I have been part of several private data center builds, and in my current role, I help many customers adopt Platform Equinix® to expand their footprint. My first foray into colocation came after the third time someone cut the communication cabling into the industrial park that our headquarters and on-premises data center were located in.
On top of that, every time there was a big electrical storm, the local power distribution grid would go down, sometimes for hours. As the business expanded, and reliance on key IT systems increased dramatically, we needed a better answer to ensure reliability for our data center. The question was: Should we build, run and service that ourselves, or should we look to the industry for help?
As they look to overcome their biggest IT challenges and future-proof their operations, many enterprises have to answer this same question for themselves. There are many factors they should consider when choosing the right model for their data center needs. This blog post will examine the differences between on-premises and colocation data centers, and help you choose which one might be right for you.
What is an on-premises data center?
An on-premises data center is owned and operated by an organization to host their private IT equipment. The organization is responsible for building the data center to their own specifications and ensuring that they have access to a reliable power supply to keep the facility operating. They’re also responsible for ongoing data center management, including upgrading the equipment and systems to support more advanced technologies.
What is a colocation data center?
A colocation data center is operated by a service provider that rents power, space and managed services in that facility to its customers. As the name suggests, multiple customers are colocated within the same data center. As IT requirements continue to evolve, the colocation provider will invest in improvements to the facility, and customers will benefit from those improvements at no additional cost.
What are the potential drawbacks of on-premises data centers?
As they work to become future-ready digital enterprises, many businesses have decided that on-premises data centers no longer figure into their strategies.
IT has changed, from users having to be close to the systems, to systems being distributed to meet users where they are. In the past, these businesses may have favored on-premises data centers as a way to ensure proximity to offices with high concentrations of employees. This is less important now that highly distributed workforces are common. In fact, businesses have to reach both employees and customers in different places throughout the world, so putting too many IT resources in one location often does more harm than good.
Unless they’re in the business of building large buildings, most companies don’t own their office space. Why should their data centers be any different? Building a new on-premises data center is time-consuming and expensive. The organization will likely have to secure millions in funding just to bring the data center online. Even after the data center is built, they’ll instantly have to start thinking about funding essential upgrades to keep the facility future-proof. Expanding capacity in the facility and setting up new connectivity will be slow, manual processes.
Also, there’s the simple fact that data center expertise is poorly distributed. Think of it like baking a cake: Anyone can buy the ingredients and follow a recipe. But if you want a good cake, then there’s no substitute for the knowledge and experience of a professional baker. In the same way, IT teams that only design data centers for their own companies won’t have the same level of expertise as those who do nothing but design data centers, and have worked on facilities used by thousands of companies around the world.
Just as colocation providers are specialists in building and operating data centers, every business has its own area of specialization. When businesses have to hire staff and dedicate time and resources to running their on-premises data centers, that takes them away from focusing on their primary business, making them less effective at the things that really matter.
How can shifting to colocation help?
Among the clearest benefits of adopting colocation are the financial ones. Instead of owning and operating buildings, businesses can shift to an OPEX-based cost model for data center services, which provides more predictability in their budgets. It also helps them feel more confident that they’re getting exactly what they’re paying for. In contrast, building an on-premises data center might require them to over-estimate their capacity needs just to be on the safe side, and thus end up with low utilization rates.
Infrastructure flexibility
Colocation can help enterprises expand their presence in existing locations as their business needs change. It can also help them expand into new locations quickly. This is why it’s particularly important to choose a colocation provider with a robust global presence, so that you can reach all the strategic global locations that matter to your business.
Ecosystem access
Modern colocation data centers have become the gathering place of the global digital economy. There are benefits just from deploying in the same location as so many other organizations. For instance, having low-latency access to many different network and cloud service providers all in one place makes it easier to expand connectivity and access innovative new services on demand. In addition, you can connect with enterprises in your partner ecosystem to exchange data and unlock collaboration opportunities.
Low-latency multicloud access
A cloud-first strategy, where data and workloads are stored in cloud native storage, can result in high costs, limited flexibility and compliance issues. In contrast, some colocation data centers provide a platform to enable cloud adjacent infrastructure backed by low-latency connectivity to multiple cloud providers. This can help you maintain control over your data, keep egress fees low and access cloud services on your own terms.
AI-ready infrastructure
As AI and other advanced use cases become more commonplace, it will be ever more difficult to support them using legacy on-premises data centers. Current AI systems require very high power densities and have onerous cooling requirements that are very difficult to satisfy on your own. Leading colocation providers have invested in advanced technologies such as liquid cooling that can help provide the cooling and power density needed for high-performance computing (HPC).
In addition, colocation providers offer partnerships with leading hardware companies that can be especially helpful in the AI era. This could include helping customers simplify the deployment of GPU capacity.
Sustainability
Running sustainable data centers is another example of something that’s difficult to do on your own, but quick and easy to do with the help of the right colocation partner. Leading colocation providers are investing to help increase the renewable energy supply to the grid and implementing data center efficiency improvements to use less power. Together, these efforts provide benefits that colocation providers can pass on to their customers, helping them meet their own sustainability goals.
To optimize colocation, work with the right partner
While the potential benefits of colocation are clear, not all providers are equally qualified to deliver those benefits. For example, only Equinix offers:
- A global colocation platform that covers 70+ strategic metros on six continents
- A partner ecosystem that includes 5,000+ enterprises, 3,000+ cloud and IT service providers, and 2,000+ network service providers
- A market-leading portfolio of low-latency cloud on-ramps
- A partnership with NVIDIA that makes it easier for customers to access the compute and services they need to succeed with AI
- Sustainability and efficiency leadership, including achieving 96% renewable energy coverage during 2023
To learn more about how the right colocation partner can help you keep up in a rapidly changing business world, read our vision paper, The future of digital leadership.
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