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How to Choose Between IaaS vs. Colocation: Making the Right Decision

How to Choose Between IaaS vs. Colocation: Making the Right Decision

IaaS and colocation are the two main ways for businesses to get the IT infrastructure they need. While both approaches serve the same purpose, they take very different approaches to achieving it. To help you decide which is the right option for you, here is a quick guide to IaaS vs colocation.

What is IaaS?

IaaS is Infrastructure as a Service. It uses the cloud to deliver a virtual equivalent of standard IT infrastructure. With IaaS, clients specify what type of IT infrastructure they want. Vendors replicate its functionality on their own infrastructure. They then package this functionality as virtual machines. Clients access and use these in essentially the same way as they would use physical machines.

What is colocation?

Colocation is when businesses rent space in a shared data center and use it to hold their own equipment. This effectively means that they get the use of a private data center without the cost and administrative overheads of running one.

IaaS vs colocation

The answer to IaaS vs colocation used to be fairly simple. If you need to comply with stringent data-protection programs, colocation is the best option. If you don’t, IaaS is best.

Now, however, many IaaS providers are compliant with all the major data-protection programs, including global ones such as GDPR. This means that the IaaS vs colocation debate has shifted onto different grounds.

IaaS vs colocation in brief

If you are looking for maximum scalability, then IaaS is a better option than colocation. If, however, you are looking for maximum customizability, then colocation is a better option than IaaS.

IaaS vs colocation in practice

If you’re not sure whether scalability or customizability is more important to you, then your choice of IaaS vs colocation may come down to other factors. With that in mind, here is a quick guide to IaaS vs colocation in practical terms.

Upfront costs

This is a clear win for IaaS as there are no upfront costs at all. In fairness to colocation, however, it has a clear win over running a truly private data center.

Running costs

Running costs are likely to be much the same for both IaaS and colocation. This is because, at the end of the day, both require much the same amount of resources and labor. The only real difference between them, in this regard, is who is responsible for organizing it.

Flexibility of billing

This is a clear win for IaaS. The fact that IaaS scales more easily than colocation means that there is much more scope for vendors to offer flexible billing. Most IaaS vendors will offer both committed tariffs and fully usage-based (pay-as-you-go) options.

Many clients will use a mixture of both. Signing up for committed tariffs gives them access to the most economical prices for their core needs. Using pay-as-you-go as required allows them to have maximum flexibility to scale their infrastructure.

Speed of implementation

With the public cloud, you can literally be set up and running in just a few clicks. With colocation, by contrast, the client has to arrange for the physical installation, maintenance, and removal of equipment.

This means purchasing equipment and hiring in-house IT staff and/or external service providers. It also means having a plan to decommission the implementation once it has served its purpose.

Having just said that, getting set up with colocation can generally be done fairly quickly. Likewise, decommissioning a colocation implementation is usually very straightforward. It’s just invariably going to be slower than setting up or taking down the equivalent infrastructure in the public cloud.

Management overheads

Again, this is a clear win for IaaS. No cloud service is entirely free of management overheads. In fact, as cloud services go, IaaS is actually one of the more demanding options. This is because it involves basically the same considerations as running traditional infrastructure. It’s just done virtually.

With that said, the fact that it’s done virtually does make it easier than managing physical infrastructure. Using colocation is a lot easier than having to manage a private data center. The provider will take care of all the physical infrastructure (and security).

At the same time, it still requires clients to manage physical equipment. With IaaS, updating your infrastructure is generally as simple as pressing buttons on a console. At most, it will require updating your contract with your vendor.

With colocation, somebody has to go out to the colocation site and physically install/remove equipment, unless you have remote hands with your provider. This will generally involve updating physical elements such as cabling as well as making software changes.


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