Nick Layzell, Customer Success Director, Telehouse Europe
By Nick Layzell, Customer Success Director, Telehouse Europe
On-premise data centres require a sizable budget and significant resources to maintain. As more organisations recognise that such a strategy is no longer viable, colocation has rapidly grown in popularity. Over half of organisations (54%) would now opt for colocation ahead of an on-premise deployment, compared to a third in 2020, according to figures in Telehouse’s Vision 2030 report.
But it’s not just the cost burden posed by equipment, cooling, power, compliance and potential downtime that is encouraging colocation uptake. A desire to push ahead with digital transformation strategies, increased demand for high-speed interconnection services, speed to deploy new services and a need for scalability are all playing their part.
Alongside colocation, cloud computing has emerged as another option. However, figures from 2023 show that over half (55%) of companies were spending more on cloud services than the previous year, suggesting that these overheads were starting to spiral out of control. More organisations are therefore shifting from cloud as a priority to carefully selecting which cloud-based technologies they invest in. Cloud computing, for all its agility and innovative benefits, may not suit every business.
Colocation instead offers the benefits of cloud computing without complete reliance on it, allowing businesses to benefit from a strategic, configurable path forward.
Efficiencies and cost savings
Colocation is a cost-effective option because adopters don’t need to purchase and maintain on-site infrastructure, and they also don’t need to hire specialist technical employees. In the context of downtime, colocation offers guaranteed service level agreements for uptime, thereby minimising any financial losses.
As well as avoiding infrastructure costs, colocation users can further save on costs where workloads are deployed, reducing the expenditure associated with growing cloud infrastructure to meet growth goals. Forward hedged electricity rates are also used by data operators to keep energy costs down, a benefit that provides peace-of-mind after years of spiralling costs.
Increased security, compliance and performance
Colocation also offers specific benefits to specific sectors. In the financial services sector, where the real-time transfer of data is critical, financial institutions can benefit from reliable performance and low-latency connectivity, essential for running high frequency trading, AI-driven technologies and customer-facing digital services. Rather than incur the expense of specialist engineers for on-premise deployments, colocation facilities are maintained by expert engineers on a round-the-clock basis, to ensure optimal functioning of the mechanical and electrical (M&E) infrastructure.
Companies that store and process data in certain regions may be subject to specific regulations that only apply in that area. Colocation facilities are managed by staff with the knowledge to navigate compliance regulations on a multi-country or international basis. Businesses need not search for external expertise to navigate complex requirements.
In terms of security, colocation gives users full control over their hardware and software configurations, giving the same level of autonomy as if they owned all their equipment on-site. Trained and dedicated personnel such as skilled engineers on-site ensure that security protocols are being adhered to and help to plug any knowledge gaps. Where security, compliance and performance are all necessities, colocation provides the solutions to ensure they are accounted for.
Scalability to match demand
In the coming years, businesses will need to take a close look at the current state of their digital infrastructure to ensure they remain compliant and competitive. Hybrid infrastructures, which bring together the scalability of the cloud and the reliability offered by colocation, are becoming more widespread as digital connectivity demands grow. In the context of emerging technologies, such as AI-driven solutions, colocation data centres offer both flexibility and sufficient bandwidth to provide such services to expectant customers.
Colocation is also highly suited for the explosion of data volumes. As more organisations tap into interconnected AI, IoT and edge computing technologies, data centres offer the right environmental infrastructure that can both handle the increase and make best use of the data.
Connections to the wider ecosystem
A notable drawback of on-premises infrastructure is its limited connectivity options with ecosystems and networks. Specialised infrastructure can be accessed via colocation services to provide the speed and diversity of connectivity options needed for specialised workloads. Alongside the major cloud providers, internet service providers and interconnection services are all available, enabling seamless access to low-latency and high-bandwidth connections. Instant access to partners, suppliers and customers is possible.
Meeting the needs of today’s enterprises
The adoption of colocation signifies a crucial strategic departure away from cloud technology as the sole solution, and instead opens up benefits such as cost-effectiveness, heightened security and scalability to match the most ambitious growth plans. Shifting from on-premise to colocation is vital for both more effective resource utilisation and meeting today’s requirements around agility and improved connectivity.
Colocation empowers businesses with the adaptability to overcome legacy infrastructure constraints and make use of integrated services. This strategy reshapes how companies formulate their IT strategies, emphasising adaptability and strategic connectivity over traditional solutions.
Jesse Pitts has been with the Global Banking & Finance Review since 2016, serving in various capacities, including Graphic Designer, Content Publisher, and Editorial Assistant. As the sole graphic designer for the company, Jesse plays a crucial role in shaping the visual identity of Global Banking & Finance Review. Additionally, Jesse manages the publishing of content across multiple platforms, including Global Banking & Finance Review, Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune.