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Server Colocation Services vs. On-Premises Which One Is Best and Cost-Effective

Lst updated on
April 6, 2021

Technology being a significant component for any business, IT infrastructure management is crucial. Without reliable data center management, delivering services to customers is challenging. Before building network systems, Organizations should decide on the best data storage solution which delivers desired results. Significantly there are three choices of implementation, on premise data center, colocation and cloud services.

Wondering which solution is best for business both at the moment and in the future as the organization grows?

Here let us concentrate on on-premise and colocation data center; both have apparent attractions.
Look through to find out a solution that fits you the best. First and foremost, understand what they mean and how they work.

    For Colocation Services VS. The Cloud Which One Is Best and Cost-Effective.


On-premises solution means the organization hosting its own data center on-site. Simply put, a company uses private data infrastructure to store its data and servers in-house. The organization is responsible for managing every aspect of its infrastructure, from operating systems to the power supply.

Opting for an on-site data center includes buying on-site servers, physical space, and infrastructure. Dedicated and skillful staff are needed in place to monitor and maintain servers, network, and security. In an on-premises system, The Company decides on its requirements and flexibly creates a system that matches their needs.

Security is the highest priority for any organization; an on-premise data center allows companies to have complete control over their data. This arrangement provides the ability to custom data access permissions. It adds high value for organizations dealing with sensitive customer information demanding strict compliance regulations.

Talking about the other side of the coin, setting up an on-premises data center demands high cost. Accommodating space, electricity, and cooling equipment for the infrastructure adds up to the companies’ expenditure. Training and appointing skilled labor for installation, up-gradation, ongoing network connectivity changes, security, and day-to-day maintenance is expensive. It will take up huge time and budget away from revenue.

Having an on-premise IT infrastructure has a drawback of flexibility; as the organization grows, infrastructure needs would also increase.  Hardware up-gradation will show a significant impact with a high budget in place. The organization itself should handle the risk of natural disasters, outages, and data loss.

On-premise is preferred by Organizations dealing with sensitive customer information, which demands strict compliance regulations.


If a company collocates with a third-party data center to place IT infrastructure and use bandwidth, security, and other resources provided by the third-party for data processing is called colocation services.

Let us drill down deeper about the colocation services for better understanding; in a general scenario, an organization will invest a significant amount in IT infrastructure for servers, hard disks, network connectivity and space. Later on, operational efforts to maintain a security system, cooling system, and power outages on a day-to-day basis would become a burden.

To perform all the operational activities mentioned above, we need skilled labor in 24/7 working shifts; the cost of running these infrastructures will swiftly add up. Hence, many companies prefer colocation - renting out space to place and manage their infrastructure. Storing data in a physical location owned by a third party refers to colocation service.

Here the company has complete control over the assets and the colocation provider handles cooling, power, security, connectivity, and space. Few colocation data center provides connectivity to top public cloud providers too.

There are two major types of services provided by colocation data center provider:

  1. If your organization has already purchased servers, the colocation provider would rent their place in the data center and charge for cooling, power supply, security and other based provided services. The service provider would arrange an IT specialist when the organization can't send their employee to the data center.
  2. Colocation provider would procure servers on your behalf and configure them based on your requirement. Renting their space to mount your routers to network configuration is taken care of by the colocation service provider. This category would help in the reduction of CAPEX.

Big organizations prefer colocation service to host their servers; it benefits them from not bothering about security, reliability, flexibility, maintenance.

Is On-premises or Colocation data center best?

Depending on your organization's requirements and resources being the critical factor, an enterprise must consider the right data solution.

An on-premises solution would be viable for an enterprise with high security, compliance requirement, and a huge IT budget. The cost of maintaining a data center is high; return on investment would not be justified unless the company outcomes desired results.

Colocation service will be an attractive option if you want to overcome the scenarios mentioned above. Listed below the advantages of choosing a colocation data center.

  • The colocation service provider will assure data availability along with SLA. On choice, data can be stored in two locations for redundancy. Necessary precautions would be taken against disaster management by often performing Business Continuity Drills. Centralized air conditioning and cooling systems will be provided to protect devices from overheating.
  • Installation and maintenance of the infrastructure is provided at a lower cost due to economies of scale. The price for the services, security, power, and scalability is shared between customers, making this less expensive than an on premise data center.
  • The cost of IT management, colocation service comes with a lower operational price. Colocation provides a two-way benefit: reducing the cost and helping employees in the organization to concentrate on development rather than solving server or network issues.
  • Scalability is a significant advantage in colocation service when compared to the on-premise data center.
  • The colocation service provider will also arrange an IT technician if needed, and the organization can also choose to have its support technician for accessing their infrastructure.
  • The colocation datacenter ensures high security by limiting access and protecting the infrastructure from physical attacks.


To sum up, Continuing with on-premise datacenter needs a high commitment to upfront capital and operating expenditure. For Businesses having stable needs, colocation service would be a better choice considering cost and resource allocation. In the present scenario, an off-premise data center is prioritized by most companies.
Server Colocation Service at an affordable price.

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