25 July 2022

Is digital strategy still a colocation v. cloud debate?

Recent global disruption has been the catalyst for digital acceleration across industry, government and communities. It has created a flurry of infrastructure architecture projects to support new initiatives, operational change and business continuity; all of which resurfaces the age-old cloud vs colocation debate.

Understanding the cloud vs colocation conversation, and the differences between the two, is a good place to start.

Colocation vs Cloud in 2022: Exploring the ideal digital infrastructure mix


Cloud is an integrated platform of digital infrastructure which customers access on-demand either by internet or direct private networks. Multiple physical machines are aggregated to deliver computing power or data storage services delivered on a pay-for-use basis, metered by duration and performance level required.

As opposed to cloud, colocation refers to organisations embedding and self-managing privately owned physical IT and networking equipment within a specialised facility built to support digital ecosystems made up of multiple tenants.

Cloud services are used by individuals, IT services providers and organisations of all shapes and sizes as an alternative to owning and managing their own IT equipment. Achieving security and resilience at scale, cloud delivers flexibility and agility advantages as ‘virtual’ machines can be quickly scaled up or down. They are increasingly attractive for dealing with unpredictable change in a disrupted world where digital transformation is core to governance, growth and innovation agendas.

Infrastructure architecture can manifest as private colocation cloud with authenticated access only or public cloud colocation where anybody can provision their own services.

By comparison, a colocation data centre serves to operationalise the costs of delivering space, power, cooling, fire protection and physical security for IT and networking equipment. It is an alternative to investing capital to build and maintain your own digital infrastructure.

Premium data centre service companies attract an interconnected ecosystem of colocation clouds, carriers, other digital services as well as enterprise and government customers looking to locate themselves within close proximity to these providers.

Colocation v. cloud services – Which is right for your business?

Benefits of cloud

  • Rapid deployment of new computing power

  • Data secured in known locations to highest standards

  • Ability to scale up and down quickly as required

  • Unlimited storage capacity

  • Disaster recovery – data and applications always backed-up and restorable

  • Mobile access for multiple teams, locations and devices

  • Always using the latest hardware and software

Cloud computing takes the operational cost model for IT one step further past colocation by eliminating the need to manage your own systems and applications. Cloud infrastructure is often used by organisations to manage huge volumes of data that is now captured, transported and analysed to extract business intelligence.

Driven by digital megatrends such as the Internet of Things, 5G connectivity, artificial intelligence and augmented or virtual reality, cloud platforms – both private and public – provide a means for organisations to bring new computing power or storage space online quickly and efficiently. It can then be decommissioned just as quickly and you only get charged for what you use.

Eliminating the financial burden of procuring and managing infrastructure and computers frees up capital and human resources to be focused on other organisational priorities.

Benefits of colocation:

There are many reasons to choose taking space in a colocation facility rather than building and managing a facility in-house. Cloud and colocation are the future but not all applications are suitable to cloud migration.

Many legacy business systems and applications have been built upon platforms not easily compatible with cloud services. They have often been heavily customised with millions of dollars invested to develop unique solutions that meet specific business requirements.

Today such systems need to be integrated with clouds managing growth and innovation agendas to form Hybrid IT environments: a mixture of physical, self-owned equipment located either on-premise or in colocation data centres and virtual platforms managed in the cloud.

Some legacy applications generate enormous datasets that are analysed in the cloud to create insight that drives real-time business decisions. They are often latency sensitive and to provide actionable intelligence that enables optimal customer and user experience, close proximity between the two is essential.

Common reasons for data centre colocation include:

  • Capital expenditure required to build an in-house facility

  • Increased space requirements due to company growth

  • Increased leasing costs for office space per m2

  • Increased power density due to virtualisation

  • Locating legacy equipment closer to the clouds they are integrated with

  • Rising electricity costs

  • Cost to maintain or replace aging equipment

  • Floor loading limits within commercial buildings

  • Reduction of carbon footprint.

When considering a move to an enterprise-class, cloud-rich colocation facility, there are multiple benefits for customers.

Cost reduction – Organisations can turn capital expenditure into operational expenditure by outsourcing their data centre infrastructure. Customers are able to consolidate and significantly reduce the expenses of running an in-house environment with reduced overheads around staff, network connectivity, electricity, cooling, rental / property costs, equipment costs, maintenance on infrastructure and depreciation costs. In most cases total costs will be significantly lower than an in-house facility.

Security – Colocation facilities provide multi-layered physical security systems and site access controls including CCTV monitoring and sophisticated authentication and encryption technology, such as biometric readers ensuring access to infrastructure is restricted to authorised individuals.

Redundancy – Unlike in an in-house arrangement, where the data centre is reliant on mains power and office air-conditioning, enterprise-class facilities use specialised energy-efficient technology with redundancy across all critical systems and complex building monitoring controls. Customers benefit from highly reliable and available power supply managed to keeping IT equipment in an optimum operating environment.

Ecosystem access
Hybrid IT fundamentally involves interconnection between multiple partners, digital services, locations and clouds. Colocation data centres attract a broad array of clouds, carriers and digital services providers congregating together into one ecosystem. Being embedded in these colocation cloud facilities enables security, operational efficiency and cost reduction advantages around localised interconnection services to co-tenants and other data centres.

Sustainability – As organisations chase carbon reduction targets, IT is a growing burden on sustainability objectives. Cloud connected colocation facilities are engineered to reduce the amount of power consumed by IT equipment. Leveraging scale and operational excellence reduce costs and impact on the environment.

Reach out to us and we’ll help you navigate the decision making process behind choosing a Colocation or Cloud digital infrastructure.

There are many reasons to choose taking space in a colocation facility rather than building and managing a facility in-house. Cloud and colocation are the future but not all applications are suitable to cloud migration. Explore our whitepaper on the Benefits of Colocation.