Colocation (also known as “colo” or “co-location”) refers to a fundamental set of technology infrastructure services provided by third-party “operators” to clients from one or more purpose-built buildings known as datacenters. These services most commonly include:
Colocation first became popular in the late 1990’s as analternative to building and operating a private, single-tenant datacenter. Similar to the consolidation of independent power plants during the Industrial Revolution, when organizations recognized that building and operating their own power generation and distribution system was impractical; colocation is a consolidation of datacenter services for use by multiple clients. Datacenters are complex and expensive. Colocation relieves each individual client from having to fund, develop and maintain the unique skills necessary to build and operate mission-critical datacenters. Therefore, colocation datacenters are known as multi-tenant facilities that leverage economies of scale more effectively than any single client otherwise could.
Do what you do best, and outsource the rest
This doesn’t mean that colocation is a one-size-fits-all service. Operators typically offer a variety of service options that allow each client to tailor and evolve its colocation deployment. For example, one client may require completely redundant services (i.e. a primary and a backup power connection) to minimize potential disruptions; while non-redundant services may be suitable for another client. Moreover, colocation is distinguished from related IT services like “Hosting” and “Cloud” in that clients own and operate the IT equipment deployed in the datacenter; in addition to the software and data. In this way, colocation clients have total control over the specifications of all their IT assets.
Colocation services are typically “rented” by the client similar to leasing office space. Long-term contracts (typically two to five years), consistent with the long-term operational goals of the client, govern the many complex expectations with the colocation operator. Most colocation services are billed monthly, in arrears; although operators often offer select on-demand services like “remote-hands,” which are billed as consumed. Remote-hands allows the client to rely on the colocation operator’s staff at the datacenter to perform basic maintenance tasks like re-starting a server instead of dispatching a member of the client’s team.
Remote-hands are important in facilitating one of major benefits of using colocation services; geo-diversity. For a myriad of economic, operating and regulatory reasons (among others), colocation clients often deploy portions of their IT estates in two or more geographic locations. For example, geo-diversity can unlock labor, vendor and tax savings; improve performance and reliability; and satisfy data privacy and security requirements. By relying on remote-hands services, colocation clients can benefit from using colocation services in markets where they do not maintain staff.
As with seemingly everything in technology, colocation services can quickly become a very sophisticated discussion and there is much more to explore beyond this introduction; but in the end, colocation is intended to provide a secure, professionally managed, uninterrupted operating environment for IT equipment to multiple clients who may not be able to otherwise fund, build and/or manage such an environment independently.