The question of colocation vs the cloud is really the question of colocation vs the public cloud. Colocation services can be used to house private cloud infrastructure. In fact, they often are. Colocation and the public cloud are two very two distinct approaches to managing IT infrastructure. Each has its own unique advantages and considerations. Here are 7 key differences between colocation and the public cloud.

Infrastructure ownership: In colocation, businesses own and maintain their physical IT equipment, which is housed in a data center facility. On the other hand, with the cloud, businesses do not own the underlying infrastructure as it is provided and managed by a cloud service provider.

Control and customization: Colocation provides businesses with full control over their hardware, software configurations, and infrastructure. They can customize and optimize their environment according to their specific requirements. In contrast, the cloud offers a more standardized and managed environment, limiting the level of control and customization.

Scalability: Both colocation and the cloud offer scalability, but in different ways. Colocation allows businesses to scale their infrastructure by adding or removing equipment within the data center facility. The cloud, however, provides the advantage of elastic scalability, allowing businesses to rapidly scale resources up or down on demand, without the need for physical hardware adjustments.

Cost structure: Colocation typically involves upfront capital expenditures for purchasing and maintaining hardware, as well as ongoing operational expenses for power, cooling, and maintenance. Cloud services, on the other hand, follow a pay-as-you-go model, where businesses pay for the resources they consume, resulting in more predictable and flexible cost structures.

Network connectivity: Data centers offer reliable network connectivity, but businesses need to establish and manage their own connections to external networks and internet service providers. Cloud providers often offer robust and redundant network connectivity as part of their services, simplifying network management for businesses.

Security and compliance: Colocation and cloud providers both prioritize security, but the responsibility for security implementation differs. In colocation, businesses have control over their security measures, while the colocation provider ensures the physical security of the facility. Cloud providers assume a larger responsibility for security measures, including infrastructure protection, data encryption, and compliance certifications.

Disaster recovery: Colocation facilities and cloud providers both offer disaster recovery capabilities, but the approaches differ. Colocation allows businesses to design and implement their own disaster recovery strategies, utilizing redundant infrastructure and backup systems within the data center. Cloud providers often offer built-in disaster recovery features, enabling businesses to replicate and recover their data and applications across multiple geographic locations.

What are the benefits?

Technically, colocation offers multiple benefits to businesses. Practically, all of the benefits of colocation stem from one fact. Colocation offers businesses a convenient way to retain full control of their infrastructure but delegate the tasks associated with running it. 

Essentially, colocation bridges the gap between private data centers and the public cloud. It offers the privacy of the former and the simplicity (and scalability) of the latter.

As such, it offers businesses a way to delegate tasks that are non-core to their business without compromising on any aspect of the ownership of their business assets.

Who uses colocation?

Colocation is used by a wide range of businesses and organizations across various industries. Here are 8 examples of entities that commonly use colocation.

Small and medium-sized enterprises (SMEs): Colocation proves advantageous for small and medium-sized enterprises (SMEs) by granting them access to enterprise-level infrastructure and services, all while avoiding the significant upfront costs and complexities involved in constructing and operating an in-house data center. Through colocation, SMEs can harness reliable and secure IT infrastructure, scalability options, and technical expertise, thereby reaping the benefits without incurring excessive expenses or burdensome management responsibilities.

Large enterprises: Large enterprises with extensive IT infrastructure requirements often utilize colocation to support their operations. Colocation provides them with the flexibility to expand their infrastructure as needed, while also ensuring high availability, data security, and compliance with industry regulations. Large enterprises may also use colocation for disaster recovery and business continuity purposes.

E-commerce companies: E-commerce businesses heavily rely on their online presence and require robust and secure IT infrastructure. Colocation allows e-commerce companies to ensure high availability, scalability, and fast connectivity for their websites, databases, and transaction processing systems. It also provides them with the necessary infrastructure to handle peak loads during busy periods.

IT service providers: Companies that offer IT services, such as managed service providers (MSPs), cloud service providers (CSPs), or hosting providers, often use colocation as a foundation for their service offerings. Colocation enables these providers to deliver reliable and scalable infrastructure solutions to their clients while focusing on managing and optimizing the services they provide.

Financial institutions: Secure and compliant IT infrastructure is paramount for banks, financial institutions, and insurance companies, as they manage sensitive customer data, conduct transactions, and adhere to regulatory requirements. Colocation data centers, equipped with robust security measures and compliance certifications, provide a dependable and protected environment for financial services organizations to securely house their critical systems and data.

Media and content providers: Media companies, broadcasters, content delivery networks (CDNs), and streaming services require robust infrastructure to deliver high-quality content to their audiences. Colocation facilities offer the necessary bandwidth, low-latency connectivity, and scalability to ensure a seamless and uninterrupted content delivery experience.

Healthcare providers: Healthcare organizations, such as hospitals, clinics, and medical research institutions, handle large volumes of sensitive patient data. Colocation provides them with secure and compliant data center facilities to host their electronic health records (EHRs), medical imaging systems, and other critical applications. It ensures data security, privacy, and high availability for healthcare IT infrastructure.

Government agencies: Government entities often rely on colocation to house their mission-critical systems, including citizen services, public safety applications, and data storage. Colocation enables government agencies to leverage secure and resilient data center facilities that comply with stringent security and regulatory requirements.

Top 5 considerations while selecting a data center

When selecting a colocation data center, there are several important considerations to keep in mind. Here are the top five factors to consider:

Location and accessibility: The location of the data center is crucial for various reasons. It should be easily accessible for your team and any third-party vendors or service providers who may need to visit the facility. Consider proximity to your business operations for convenience and quick response times. Additionally, assess the geographic location in terms of disaster risk, such as flood zones or seismic activity, to ensure the data center is situated in a relatively safe area.

Reliability and uptime: The reliability of the data center directly impacts the availability of your critical systems and applications. Look for facilities that have redundant power sources, backup generators, and robust cooling systems to ensure continuous operation. Inquire about their service level agreements (SLAs) and track record for uptime performance. The data center should have measures in place to mitigate risks and provide a reliable environment for your infrastructure.

Security and compliance: Data security is paramount, especially when housing sensitive information. Assess the physical security measures implemented by the data center, such as surveillance systems, access controls, and security personnel. Inquire about their compliance certifications, such as ISO 27001 (Information Security Management) or SOC 2 (Service Organization Control), which demonstrate their commitment to maintaining robust security practices and meeting industry standards.

Scalability and future growth: Consider your long-term business needs and growth projections when selecting a data center. Evaluate the facility’s capacity to accommodate your future requirements in terms of rack space, power density, and network connectivity. Ensure that the data center has the flexibility and scalability to support your evolving IT infrastructure needs without causing disruptions or requiring frequent migrations.

Network connectivity and carrier options: Reliable and fast network connectivity is crucial for seamless operations and user experience. Assess the data center’s carrier options and connectivity to major internet exchange points. Look for diverse network providers and multiple connections for redundancy. Consider their peering relationships and the availability of high-bandwidth options to support your network requirements.

“One of the most important advantages of data center colocation is the enhanced reliability and availability it provides,” said Eric Swartz, VP of Operations Engineering at DataBank. “Colocation providers have redundant power and cooling systems as well as backup generators and other systems in place to make sure their customers’ computing systems are up and running at all times.”

Improve connectivity, security, and lower pricing with DataBank colocation

DataBank colocation offers a range of benefits that can significantly enhance connectivity, security, and affordability for businesses. Here are just five of the key advantages of DataBank colocation.

Enhanced connectivity: DataBank colocation provides businesses with access to robust network connectivity options. 

Advanced security measures: DataBank places a strong emphasis on security to protect the hosted infrastructure and data. 

Compliance and certifications: DataBank adheres to industry-leading standards and regulations to ensure data security and regulatory compliance.

Business continuity and disaster recovery: DataBank’s data center facilities are designed to offer high availability and robust disaster recovery options. 

Expert support and service: DataBank provides professional support and service to assist businesses in managing their collocated infrastructure. 

By opting for DataBank colocation, businesses can improve their connectivity, enhance security, achieve regulatory compliance, lower costs, and benefit from expert support. DataBank’s reliable infrastructure and comprehensive services make them a compelling choice for businesses looking to leverage the advantages of colocation for their IT infrastructure needs.


What colocation means

Colocation refers to housing an organization’s IT infrastructure in a third-party data center facility. Businesses rent space and amenities while the provider manages power, cooling, security, and connectivity. It offers reliability, scalability, security, and cost efficiency compared to building an in-house data center.

What is colocation in a data center?

Colocation in a data center refers to the practice of renting physical space within a third-party facility to house and manage an organization’s IT infrastructure and equipment. The data center provides power, cooling, security, and connectivity. This allows businesses to leverage a reliable and secure environment for their servers and networking gear.

What is the difference between colocation and a data center?

Colocation is a service offered within a data center. While a data center refers to a facility that houses servers, networking equipment, and other IT infrastructure, colocation specifically refers to the practice of renting physical space within a data center to house and manage an organization’s IT equipment while the data center provides power, cooling, security, and connectivity.

What is the principle of colocation?

The principle of colocation revolves around the idea of outsourcing the physical infrastructure and management of IT equipment to a specialized data center provider. Businesses rent space within the data center, leveraging the provider’s expertise and resources. This ensures reliable power, cooling, security, and connectivity for their equipment while focusing on their core operations.

What are the features of colocation?

Colocation features vary depending on the provider. It is essential that prospective customers research providers and their facilities before choosing which provider to use. That being said, here are some features of colocation that are essential:

  • Physical location
  • Physical security
  • Cybersecurity
  • Power and cooling
  • Cross-connectivity
  • Scalability
  • Compliance and certifications
  • On-site support
  • Disaster recovery

What are the benefits of colocation?

Colocation offers businesses a multitude of benefits, primarily by providing a cost-effective, secure, and reliable environment for their IT infrastructure. By leveraging colocation services, companies can save significantly on the capital and operational expenses associated with building and maintaining a private data center.

Colocation also allows for scalability, enabling businesses to easily adjust their IT resources in response to changing needs.

It also ensures compliance with industry standards, offers professional support and maintenance, and enhances disaster recovery capabilities. By offloading the complexities of data center management, businesses can focus more on their core activities, driving growth and innovation.

Why use colocation services?

Using colocation services provides numerous benefits to users, particularly for those looking to optimize their IT infrastructure without the costs and complexities associated with building and maintaining their own data center. Here are the main reasons why businesses choose colocation services:

  • Improved performance and reliability: Data centers have uptime guarantees, redundant power and cooling systems, disaster recovery, emergency generators, and other resiliency features to avoid downtime
  • Improved cost efficiency: Building and maintaining a private data center is expensive. The costs of space, infrastructure, security, and ongoing maintenance add up quickly. Colocation allows businesses to share these costs with other tenants, converting capital expenditure into a predictable operational expense.
  • Enabled scalability and flexibility: IT demands change with businesses growth, industry shifts, the development of technology, changes in the economy, and new compliance requirements. Colocation helps businesses stay ahead of new changes by enabling flexibility and scalability.
  • Enhanced security: Colocation centers are equipped with state-of-the-art security measures including physical security, surveillance, and cybersecurity protocols. This level of security can be prohibitively expensive for individual businesses to implement and maintain on their own.
  • Enabled compliance: Many colocation providers adhere to strict industry standards and certifications. This ensures that a business’s data is managed in compliance with legal and regulatory requirements.


Related Resources:

Five Advantages of Colocation for High Performance Computing

How to Know It’s Time to Move Your IT Infrastructure to a Multi-Tenant / Colocation Data Center

Colocation Solutions

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