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

Presently, most companies are eyeing for outsourcing their data solutions on considering cost shrink, disaster recovery, on-demand delivery, skilled and dedicated labour, data management, and many such advantages.

Significant outsourcing services are cloud and Colocation Services. Organizations prefer their employees to spend their total time developing ideas that elevate their business rather than concentrating on server problems.

Are you in a dilemma of considering one which would be a better for your companies’ current requirements and also for upfront expansion?
Okay, let me help you. Before helping you decide on colocation or cloud services, allow me to brief what they mean.


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 centre 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 centre.

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.


On a lighter note, cloud hosting service is similar to colocation except for the fact that this is virtual.

Companies owning their physical server infrastructure might be vexed with upgrading, replacing failed components and surveillance. In cloud service, the total responsibility of managing services like deployment, security, data recovery, upgrading and networking owned by the cloud provider.

Suppose an organization picks up the cloud for hosting; it has to migrate all the data in their physical servers to virtual servers present in the respective cloud provider and handovers daily infrastructure management operations.

This service helps the organization to concentrate on development solely rather than troubleshooting server-related issues. All computing services are delivered directly to the customers over the internet.

We have types of services provided by cloud providers, namely public cloud, private cloud. A public cloud is a service, all servers belonging to different organizations will be hosted in a single place. In contrast, a private cloud is a customized space over the cloud that only runs your data; a dedicated environment is provided for each organization.

The data or information in this cloud services model will be available in a hard drive located in your cloud provider's physical location. Still, the organization will only have access to the data over the web.

With the basic understanding of the Colocation Data Centre and Cloud Data Centre, it makes our job easy to decide which service would be Cost Effective.

Let us now compare cloud and colocation services:

The tabular flow below refers to the significant comparisons between collocation and cloud services

SecurityHighLowIn colocation, dedicated infrastructure and control over the devices solely lie with the organization. The cloud provides shared infrastructure.
Initial CostHighLowOrganizations need to invest in infrastructure procurement. In contrast, we no need to procure devices in the cloud; we only pay for resources used (Pay-as-you-go model).
Upfront CostLowHighIn colocation, devices are procured initially for the organization and there would be only operational chargers. As the cloud is a pay-as-you-go model and the cost of resources is also high.
ScalabilityLowHighIn the cloud, resources can be added and terminated at any point in time. In comparison, scalability is a time taking process in collocation service.
Hardware accessHighLowIn colocation, monitoring tools are provided by the partner and the organization has control over the infrastructure. Cloud services offer data accessibility over the internet; the organization cannot manage devices.

Cons of Colocation Service

  • In the Colocation service, by paying rent to space in the data centre, we are provided with power supply and cooling equipment at a lower cost due to economies of scale.
  • Having a local data centre helps in high deliverability without latency which in return provides increased productivity.
  • Colocation services deliver top-notch data security by having total control over the equipment.
  • The colocation service provider offers round-the-clock support and infrastructure monitoring tools, which help in high visibility.

Cons of Cloud Service

  • Since the cloud isn’t a physical space, it’s far more flexible than a traditional IT infrastructure.
  • Easily Scalable and pay-as-you-go model.
  • IT Infrastructure management and refreshment are taken care of by the cloud service provider.

Is Colocation or Cloud Service Cost Effective?

  • Colocation services have a high upfront cost because of the hardware procurement. CAPEX value decreases in the long run. For massive data, having an own server would be cheaper. Over a while, the Hardware refreshment would be a burden to the organization.
  • Cloud services will charge based on the usage of resources. Although they provide scalability, flexibility and many other features, on boarding these features comes with a high cost. OPEX model significant. IT infrastructure refreshment cycle is taking care of by the cloud service provider. Customers don’t have access to manage the servers.

Expert Server Colocation Service Provider at an affordable price.


Initially, cloud service would be a cheaper solution, but colocation would be of great benefit as the company grows. The larger the resources you use - the higher the cost needs to be paid in the cloud model, whereas we don’t pay for extra usage in colocation.

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