This content is part of the Essential Guide: Consumption-based, pay-for-what-you-use IT as a service

Assessing colocation vs. cloud for hybrid IT infrastructure

When transforming operations to a hybrid IT environment, there's one other option to consider beyond the premises, public cloud and hybrid. Learn the many advantages of colocation.

As enterprises digitally transform into data-centric operations, IT infrastructures are undergoing a unique transformation of their own.

"The data center, once the central cog in the IT machine, is quickly becoming only a piece of a larger and more complex environment," reported Enterprise Strategy Group (ESG), a division of TechTarget. "Contemporary IT infrastructure is often distributed across multiple locations both on- and off-premises."

For companies morphing their IT departments into a hybrid IT infrastructure, conventional wisdom dictates three options or a combination thereof: operate on premises, migrate to a cloud-based infrastructure or adopt a hybrid cloud model.

"[T]here's actually a fourth option, too, that is less frequently talked about called colocation," said Brien Posey, whose 30 years of IT experience include lead network engineer for the U.S. Department of Defense, CIO for a chain of hospitals and healthcare facilities, network administrator for major insurance companies and Microsoft MVP. "And in many cases, colocation is just as good -- if not better -- than using the cloud."

Several factors differentiate colocation providers from cloud providers, according to Posey. One of the major differences is that cloud providers supply customers with the necessary hardware while customers in a colocation facility provide their own hardware. "[T]he advantage is that you can use anything that you want," Posey explained. "And you can configure that hardware to meet your needs exactly. You're not locked into the cloud provider's approved configuration."

In addition, cloud providers charge customers a monthly fee based on workloads and the resources used. Since colocation customers are using their own hardware, Posey noted, "all you're really paying for is the space within the colocation facility that you use. … [I]t gives you much more predictable pricing. You don't have to wonder what your fees are going to be next month because you generally sign a lease at a flat rate."

In this video, Posey describes in detail these and many other differences, as well as the advantages and disadvantages, when choosing a colocation vs. cloud provider in a hybrid IT infrastructure.


Hello and welcome. I'm Brien Posey, and today I'm going to be talking about hybrid IT done right when colocation is better than the cloud.

So, for those who don't know me, my name is Brien Posey and I'm a freelance technology author and speaker. I'm also a 20-time Microsoft MVP and a commercial astronaut candidate. Before I went freelance, I served as CIO for a national chain of hospitals and healthcare facilities. I was also the lead network engineer for the United States Department of Defense at Fort Knox. And, I've worked as a network administrator for some of the largest insurance companies in America. So, that's just a little bit about my background. Let's go ahead and get started.

Over the last 10 years or so, we've seen the public cloud become extremely popular. As a matter of fact, it's become so popular that most larger organizations have adopted a cloud-first approach to IT operations. As a matter of fact, the cloud has become so popular that conventional wisdom has begun to dictate that there are three basic ways of conducting IT operations: You can do IT in the cloud, you can do it on premises or you can create a hybrid cloud. But there's actually a fourth option, too, that is less frequently talked about called colocation. And in many cases, colocation is just as good -- if not better -- than using the cloud. So, that's what I want to talk about in this presentation.

So, what is colocation? Well, in order to answer that question, let's talk a little bit about the public cloud. The public cloud is often described as a consumption-based model. In other words, there are compute resources within the public cloud, and those resources are shared by a number of different subscribers -- or tenants, as they're often described. And each tenant only pays for the resources that they consume. These resources include things like storage, compute resources and network bandwidth. Well, colocation is also a consumption model, but it's a different type of consumption model. Because rather than leasing compute resources, you're leasing space within a shared data center. This might be rack space, it might be cabinet or a cage space, or you might even lease an entire room. Now one of the most important things to understand about leasing space within a colocation facility is that you're doing just that: leasing space. It's up to each tenant to provide their own data center equipment to put inside of that space.

But having said that, there are some additional things that you get besides just physical floor space or rack space. Now, what you get varies widely depending on which colocation facility you sign a lease with. But some of the things that are often included include physical security -- in other words, not just anyone can walk into the building. There is some physical security in place to protect your equipment. You might also expect to get guaranteed reliability. Colocation facilities often provide an SLA [service-level agreement] that guarantees a certain amount of power availability and internet connectivity. Likewise, you might expect to receive cross connectivity. Cross connectivity describes the ability to connect to another network. You might connect to partner networks for vendors who are also set up in the same colocation facility. Or, you might have a direct connection to a cloud provider or some other provider. Likewise, you might expect to have redundant internet connectivity and redundant power. And that plays into that SLA that I described a moment ago. Colocation centers are also typically designed with regulatory compliance in mind because the providers know that many of their would-be subscribers are subject to various regulatory burdens. So, they design the facility especially to comply with those regulations. So that way, it makes things just a little bit easier on their tenants. Another thing that you might expect to receive is technical support. And that's something that can vary widely, and that I'll be talking a little bit more about later on.

So, now that I've talked a little bit about what a colocation facility is and what you might expect to receive when you sign a lease with a colocation facility, let's talk about some of the advantages associated with using a colocation facility. The primary advantage, and the one that seems to get the most attention, is that it's less expensive to lease space in a colocation facility than to construct a new data center or to expand an existing data center. So, conventional wisdom is that if your data center is running low on space and you need to expand, then a less expensive option for doing that is to simply sign a lease with a colocation facility, rather than trying to expand your own data center. As I previously mentioned, when you sign a lease with a colocation facility, you're expected to provide your own data center hardware to place inside of that facility. And this is in stark contrast to the cloud way of doing things. Because in the public cloud, the cloud provider provides the hardware. And this is one of the big advantages that's often marketed with the cloud is that the cloud provider buys the hardware and you simply lease space and time on that hardware, thereby freeing you from having to make a large upfront investment in hardware. And that's often considered to be an advantage. But there's also advantages associated with having your own hardware and placing that hardware in a colocation facility.

One such advantage is that by having your own hardware, you're allowed to use the hardware that makes the most sense for your business and your own unique needs. Because cloud providers use very standardized hardware, you don't have the freedom of picking and choosing what type of hardware you want to use. But in a colocation facility, you can use anything that you want. Another thing that you have to think about is that a colocation facility gives you the ability to configure your hardware in a way that makes the most sense for you. In a cloud environment, multiple tenants share the same hardware. And so, the cloud provider has to aggressively secure that hardware in order to keep any of the tenants from being able to compromise the underlying operating system or any of the associated infrastructure. In a colocation facility, things are completely different because you're using your own hardware -- you're not sharing that hardware with anyone else. And that means that you have full access to the low-level configuration, which you wouldn't have in a cloud environment. And it also means that you can configure that hardware any way that you want. Additionally, because each tenant owns their own hardware, the hardware isn't being shared across multiple tenants. This helps with security because you don't have to worry about another tenant doing something that's going to compromise the security of your hardware. And it also helps with performance because you don't have to worry about the noisy neighbor syndrome, in which another tenant causes an extreme amount of activity and that diminishes the performance of your own workloads. So, none of these types of things are a factor in a colocation facility because you are using dedicated hardware. Now, in all fairness, some cloud providers do give you the option of leasing dedicated hardware within the cloud. But even in those types of situations, the cloud provider itself still controls the low-level configuration of that hardware.

Another advantage that you sometimes get through colocation is scalability. Now, scalability is one of those things that's most often discussed with relation to the public cloud. The public cloud is known for its scalability because the public cloud providers -- at least the larger ones -- have a nearly unlimited amount of hardware resources available. So, if you've got a workload that needs to be scaled up, then all you have to do is acquire some additional hardware resources from the cloud provider, and then that workload can scale on an as-needed basis. If demand subsides later on, you can just as easily scale down the workload and release those hardware resources, meaning that you're no longer being charged for them. Now, this type of scalability isn't available in a colocation environment -- because, remember, you're using your own hardware, you're not leasing hardware from a cloud provider.

Having said that, though, there is still a type of scalability that is available. And that scalability has to do with leasing additional space because, very often, additional space is available within a colocation facility whenever it's required. So, if you find that you're going to need some additional hardware resources, it's typically going to be very easy to lease some additional space within the colocation facility that you're already using and then simply purchase hardware to put in that newly leased space. Now, obviously, this type of scaling isn't quite as carefree as what you get in the public cloud because you do have to sign a lease and you do have to purchase hardware. But, it is much simpler than achieving scalability in your own data center. Because, think what's involved in scaling a data center that you already own: You would typically have to engage in a large-scale construction project in order to expand that data center if you don't already have the space available, and there's going to be significant cost available with that; you may not necessarily have the physical space available to expand the data center; and, it's also going to be a very time-consuming process. Conversely, in a colocation environment, you can scale almost instantly because that space is already there and available for your use.

Another advantage that's commonly associated with the use of a colocation facility is that colocation facilities typically have top-notch physical security. In order to get to your data center hardware, for example, you're usually going to have to pass through multiple security checkpoints. Even within the colocation facility, tenants' resources are physically separated from one another. They might be in separate rooms or, more commonly, they may be separated by fences with locking gates -- meaning that you only have the ability to access your own hardware.

Another advantage that's often associated with colocation facilities is that these facilities almost always provide some level of on-site technical support. Now, the degree of support that's available is going to vary from one colocation provider to the next, just as cloud providers offer varying degrees of technical support. Some providers offer only basic support, whereas others offer advanced support. Likewise, remote hands support might be offered, or it might be required. I'll be talking more about remote hands in just a moment. Some facilities also offer a next level of support called smart hands. I'll be talking about that in a moment as well.

So, let's talk a little bit about remote hands. The idea behind remote hands is that someone working for the colocation facility handles various service and maintenance tasks for you so that you don't have to. Essentially, their hands are performing a task remotely so that you don't have to go into the colocation facility to do it. So, what types of tasks? Well, the tasks that are available through a remote hands program vary from one colocation provider to the next. But some of the things that may be included include things like moving or securing network cables; network router and switch configuration tasks; server refreshes; server reboots; hardware and software replacement or installation; power cycling; inventory management; labeling hardware devices; handling shipping and receiving requests; reporting on equipment performance; and performing audits. So, those are just a few of the things that might be included in a remote hands program. Now, having said that, it's very important to understand that some colocation facilities offer remote hands program. Some other facilities require a remote hands program. I mentioned a moment ago that colocation facilities pride themselves on having top-notch physical security, and some facilities take that security to the point that they don't even allow tenants to set foot in the facility. Instead, all service and maintenance is handled through a remote hands program so that tenants never have to come on site. Members of the colocation facility staff handle everything on the tenant's behalf through their remote hands program.

Another support option that colocation providers sometimes offer is something called smart hands. Now, not every colocation provider has a smart hands program in place, and the ones that do generally offer it as a premium. For example, if remote hands is included in your basic colocation lease at no additional cost, then the provider will typically offer smart hands for an hourly rate -- although they may bill that in increments of half an hour or even 15 minutes. If, on the other hand, the provider does charge for remote hands, then they'll typically charge at a higher rate for smart hands.

So, what's the difference between the two? Well, remote hands generally involves performing very basic tasks, such as cycling power on a server or something like that. Smart hands, on the other hand, might include things like receiving and installing new equipment or replacing failed hardware components -- things like hard drives or power supply units or things like that. Now, you'll notice that there's a little bit of overlap here. I mentioned receiving and installing new equipment as a part of a smart hands program, but I also mentioned that with regard to remote hands. And the reason for that discrepancy is that some providers do include receiving and installing equipment as a part of the remote hands program -- especially if the provider requires remote hands and doesn't allow tenants to enter the data center because, otherwise, how would they install equipment? But, for providers that do allow physical access to their data centers, they typically include things like receiving and installing new equipment as a part of their smart hands program because the tenant does have the option of doing that themselves, but they can opt instead to pay a fee and have the provider do that for them instead.

So, I've spent quite a bit of time talking about what a colocation provider is and how colocation providers operate. But how do colocation providers compare with cloud providers? Well, there are several distinct differences between the two. For example, cloud providers supply the required hardware, while colocation facilities require customers to provide their own hardware. Now, there are advantages and disadvantages to each.

In the case of a cloud provider supplying the hardware, the advantage is that you as a tenant don't have to go out and purchase that hardware. But having said that, in a colocation environment where you are required to supply your own hardware, the advantage is that you can use anything that you want. If you want to use commodity hardware that comes at a low cost, you can certainly do that. If, on the other hand, you want to use top-of-the-line, high-performance hardware, you can do that as well. It's entirely up to you what type of hardware you want to use in a colocation environment. And you can configure that hardware to meet your needs exactly. You're not locked into the cloud provider's approved configuration.

Another major difference between cloud providers and colocation providers is that cloud providers offer managed services for workloads. They might offer databases as managed services, for example. They also offer platforms where you can host virtual machines. Colocation providers don't do this; instead, a colocation provider focuses on leasing data center space, and it's up to you what you do with it. The advantage to this is that you're not locked into the services that the cloud provider offers or the cloud provider's way of doing things. If you want to run some piece of software, there's nothing stopping you from doing that -- whereas in a cloud environment, you may or may not be able to run that particular software or that particular workload.

Another major difference between cloud providers and colocation providers is that cloud providers charge you a fee each month based on the resources that you use. This includes things like compute charges, storage charges, even data egress fees Colocation providers don't do this -- because, remember, you're using your own hardware. So, a colocation provider isn't going to charge you a fee just to use your own hardware. All you're really paying for is the space within the colocation facility that you use. Now, having said that, there are some providers out there that will charge you a fee for electricity and for internet connectivity. That's a fairly normal thing. But you're never going to pay a fee for the CPU resources that you consume on your own servers, for example. So, the reason why this is such an advantage over the cloud way of doing things is because it gives you much more predictable pricing. You don't have to wonder what your fees are going to be next month because you generally sign a lease at a flat rate, and you know from one month to the next what that lease is going to cost you. In a cloud provider, your monthly usage fees are going to fluctuate based on your workloads. So, it's hard to predict with any certainty what you're going to be paying each month to use the resources within the public cloud.

Another major difference between colocation providers and cloud providers is that cloud providers don't allow you to have low-level infrastructure access. On the other hand, colocation facilities require you to supply your own hardware. And because you own that hardware, you're able to configure anything that you want, right down to the lowest level.

One last concept that I want to talk about is that of hybrid clouds -- because most organizations today operate in a hybrid cloud environment, meaning that they use public cloud resources but they also use private cloud resources within their own data center. And those public and private clouds are joined together to form a hybrid cloud. Now, adopting a colocation facility doesn't force you to give up the idea of creating a hybrid cloud. Because, remember, a colocation facility is really just a multi-tenant data center. What you put into that data center is entirely up to you, as is how you configure that equipment that you put in the data center. So, you can build a private cloud at a colocation center, just as you could create a private cloud in your own data center on premises. Similarly, a hybrid cloud can consist of resources in the public cloud and resources in a colocation facility. And it's becoming increasingly common for hybrid clouds to span multiple public clouds, on-premises data centers and colocation facilities. So, you have resources located in a variety of different locations, all working together to deliver the hybrid cloud experience that you need.

So, the bottom line is that both public clouds and colocation facilities are off-site multi-tenant environments, the difference being that public clouds supply all of the hardware and bill you for your hardware usage, whereas a colocation facility bills you for the space that you consume within the data center. Neither one is necessarily superior to the other; both have their place. Having said that, you shouldn't expect to use a public cloud in every situation. There certainly are situations in which a colocation facility is the better choice. This is particularly true if you're looking for predictable costs each month, or if you need absolute control over your hardware resources because you're not going to get that in a public cloud environment.

So, that's going to do it for this presentation. I certainly hope that you found it informative and enjoyable. I'm Brien Posey, thanks for watching.

Dig Deeper on Colocation, hosting and outsourcing management

Cloud Computing
and ESG