Colocation Explained for Business Leaders

It doesn’t have the hip cache of cloud, but colocation remains a critical piece of the IT ecosystem.

Public cloud has been the belle of the ball for several years now, a now-proven way to reduce IT costs, increase flexibility and speed time to market.

Add to that all the sexy new technologies cloud enables, like Internet of Things, artificial intelligence and machine learning, and it’s easy to understand why cloud gets all the buzz.

But the truth is, many organizations simply aren’t there yet. They’re still in the early stages of transformation, deciding how and what (and in some cases even whether) to move out of their on-premise data centers.

That’s why today, as part of my series breaking down tech for business leaders, I’m taking on one of the oldest and unsexiest data center solutions out there, but one that still plays a critical role for many companies: colocation.

Colocation allows an organization to license space in a data center and place its own hardware there; in addition to the building, the provider delivers power, cooling, connectivity in various forms and physical security. The company still manages its own hardware.

Why would they want to do that? Let’s dive in.

DIY vs outsourcing

While “cloud” conjures images of fluffy white cumulus in a bright blue sky, the reality is, all computing lives on servers in a data center somewhere. And as computing power demand continues to skyrocket, data centers have gotten more numerous, bigger and more state of the art. But as my colleague Michael Levy, who oversees Rackspace’s colocation solution, points out, data centers are really just big, secured, air-conditioned power outlets

To keep buildings filled with row upon row of servers, which consume massive amounts of energy and throw off tremendous heat, from melting (or worse, catching on fire), they must be continuously cooled. Nor can they ever go down (if they want to stay in business),  and that means a high level of redundancy and resiliency — not an inexpensive proposition. A new state of the art data center can cost between $7 million to $10 million per megawatt, according to Data Center Frontier.

Beyond cost, one of the most difficult aspects of running your own data center is convincing multiple carriers (necessary for redundancy and reach) to extend their networks into your data center, which serves only your business. Colocation providers, on the other hand, with large facilities filled with multiple tenants, can more easily convince carriers to extend that “last mile” of fiber to their facilities.

An oldie but a goodie

Colocation may be one of the oldest IT solutions available, but it’s still a critical component for many enterprises, and will remain so for the foreseeable future. Cloud continues to chip away at colocation, but not every company is ready to make that leap, and not every app is ready to be virtualized and refactored to the cloud. For many companies, “If it ain’t broke, don’t fix it,” is still a guiding factor in IT decision-making.

Additionally, colocation may be the preferred solution over cloud if a company pursues a CAPEX-friendly financial strategy, looking to depreciate large investments overtime rather than outlaying significant OPEX every month by leasing their technology. Most often, company leaders, or farther down the chain, IT leadership, may not be interested or ready to have a service provider own and oversee its infrastructure.

The future is hybrid

In most cases these days, colocation is just one tool in a hybrid toolkit. Many of today’s companies recognize there isn’t a one-size-fits-all solution to their IT transformation, and they’re taking that journey in discrete, bite-sized chunks. Companies that utilize colocation may also use public cloud for certain workloads, private clouds (which can be located in their own datacenter, or with a managed service provider) for others, and may even use managed hosting — leasing hardware in a third party data center with various levels of support on top from a managed service provider.

For those who aren’t yet at the hybrid inflection point, colocation offers a secure place to begin dipping a toe in the water. A great way to trial cloud is “bursting” from self-managed colocation environments to public cloud to accommodate peaks in compute usage.

Moving down the stack

Some colocation companies have tried moving up the stack, offering cloud and managed hosting to accommodate growing hybrid demands. Since most colocation providers have real estate-centric backgrounds, however, many of those efforts have failed.

Rackspace, on the other hand, has spent the past two decades offering cloud and hosting services and building and managing data centers. We’re moving down the stack to offer colocation as part of our broad portfolio of solutions for one simple reason: our customers want it. They’re seeking:

  • an environment where their equipment is secure and that ensures no down time,
  • the cost savings of not building and running their own data centers,
  • audit-ready data centers that meet all the compliance standards relevant to their industry,
  • their own IT teams freed up to work on revenue generating tasks and
  • secure connectivity to the leading public clouds (not to mention our federally-compliant FedRAMP private cloud).

And because we offer a Fanatical Experience in everything we do, Rackspace’s colocation offering includes ‘Smart Hands,’ a white glove service for any physical touches customers need us to execute on their gear — a service which comes with an unprecedented SLA in the colocation industry.

Ready to get out of the data center business? Learn more about Rackspace Colocation and Infrastructure Management.

Mark Bunting served as Rackspace Chief Marketing Officer from 2018-2019. He oversaw the global marketing practice, including global marketing strategy and all aspects of the marketing organization including communications, brand, advertising, creative, digital, field and channel marketing. Mark’s leadership objective was to ensure all customers of Rackspace understand the full breadth of what the company provides as an unbiased, trusted advisor in today’s multi-cloud world. Mark also oversaw the transformation of the Rackspace brand. Mark brought more than 25 years of experience as a technologist, author, TV personality and influencer to Rackspace. He has served as interim CEO and CMO at various technology companies where his experiences ranged from driving traditional marketing strategy and deployment, to sales and marketing organizational restructure, to agency and personnel selection and team building. Mark has also held acting C-suite roles at Apollo Education and McAfee, and currently serves as a mentor to numerous technology start-ups at the Texas-based accelerator Capital Factory. In addition to his experience in the C-suite, Mark is a recognized TV personality on the topic of demystifying technology and has appeared on programs for The Discovery Channel, CNBC, The Learning Channel, Fox and his own series, “Bunting’s Window,” which ran for 23 years on 11 airlines globally. A serial entrepreneur, he has also founded numerous digital and media brands, including SkyTV, which was sold to Ziff-Davis. Mark is a graduate of the University of Texas at Austin, where he is currently a lecturer at the Stan Richards School of Advertising and Public Relations. He is based in the company’s San Antonio and Austin, TX offices. You can find him on LinkedIn and Twitter.


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