Colocation Vs. Cloud: When Is Colocation the Right Choice?

For many years, colocation was the most popular form of server hosting for businesses that needed more than a small infrastructure deployment, but, over the last decade, the cloud has become the default choice for many businesses. Cloud servers are convenient, flexible, and scalable. Unlike colocation, the cloud requires little upfront investment. Nevertheless, colocation has a role to play in businesses that want complete control over their infrastructure, but don’t want to build and manage a data center.

Colocation places owned infrastructure in a third-party data center. Servers, switches, and other networking equipment are purchased by the business. The data center provides power, a connection to the internet, and little else. Some colocation data centers also offer hands-on support, but, for the most part, the hardware is managed by its owner.

In the cloud, the physical infrastructure is managed by the vendor. The user has little control over or insight into the physical servers or network configuration. Instead, they have access to on-demand virtual machines that behave much like “real” servers from the perspective of the user.

The Advantages of Colocation

There are three important advantages to colocation: hardware choice, control, and privacy. Colocation users buy the servers and networking equipment that best suits their project. This allows them to build specialized deployments that exactly match a project’s needs. For instance, some machine learning algorithms benefit from parallel processing on multiple GPUs. Colocation allows users to buy the hardware that makes the most sense for that scenario.

Colocation users have complete control over how their hardware and the software that runs on it are configured. Again, this is useful for businesses with specialist requirements. Financial trading companies often prefer colocation because it allows them to build and configure extremely low-latency networks — something that is not possible in the cloud, which affords little control over the network layer.

Finally, colocation is the ultimate in server and data privacy. Only the owner runs software and stores data on colocated servers.

Disadvantages of Colocation

Colocation users buy and manage their own infrastructure. That means a large upfront capital investment which can be prohibitively expensive for startups and smaller businesses. For established businesses, this is less of a disadvantage. If the infrastructure is used effectively, it will pay for itself over the course of its life.

In the cloud, much of the complex infrastructure management and configuration is handled by the vendor. That’s a major benefit for businesses that don’t have the technical expertise and want to avoid the expense of hiring.

Finally, colocation is less “elastic” than the cloud. For highly variable workloads, the cloud is often a better option. The alternative is colocated hardware that is left idle for much of its operational life.

Is Colocation Always More Expensive?

Colocation has higher upfront costs than the cloud, but that doesn’t mean it always works out more expensive over the life of a deployment. For predictable workloads that don’t need to be scaled up or down quickly, owned infrastructure is often less expensive than an on-demand cloud platform. Before making a choice, businesses should consider the total cost of ownership for both server hosting modalities. Often the cloud is more economical, but not always.

Cloud and colocation have advantages and tradeoffs that depend on the requirements of the user. The cloud is often the most economical and flexible choice, but if control, customizability, and privacy are important concerns, colocation should be considered.