Colocation: The Evolution of Managed Data

Colocation: The Evolution of Managed Data

In today’s business landscape, data centers have not only become crucial for day-to-day operations in every industry, but they have also grown to be more complex and varied to help companies achieve their nuanced business objectives. Apart from a price tag that reads “most cost effective,” several dynamics, including location, convenience, security, efficiency, and reliability should all play a critical role in the formation of any data center strategy.

Colocation data centers—which lease space to enterprises for data center hosting—have become increasingly popular as businesses are realizing the plethora of benefits of leasing from a colocation, or colo, rather than building their own data center infrastructure. The revenue generated by colocations in the past two years alone signifies their growing popularity. From 2014 to 2015, colocations increased their revenue from $22.8 billion globally to a jaw-dropping $27 billion. This explosive growth is projected to continue and reach $33.2 billion in estimated revenue by 2018.


Compliance, hardware, software, security, energy efficiency, and cost have all contributed to the shift towards colos in the world of data and accessibility, but the ability to scale as needed is one of the defining benefits of leasing space from a colocation provider. Colocations offer volumes of flexibility compared to traditional in-house data centers because flexibility is built right into the design of most colocations.  Enterprise IT leaders are discovering that renting space from a colocation provider offers significant savings while allowing business to scale on a manageable schedule without making large upfront investments in hardware. Instead, they can provision exactly the right type and size of computing resources they need to power their newest bright idea or operate their IT department.

Cloud-computing technology within colocations also allows expanding businesses to simply and easily lease extra space with their existing contract. Amazon Web Services (AWS) and Azure, for example, both have global footprints in the cloud computing space and provide flexibility to scale. AWS and Azure let users access as many resources as they need, almost instantly, and only pay for what they use. Because usage from hundreds of thousands of customers are aggregated in the Cloud, providers such as AWS can achieve higher economies of scale which translates into lower “pay as you go” prices.


While the increase in connected devices has been beneficial to consumers and enterprises alike, the amount of data they generate and transmit will only continue to magnify. However, colocation facilities can mitigate the overwhelming torrent of information by acting as data processing powerhouses and aggregation points for clients’ data, which can also prevent internal servers from getting clogged with excessive information. Colos can redirect data traffic to underutilized servers through load balancers that help keep bandwidth efficient. The control of data currents is an essential component of cutting-edge colos that have a unique system of power redistribution.

The push to accommodate and improve the quality of high-bandwidth Internet services has established a whole new category of colo providers referred to as “edge data centers,” which bridge the gap between users and their access to data by increasing speed and stability. Furthermore, colocations can handle many core data protection tasks by offering enterprises with security edge in the form of advanced access control and robust network security through multi-tiered security protection systems and dedicated firewalls, all which ensure that our data is both internally and externally secured from hackers.

Colocations also offer advantages when it comes to consolidating various types of big data because they are primed for a high-density computing architecture. Rather than provisioning additional floor and rack space to accommodate increasing storage needs, facilities that follow a high-density model maximize computing power per square foot of space by housing multiple CPUs in each server – this means more data storage in less space. Colocations are generally ideal high-density environments because of their large energy capacities, optimized power delivery systems, and network interconnects. So by leasing colocation space, enterprises not only avoid the trouble of expanding their own infrastructure, but also reap the benefits of a more condensed and efficient computing architecture.

In-house Data Center vs Colocation


As specialists in data center operations, colocation providers dedicate substantial resources to achieving robust network performance for their clients, backed by Service Level Agreements (SLAs). Uptime is a key factor for data center clients, and colocations have been shown to provide better reliability. In fact, when surveyed over the previous year, 7 percent of data center operators reported having experienced at least five “business impacting” outages while only 3 percent of colocations experienced similar issues. Colocations are proving themselves to be up to the challenge of providing reliability with an always-on environment.

The Future of Colocation

Colocation providers have forged a relationship with flourishing businesses seeking economic solutions for data center hosting. With the number of colocations undoubtedly on the rise, here are a couple noteworthy trends to keep an eye on:

The Race for Unique Colocation Benefits

four largest colocation providers only account for 16.8 percent of expected colocation revenues by the end of 2016, meaning that there is significantly more competition amongst colocation providers to offer unique benefits that will entice customers. As colocations spread into new markets, Data Center Infrastructure Management (DCIM) software, both internally and externally, is on track to become a major component of colocation services.

The Changing Face of the Provider

As technology continues down the path of innovation, colocations will add new components and services to their infrastructures. The demand for a global infrastructure, support, and maximum capacity has pushed towards having lower latency and providing customers with a better experience at a minimal cost. Edge data center markets will expectedly continue to expand as providers build smaller hubs in areas that are increasingly bandwidth-hungry.

With 20 percent of all IT assets already housed in colocations and projected revenues skyrocketing, businesses expect their data to be secure, scalable, and easy to access. Colocation providers bear the responsibility of ensuring that these priorities are met.

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