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What is a Colocation Data Center?

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By: Nihad Hassan

November 10, 2021

Organizations worldwide are increasingly shifting their work processes to become completely digital. The COVID-19 pandemic has resulted in accelerating digital transformation due to the increased number of remote workforce. According to Mckinsey, the pandemic has sped up digital transformation by several years in a few months. The most apparent aspect of digital transformation is the increased volume of digital data resulting from the wide adoption of applications to facilitate work processes.

The rapid development of digitalization is moving steadily at an unprecedented rate. A study conducted by International Data Corporation (IDC) and sponsored by famous hard drive manufacturer “Seagate” found that IoT applications alone will generate 90 zettabytes of data annually by 2025. The study also found, up to 40% of global data stored in public cloud environments by 2025.

To utilize digital solutions efficiently, organizations need to store and process a massive amount of data. Data centers can solve this issue.

What is a data center?

It is a building or a dedicated place, such as a room within a company used to house data storage systems and associated equipment such as networking appliances and other electrical infrastructures. The purpose of a data center is to accommodate data and business-critical applications, keep them secure from unauthorized access, and make them always available for authorized users.

Older were mainly on-premises and built to serve one organization. In contrast, modern ones are large. They span to include cloud providers such as Amazon web services and Google cloud. For instance, a data center provides the following critical services:

  1. Data storage, management, and backup/recovery solutions
  2. Email and file-sharing services
  3. Support e-commerce transactions for big enterprises
  4. Utilize the latest technologies such as big data, machine learning, and artificial intelligence to work on stored data

Both small to medium-sized organizations do not have the required resources and expertise to run their data centers. Many big enterprises use a mix of a privately owned data center and renting servers and other storage solutions from other third-party data center providers to reduce the hassles of building and maintaining in-house data centers.

This article will discuss what is meant by the term “colocation data center” and mention its benefits to organizations.

What is a Colocation data center?

Colocation centers provide IT infrastructure to clients. It (see Figure 1) is a physical facility that rents its space and sometimes other related equipment per request to clients to put their IT infrastructure within it. Some examples are cooling, heating, physical access controls (biometric and key access card), network connectivity and bandwidth, contingency power generators, UPS systems, or other security aspects required.

A colocation data center allows clients to enjoy all the advantages of a modern data center while they aren’t bothering to direct their resources to build it. Big enterprises adopt colocation services when their areas span wide geographic locations. The main reason is that they can have their IT infrastructure closer to their regional offices and target markets.

Figure 1 - Colo network topology

What are the main advantages acquired from utilizing a colocation data center service?

Reduce costs: Utilizing a colo service is better than building a complete data center. This option is vital for small and medium-sized organizations with limited IT infrastructure who want to outsource their data management to a third-party provider.

Reduce IT support expenses: Colo providers offer experienced technical support staff for their customers, reducing the technical support and data center maintenance costs.

Enhance business continuity: Colo data centers use the latest modern technology to run their facilities; they have reliable data backup plans, stringent access controls to data center buildings, contingency power generators, and a UPS system to keep the center operating during a power outage. Having all these features in an in-house data center is costly and surpasses the ability of most organizations.

Flexible geographic location: You can select the colo center near your office locations or target markets and users. The chosen option will significantly increase connection speed (data transfer speed) and enhance the customer experience.

Predictable costs: You can predict the amount of time you need to use the colo service—for example, one or three years, which allows you to plan your IT budget accordingly.

On-demand scalability: For instance, one room could be enough for a small or medium-sized organization to house its servers and storage solutions. However, digitization in your company could accelerate your needs, and the need to have more room to fit its IT infrastructure increases. Businesses can expand their IT infrastructure instantly when using the colo provider; this efficiently reduces the IT equipment purchase bill and allows a company to scale on demand.

Improve uptime availability: Local data centers lack the needed resources to maintain high uptime; Colo providers are more reliable. For example, it is difficult for a company to guarantee 24/7 uptime for its network connectivity, power, and cooling systems. Colo centers have dedicated staff to make sure everything remains operational, and they monitor it for 24 hours a day.

Enhance Resources Allocation: Building a dedicated data center is an insensitive resources task. The cost of building such a facility does not stop after finishing the physical building and placing the IT infrastructure within it. Keeping the facility operational and maintained requires continuous efforts and resources, making this option inappropriate for most organizations.

On the other hand, Colo centers allow the organization to pay the rental fees only, minimizing an organization’s overall operational costs.

Experienced IT staff: Colo centers hire professional employees specialized in data management, ensuring your stored data’s highest security and availability levels.

Modern equipment: Colo centers use world-class equipment for cooling, heating, and power generations.

Excellent network connectivity: Colo centers commonly utilize their internet connection service from more than one provider, which guarantees a high availability if one provider experiences network problems.

Data integrity: Colo utilizes strong physical access controls to facility building and server rooms, ensuring unauthorized parties cannot access stored data.

Facilitate compliance with different data protection rules: Facilitate compliance with different data protection roles: By utilizing a Colo service, an organization will reduce the efforts of complying with the various data protection regulations such as GDPR, HIPAA, and PCI DSS. Colo providers will become responsible for the issues surrounding the legal requirements of their client’s data.


Colo data centers provide a convenient way for organizations to store their precious data assets and other IT infrastructure in a secure facility. It used to be created for small and medium-sized organizations that can not afford to build their own data center. Big organizations now utilize colo services to achieve the many benefits mentioned in this article.

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