7 benefits of colocation for your business and 4 challenges

Colocation -- the act of placing IT equipment within a data center owned and operated by a third party -- has proven itself in the market as organizations look to move away from the Capex, ongoing costs and problems of dealing with their own data centers.

While there are many reasons why it can be good for an organization, anyone looking to move to such a deployment must also consider the advantages and disadvantages of colocation.

Advantages of colocation

First, let's look at the benefits.

1. Greater overall flexibility

An owned facility has limited flexibility. It's hard to extend to meet increased needs, and it can also be difficult to shrink when higher-density equipment or fewer workloads are being served. A good colocation partner will allow customers to add or remove space as required. As such, colocation customers can be more flexible in their planning and in how they respond to the needs of the business.

This flexibility also allows for better planning for cloud migration -- particularly, where public cloud is involved. By having the capability to flex the amount of space being used, workloads can first be moved to the colocation facility and then replaced with cloud services over time, with the colocation space being freed up and the old equipment sold off or otherwise retired.

2. More predictable energy costs

With an owned facility, it's tempting to think that costs are reasonably predictable. However, energy costs can be unpredictable, and facilities tend to use a lot of energy in background areas such as cooling. With a colocation facility, the owner should have negotiated long-term, low-price agreements over energy costs, based on their much larger requirements compared to any single end-user organization.

3. Grid power availability

Although the equipment owner is still typically responsible for IT platform availability, the colocation facility owner is responsible for facility availability. As their business depends on this, they should have capabilities in place, such as multiple different power feeds coming in from different suppliers and physical directions.

4. Backup power

To back up the main grid power, a colocation facility owner should also have adequate failover power generation in place, and it should be tested on a regular basis to ensure that it will work as expected.

5. Network availability

Similarly, a colocation provider should have multiple high-bandwidth internet connections configured in the same way -- different providers coming into the facility at different points.

These three areas of multiple redundancy should better support the IT team's drive to provide business continuity and support business critical workloads.

6. Facility security

Many owned facilities have poor levels of security -- large numbers of employees might be allowed in and out, and few checks are in place to manage accessibility. A good colocation facility will have strong physical security in place: no one can enter the facility unless they are named and have been authorized by the customer, and they should have a work ticket with them stating what they can do. Perimeter security will also tend to be stronger -- most colocation facilities have anti-ram bollards or earth-filled planters to prevent burglars attempting to break through to get at the equipment inside.

7. Third-party services

A colocation environment will have many different customers within its facility. Some of these will be managed service providers in their own right. As the overall facility operates as a single high-speed interconnected environment, the customer can make use of such services without fear of data latency caused by poor WAN connectivity. Indeed, some colocation providers support high-speed interconnects to major cloud platforms, such as via Azure ExpressRoute and AWS Direct Connect.

Disadvantages of colocation

On the downside, the cons include:

1. Facility improvements

Once in a colocation facility, it becomes more difficult to insist that the facility owners maintain it to current standards. As far as they are concerned, it's more cost-effective to keep cooling equipment and power distribution systems as long as possible, wringing as much value out of them as they can. With power distribution, it might become a constraint if the customer wants to introduce hyper-dense servers that require large amounts of power and the facility doesn't support this.

2. Service-level agreements

With a colocation facility, you are just one of many customers. The facility owner will want to have standard agreements across as many of those customers as possible to keep things easy for themselves. It's hard, but not impossible, to negotiate bespoke service-level agreements (SLAs) for yourself. Unless you are a major customer to the facility owner, expect to have to pay more for bespoke SLAs and be ready to police them yourself.

3. Accessibility

Having fully controlled levels of accessibility to the facility is a strong benefit. However, it can also be a major issue. For example, assume that there has been a major server or storage failure within the customer's cage at the facility and the named engineer is off sick. Arranging for an alternative name to be added to the access list might not just be a case of a quick phone call. The facility owner might want proof of identity, so one might need to be provided before allowing that person on site.

4. Costs

With the facility owner having major negotiating skills with suppliers, customers benefit from lower prices and more predictable energy costs. However, some colocation providers can complicate matters with rules around overages in energy usage by the customer. For example, the customer might be signed up for 100 kW base provision, and then finds a need for a 110 vkW spike. Is that spike covered in the agreement, is it charged for by the kilowatt hour or does it tip the customer into a new tier that they are then stuck with until the end of the charging period?

Overall, most of the cons can be dealt with through essential due diligence and effective contract negotiation. The benefits are increasingly overriding any cons -- and those using colocation are finding that it's making them far more effective in their markets.