Colocation vs. Cloud - Which Is The Better Solution For Your Business?

Posted on Apr 9, 2019

These days in many IT circles and admin coffee rooms, you'll likely hear some passionate debate about the "colocation vs. cloud?" question.

For many enterprises, colocation may seem a bit too "old-school," while cloud computing appears to be the grand disruptor. This is especially the case since so many major players have entered the space, such as Amazon, Google, and Microsoft.

As we discuss in this installment, however, you may find that things may not be as clear as they may seem in this ongoing debate.

The fact is that both of these technologies still serve essential roles and purposes when it comes to managing a robust data infrastructure for any business. As the ongoing trends (that we covered in a previous post) such as AI, IoT and others continue finding their way into the business/corporate ecosystem; the answers may become even more complicated.

Conversely, the more growth that these trending technologies experience in the coming years, the more that both colocation and cloud will grow as well.

Let's start the discussion by covering some common questions that are asked when it comes to "colo vs. cloud":

1. What’s the difference between them?

To cut to the chase, the main difference is hardware. In the colocation scenario, the company owns or leases the actual server hardware and places it in a private, secure data center. The data center then manages the data connection, network security, cooling, power management, and all other relevant infrastructure requirements needed to keep the colocated server humming, safe and secure.

Cloud computing, on the other hand, relieves the company of needing to maintain any hardware of its own at all. The equipment is managed and operated by the service provider, along with everything else that would be handled by a contracted data center. In cloud computing, the network and data infrastructure is also location-independent due to a redundant architecture that's geographically-distributed.

This strategy enables the network infrastructure to operate with higher security and reliability while making it less subject to any interruptions or downtime. At the same time, it provides real-time protection and backups to all company data stored and running on the cloud infrastructure.  

2. Which option is better for big companies? … and for small companies?

The better question to ask would be: "What’s best for my business?”
Much of which solution should be utilized by a business will widely depend on varying factors that don't necessarily change depending on the size of a company. For example, a small two-person 3D-rendering shop may benefit significantly from having a robust and scalable cloud-based solution for their data infrastructure. In contrast, a large multi-national retailer may benefit more from a tidy well-strategized colocation scheme. It's all a matter of what gives the best "fit" for a specific business' needs.

All that said, it appears that smaller businesses are going for the cloud more and more, at least at the outset. This rising trend is due to high-scalability, low overhead and upfront cost. Another plus is no need for in-house admins or IT staff.

3. What’s the difference in cost?

Here’s a quick breakdown in general terms:

For our example, we’ll focus on a large, rapidly growing e-commerce enterprise that needs to handle high website traffic, support inquiries and a rising number of simultaneous purchase transactions.

Cloud Solution Scenario:

128GB RAM 2x10 core setup

Including any upfront costs, typical support during setup/implementation and related costs: Approximately $2000 per month

Colocation Scenario:

Initial hardware investment (to purchase new):  A server configured with 2x10 core Xeon E5x CPU – approximately $2500-3000

IT Staff/admin cost (in-house) to maintain/manage colocated server: $75-100,000+ per year (minimum). For offsite/outsourced administration, this cost can be reduced by as much as 50% or more.

After reviewing this lean and mean analysis, it's evident that the cloud solution has its own unique set of advantages cost-wise. When the hardware investment is taken into account, that makes the case even stronger. Since it's clear that it will get outdated significantly over just a few years.

Nonetheless, if a business can streamline the administration needs and costs of a colocated server, the value of the colocation solution can't be ignored.

For a growing number of larger companies, the colocation route makes more sense because they have the budget and the staff to run and manage the infrastructure. Thus they will likely save money in the long run while maintaining complete control over their infrastructure. That said, they may adopt a cloud-based solution for data security and backups for their colocation setup.

4. Are there certain industries that may benefit more from one solution vs. the other?

A cloud solution may better serve companies with multiple locations that utilize common applications and share data in most cases. Then again, they may want to use a colocation scenario for specific needs to have more control over data security and other aspects.

It’s important to remember that it’s not a zero-sum equation when it comes to choosing one over the other. For many businesses, the right solution may be the smart implementation of both cloud and colocation.

For many businesses, colocation may be a required solution if they're still using a legacy application or platform that can't work on a cloud infrastructure. Rather than go through the cost and hassle of developing or taking on a new platform, running the legacy software on a colocated server may be the smarter option.

Once a company lays out all of its needs to efficiently run its operations in a secure, reliable and scalable manner, it needs to take account of all the options and solutions that are available. Whether the solutions end up being colocation, public cloud, private cloud, IaaS, SaaS, or any combination of them, the key is to tap into the best choices for the unique needs of an individual business.

At A&A Office, we're experts at helping enterprises of any size to find the right colocation, cloud or hybrid solution that will fit their business like a glove. While at the same time, provide easy scalability and flexibility for future growth.

If you're looking for the right solution for your growing business, we can help.  

Reach out to one of our experts today!

Back to Blogs

Subscribe to our blog