Cloud vs Colocation: Which is Best for Your Business?

Cloud vs Colocation: Which is Best for Your Business?

Whether cloud or colocation is the right choice for your business, one thing is certain: the past couple years have demonstrated the immeasurable importance of reliable data maintenance. Increased reliance on remote work, a greater frequency of natural disasters, and an uptick in cybersecurity attacks have demonstrated that businesses need reliable data centers. Cloud computing is often the solution that comes to mind first, but colocation or hybrid environments may be a better fit for your needs. We’ll do a breakdown comparison of cloud vs. colocation to help you decide what makes sense for you.

What is Cloud Computing?

Cloud computing is the delivery of computing services via an internet connection, allowing users to access cloud-based software, applications, resources, storage, etc. from any compatible and approved device and location. Cloud computing, when using a third-party cloud provider, doesn’t require organizations to invest in or manage on-premises infrastructure or hardware as the provider handles all investments, maintenance, and day-to-day management.

Born out of virtual machines and Software as a Service (SaaS), cloud technology rose to prominence in the early 2000s; and due to the variety of the cloud’s capabilities (from basic data storage and processing to scaling and running mission-critical applications), cloud computing has revolutionized the way many organizations operate today.

Types of Cloud Computing

Businesses that choose to manage their data via cloud hosting have public, private, hybrid, and multicloud options.

Public cloud services are a cost-effective cloud option for businesses that don’t want to maintain, purchase, or manage on-premises physical hardware.

A private cloud can be an on-premises solution or managed via a third-party provider and can be hosted near your office or closer to customers. It’s good for companies that need more control over their workloads and legacy applications that can’t be migrated to the public cloud.

Hybrid solutions consist of cloud and non-cloud infrastructure. This can be good for organizations that have legacy workloads that are too cumbersome to move, or businesses that have stringent and complex compliance requirements for some of their workloads.

Multicloud, a combination of more than one public cloud solution, is also a popular option.

What is Colocation?

Colocation (also referred to as “colo”) allows your business to operate its own IT equipment in a third-party data center. When using colocation services, it’s the data center’s duty to provide a secure, reliable environment for the customer’s hardware while the customer is responsible for maintaining and managing all of own their equipment.

With more traditional data centers shutting down, businesses are shifting to colocation and cloud hosting options.

Types of Colocation Services

Colocation can be done wholesale, retail, or as a hybrid between the two. Wholesale colocation is when a company rents out space in a data center, either a room or a whole cage. Larger companies that require the space and resources are likely to go with this option. Retail colocation is when a company rents out a cabinet or a rack in a data center. It is a more scaled-down option for smaller businesses that don’t need as much in the way of power and resources.

Cloud vs. Colocation: What Are the Differences?

While they can be used together, there are distinct differences between cloud and colocation in terms of equipment requirements, costs, scalability, agility, time to market, innovation opportunities, and level of involvement needed from the business.

Cloud computing service models IaaS, PaaS, and SaaS, tend to be more hands-off, where the infrastructure is hosted and managed by the cloud provider. With colocation, because you are renting space in a facility, you are responsible for more management, unless you work with a provider that offers colocation services.

Housing your workloads with a cloud provider is usually a more scalable option than colocation, but can also vary in price as a result since public cloud is normally a “pay as you go” service.

Cloud vs. Colocation: What Are the Similarities?

There are a few similarities between cloud and colocation.

In terms of scalability and flexibility, colocation and cloud allow customers to scale up and scale down resources as needed. Both services also offer robust redundancies (if one power system fails, for example, a backup can kick on and take its place to enable business continuity) and high availability.

Cloud and colocation also share a mutual dependence on data centers (for cloud: either on-premises or a third-party data center depending on where the cloud is hosted) to run IT infrastructure.

Advantages and Disadvantages of Cloud Computing

Cloud computing comes with a lot of benefits, including the following:

  • Improved cost-effectiveness, when it comes to infrastructure, real estate, and maintenance costs
  • Improved speed to market
  • Scalability to match the growing needs of businesses
  • Increased productivity and performance, freeing up your IT resources to manage other tasks
  • More security and disaster recovery protection in the cloud, especially when working with a cloud provider with additional managed services

However, there are also drawbacks to cloud computing. If the applications used are tied too greatly to one vendor, you may experience vendor lock-in, making it expensive or time-consuming to move to another cloud provider. While public cloud providers meet most major compliance requirements, they may not fulfill more niche regulatory standards. Customization in general is less possible with cloud computing compared to on-premises frameworks or colocation.

Advantages and Disadvantages of Colocation

Colocation benefits include: 

  • Saving money on on-premises data center real estate costs
  • Improved disaster recovery and physical security due to being located in a provider’s secure data center
  • The ability to scale without thinking about moving buildings, building new structures, etc. 
  • Cost savings from energy and facility management 
  • More options for connectivity when compared to an on-premises data center

If they are not used to their fullest potential, colocation services can be more expensive than cloud computing, due to the cost of a dedicated space or area and the capital expenditures (CapEx) from physical equipment. Colocation can be more customized than cloud, but it’s also less customizable compared to on-premises infrastructure.

Cloud vs Colocation: Use Cases and Business Considerations

When to Use Cloud Computing

If you don’t own your own hardware already, want to get up and running quickly, and are looking to work with experts to get everything set up with a cloud service provider, cloud computing is a great option. Small or highly variable workloads that need to scale are also well-suited for the cloud.

When to Use Colocation

Colocation can help ease the transition from legacy workloads, increase disaster recovery preparedness, and enable hybrid deployment. It’s a versatile option that offers a wide potential suite of services and physical features that make sense for almost any business.

Legacy workloads aren’t always ready for the cloud right away, due to equipment contracts that are not yet expired, additional development that needs to be done, or some other reason. Moving to a colocation facility is a step in the right direction without making any immediate major transitions.

Consider a Hybrid Cloud Deployment

The cloud and colocation aren’t mutually exclusive, and you can use both in a hybrid environment.

A hybrid deployment is an environment leveraging both cloud and non-cloud solutions to run their IT infrastructure, and it’s not uncommon to see businesses using colocation and cloud to reap the benefits of both worlds. With a a hybrid deployment, your business function is delivered across multiple clouds along with other on-cloud resources in a seamless manner. However, whether cloud, colocation, or a hybrid environment is the best path to venture down depends on elements like:

  • Your workloads
  • Your legacy data
  • How much you’d like to own and manage or rent
  • How customized you want your experience to be

Choose the Right Cloud Computing, Colocation or Hybrid Service Provider

Whether you’re looking to leverage the power of cloud services and solutions, or bring some of your existing workloads into state-of-the-art facilities, working with a service provider can make the process easier. TierPoint offers colocation and cloud services for businesses looking to adapt, become more agile, and reduce their overhead.

Interested in exploring which cloud platform may be best suited for your needs? Download our Journey to the Cloud eBook today.

Journey to the cloud ebook
What are the Cost Differences Between Cloud vs Colocation?

Cost-effectiveness for cloud and colocation will depend on a number of factors, including hardware you already own, the amount of services and space you need, and the provider you’d like to use. For most small to medium-sized businesses, cloud is more cost-effective.

Can You Use Both Cloud Computing and Colocation?

Yes, many businesses use both cloud computing and colocation to benefit from both technologies in different ways. For example, a legacy workload can be moved to a colocation service, while other, more flexible applications can move to a cloud provider.

What is the Hybrid Cloud Approach to Cloud vs Colocation?

A hybrid deployment is an environment leveraging both cloud and non-cloud solutions to run their IT infrastructure. With a hybrid cloud, your business function is delivered across multiple clouds along with other on-cloud resources in a seamless manner.

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