How to Use Colocation to Your Advantage

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Let’s look at the colocation market and a few statistics; talk about why businesses are choosing colocation (i.e., the problems it addresses); and finally, review 10 strategies to select the best colocation provider.


What does the move off-premises look like?


The amount of computing workloads that are handled onsite has hovered at approximately 70% for the last few years, but research suggests cloud and colocation will be responsible for a greater share in the years ahead.


According to the Uptime Institute’s 2016 Data Center Industry Survey, fully half of IT decision-makers predict that most of their computing will eventually occur through a third-party facility. Among those, more than two-thirds (70%) say that they expect off-premise to outdo on-premise by 2020.


A substantial portion of the transition to external providers is headed for public cloud. However, many businesses will also be switching over to colocation, or colo – the rental of space within an external data center for a business’s own servers and hardware. This practice is called “colocation” (co-) because it collaboratively meets the business needs of the client: you provide the servers and storage, while the vendor provides the facility, physical security, climate control, bandwidth, and power.


Colocation vendors have been expanding. That’s evident with statistics from business intelligence firm IBISWorld that reveal a compound annual growth rate of 14.4% from 2011 to 2016 (with a total size of $14 billion).


Why do businesses choose colocation?


Here are some of the most common reasons businesses use colocation, according to senior IT executives:


  • Worldwide growth
  • Challenges related to mergers or acquisitions
  • Migration of systems that are not core business
  • Leadership instructions to move off internal hardware
  • Save the cost of building a new data center
  • Limit churn from noncritical computing into critical systems
  • Use of a different power grid for disaster recovery
  • Unsureness about in-house resources or staff.


Related: “Why Colocation?”


Michael Kassner of TechRepublic lists several other reasons for this practice that get a little more granular:


  • Cost-effectiveness – Because data centers can get volume deals on internet access and bandwidth, you can save on those costs.
  • Security – If an organization does not have an IT staff that has some security expertise, the colocation facility is better for data safety.
  • Redundancy – The amount of backup is expanded in terms of both power and the network. A business might have its own generators in the case of outages for uninterruptible power, but they often will not have diversified their internet connections with various vendors.
  • Simplicity – You own the software and hardware, so the businesses are able to update these components as needed without having to renegotiate with the vendor.
  • No more “noisy neighbors” – If you don’t have guaranteed resources in a VPS or cloud hosting plan, you can end up with other tenants hogging the resources (CPU, disk I/O, bandwidth, etc.), hurting your performance.


10 tips to select a strong colocation vendor


Any company that is using colocation is using some of its budget for data center capacity from an external party. Since that’s the case, they are entitled to expect that their vendors operate with at least as high of standards as they apply in-house. The brokering of services generally has become a more important skill for CIOs; as for colocation, the assessment, contract structuring, and management of these partnerships will become increasingly critical to the success of an IT department.


Here are tactics to make sure colocation works right for you (and you’ll notice that many of these direct questions cover similar ground to the above listed general reasons):


#1. Prioritize physical location. Yes, you want to be able to get to the facility easily for physical access; plus, be aware that data replication and network latency will be simplified and improved by relative proximity.


#2. Confirm third-party verification. You need to know that availability is fundamental to the infrastructure that you’re using. Make sure there is documentation to back up any claims made by the vendor about their ability to meet Statement on Standards for Attestation Engagements No. 16 (SSAE 16) or other key industry standards. If your systems are mission-critical, get evidence from the provider.


#3. Check for redundant connectivity. Note that redundancy is a key reason why colocation is a strong option. You want to make sure of the existence of connectivity backups. Reliability of these internet connections is also crucial.


#4. Look for commitments to security & compliance. Security should be a major concern of any data center, but verifying that commitment is a major concern for you. You also have to check that the vendor meets your regulatory requirements so you are protected and aren’t blindsided by violations.


#5. Review how the vendor will provide support. You need to make sure your needs are met both in terms of the hardware and support, as should be spelled out in the service-level agreement (SLA).


#6. Get a sense of business stability. Matt Stansberry of the Uptime Institute advises looking for a colocation facility that has been running for a number of years, by the same organization, with a consistent group of providers and clients. In other words, you do not want moving pieces but stability. Problems are likelier to arise when the vendor you choose gets acquired by another organization, reinstalls hardware, adjusts its operations, or is consolidating equipment. To gauge this aspect of the business, ask about the data center’s hardware lifespan, occupancy rate, and even employee turnover. Does the average staff member have a long tenure? Why not? And if the hardware is aging, do not be surprised if the firm is gearing up for potentially problematic upgrades.


#7. Assess the scope of services offered. Ideally, the vendor will provide a range of services. It may sound irrelevant to your specific and immediate concerns of getting your equipment colocated. However, diversity of offerings means that you can adjust if your organization’s needs change without having to go through the process of vetting a new provider again.


#8. Make sure that cooling and power are guaranteed. The SLA should ensure that power and backup power will be in place without exception.


#9. Confirm that operations are aligned with your expectations. You are likeliest to experience downtime when errors or oversights are made in operations. You will not always be able to get full paperwork (maintenance records, incident reports, commissioning reports, etc.), but getting what you can will give you a more transparent window into how things run at the vendor.


#10. Generally improve your RFPs and SLAs. Make sure terms are established well within an RFP or SLA. Specific ideas to enhance your effectiveness with these documents from the Uptime Institute Network include: 1.) staying brief (2-3 pages) so that potential vendors don’t feel overwhelmed by a massive document; 2.) remembering that due diligence must occur regardless what brands are currently using the vendor; and, 3.) keeping overprovisioning at bay by questioning hardware faceplate data and assuming excessive impact from an equipment refresh.




Are you looking to make the most of colocation as a strategy for IT at your business? The above considerations can guide you in the right direction. At Total Server Solutions, we meet the parameters of an SSAE-16 Type II audit; but our service is what sets us apart, and it’s our people that make our service great. Download Our Corporate Overview.