What Is a Colocation Data Center?

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Companies benefit from using colocation centers as part of a robust IT strategy. In a colocation center, companies rent rack space from the data center operator. This gives the company direct control over its computer servers with many other benefits of operating their equipment in a climate-controlled, secure environment.

It became apparent in the late 1990s that placing equipment in a collation center was more effective when compared to companies trying to maintain an onsite area for computer equipment. Even large enterprise companies found it to be more cost-effective to use colocation centers. This was due to the reduced capital expenditure and the financial benefits of the economies of scale that are possible when utilizing a large data center.

One of the main expenses for operating computer equipment is the electricity used. A colocation center that draws electrical power from a sustainable resource, such as hydropower, is vastly superior to a company using electricity from the power grid that relies on non-sustainable sources; moreover, if a data center is located near a source of less expensive sustainable power, the cost-efficiency increases.

Using colocation centers allows hybrid solutions that place some of an organization’s data resources in the cloud and protect proprietary resources in company-owned servers that are not public-facing.

Here are some of the other key benefits of using collocation centers.

Enhanced Security

There are many levels of security employed in colocation centers, which include physical barriers, network protection against data breaches, and emergency disaster preparedness.

Physical security includes such things as restricted areas, alarm systems, video surveillance, perimeter protection, and entry control using sophisticated identification systems such as biometric scanning. Onsite personal manage the security of the premises on a 24/7 basis. There is never a moment when the facility is not under secure surveillance by the onsite staff.

If a company wanted to provide this level of enhanced security, it would likely be too costly for a single organization. When placing equipment in a colocation facility, the colocation tenants share the cost of security, which makes it a minor portion of the total expense for each tenant. The capital needed to use state-of-the-art technology for enhanced security is an investment made by the owners of the colocation facility.

Companies that are required to remain in compliance with specific standards, such as the HIPAA rules for handling medical records, benefit from using a colocation facility that maintains the required standards. These standards may include conducting extensive background checks on the facility personnel and restricting access to sensitive areas.

Lower Downtime

For mission-critical functions, downtime is unacceptable. For example, being offline, with a website down for a few minutes, may cost a company thousands of dollars in lost sales. Using a redundant colocation facility strategy allows a company to maintain a high level of availability. Each colocation center makes an effort to avoid downtime by using the duplication of support systems for power, cooling, and infrastructure. Backup power is available in the case of an electrical grid failure.

Companies may also use redundancy of having more than one functioning and connected data processing system placed in different colocation centers. The connections between systems allow a multi-task data processing solution operating in real-time with balanced load sharing.

Operations may access identical copies of virtual servers, which run simultaneously in colocation centers located in different geographical areas. If one system goes down, the others pick up the processing needs, and the switchover is invisible to any user.

By having equipment in one colocation facility, the availability achieved might be 99.75% (22 hours of downtime each year). By adding a second colocation center, with real-time processing capabilities, the availability might increase to 99.99% (eight hours of downtime per year). By adding a third system configuration that processes data in real-time, the availability may increase to 99.995% (four hours of annual downtime).

Hybrid Cloud Solutions

A hybrid cloud solution combines the benefits of using cloud-based software as a Service (SaaS) with the ability to use private servers to hold proprietary data or to run legacy systems. Some data processing functions transition to the cloud where they operate more efficiently by running on a cloud-based offering, while at the same time, the company does not have to put everything on the cloud.

SaaS is convenient because there is no need to maintain any per-seat licensing, and software upgrades are always current as well as automatically updated. Strong cloud-based security, including point-to-point encryption and data transfer through secure information tunnels, supports protected communications between the systems. Application programming interface software (APIs) makes communication between the systems function correctly.

Most colocation centers already connect to large well-known cloud service providers such as Microsoft’s Azure and Amazon’s AWS. It is more convenient and cost-effective to access a high-speed connection to the cloud service providers through a colocation center than to pay for the expense of a company having a direct high-speed connection.  It is faster and more secure to use a company to the collocation-center to the cloud-service-provider as the connection, rather than for a company’s data to move across the public Internet to make a less-secure, slower connection to the cloud services.


Colocation centers offer scalability that allows the addition of more rack servers or a reduction in them as the company’s needs change. If a company chooses to manage its IT equipment onsite, then they must estimate their need for infrastructure, both currently and for the future of the next five to 10 years. When using a colocation facility, a company needs only to access the space required for servers and equipment to support current operations. The collocation agreement should allow the provision to be able to grow by renting more space in the colocation facility in the future.

Additional Support Services

Many companies find it very beneficial to not only rent rack space in a colocation center but also to access the support services at the center that may include inexpensive data storage for backups, infrastructure design, network management, and network security.

Many colocation centers have in-house staff available to provide these additional services. Some also use trusted third-party vendors, which they like to work with, and they recommend.


Businesses of all sizes benefit from using colocation centers because of the cost efficiencies, enhanced security, less risk of downtime, the ability to use hybrid SaaS solutions, easy scalability, and access to talented IT support staff for other needs.

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Disclaimer: The information provided on this blog is for informational purposes only and should not be taken as any form of advice.

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