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Home > Data Center > What is Colocation Data Center?

What is Colocation Data Center?

With their benefits, colocation data centers became an important problem solver for especially large scale organizations recently. Let's take a close look at them.


Erdem Yasar Erdem Yasar
January 21, 2023
4 min read
What is a colocation data center

A colocation data center, or “colo” for short, is a facility that provides organizations with space for rent allowing them to place their servers and other computing hardware. Since large organizations’ compute and bandwidth needs increase drastically, it became much harder to provide that capacity with on-premise facilities. While the number of servers increase, it became much harder to provide the required space, power, and cooling services for those in-house server rooms. Thus most organizations started to search for alternative options. This is where colocation data centers came into play.

Colocation data centers provide the facility for organizations’ IT hardware and supply the building, cooling, power, bandwidth, and physical security. The customer only needs to provide the servers, storage, and other hardware. Most data center providers are much more capable than the organizations’ IT teams when it comes to handling the IT infrastructure, thus many organizations prefer colocation data centers to get rid of the burden of handling all those technical tasks.

Table of Contents

  • What are the types of colocation data centers?
  • What is the difference between a data center and a colocation data center?
  • What is the difference between Data Center as a Service and a colocation data center?
  • What is the benefit of colocation data centers?
  • What to consider before choosing a colocation data center provider?

What are the types of colocation data centers?

There are three types of colocations data centers:

  • Wholesale: In a wholesale colocation data center, a tenant leases the entire fully built data center space.
  • Retail: In a retail colocation data center, tenants can lease the space they need in a data center facility. Thus multiple tenants share an entire data center.
  • Hybrid: A hybrid cloud colocation deployment is a combination of on-premises and data center solutions.

What is the difference between a data center and a colocation data center?

While the term data center refers to a facility that is designed to efficiently store, power, cool, and connect IT infrastructure, colocation refers to one of the many services that are provided by data centers. Thus, a colocation data center is a data center that offers colocation as a service to its customers.

What is the difference between Data Center as a Service and a colocation data center?

It depends on how the organization is using the service. If the tenant is only using the facility as a service, then both terms can be considered the same in that situation. However, some tenants may need device-level manual controls, which became closer to an Infrastructure as a Service experience. Thus, in simplest terms, Data Center as a Service and a colocation data center can be considered the same thing, but it can depend on the customers’ needs.

What is the benefit of colocation data centers?

As we mentioned before, a colocation data center eliminates the burden of managing an on-premise data center. It includes flexibility. When an organization scales up its data center, it doesn’t only include buying and implementing new hardware but also finding an ideal space for devices, power, and cooling needs. A colocation data center can handle these tasks for the organizations, allowing them to focus elsewhere.

Since most data centers can benefit from lower-cost power and cooling solutions, it can be cheaper than implementing one for organizations. Thus, while workload demands grow, organizations can easily scale their IT infrastructure. Serviceability is also an important factor. Tenants of colocation data centers know that their hardware is in good hands and monitored continuously.

Also, most colocation data center providers offer transparency, including remote self-monitoring and management to a degree. It allows tenants to examine the service level agreement to avoid unexpected charges. Another important factor is the data centers’ proximity to major fiber hubs. Most data centers are located strategically to be able to connect to major fiber lines, eliminating bandwidth to become an issue for the facility.

Reliability is also a very important factor. Most modern data centers guarantee up to 100% uptime for services. This means the organizations will be operational even in power outages or other similar situations. Data centers can also get routine backups for their tenants. Along with cybersecurity, colocation data centers also offer physical security, protecting devices against intruders.

What to consider before choosing a colocation data center provider?

Even though it helps organizations to lower their costs, leasing a colocation data center is still a big investment, thus it is important to understand the provider’s business model and the charge model is very important, along with clear service level agreements. Since colocation data center employees will take care of the organization’s systems, it would also be wise to check their capabilities and certificates. Organizations can also ask about technical details, such as their topologies, power density, redundancy, connectivity, backup, and cooling provisioning.

Data center footprint is also important for global organizations. You can ask how many facilities the colocation data center provider has and where are they located. If the stored data needs to comply with regulations, the organizations should consider it too. Physical security can be important for some organizations, thus a colocation data center should align with the organization’s security audits.

Another important aspect of reliability is disaster recovery, which can be a life save in some situations. If the bandwidth is a top priority, you can also ask about the facility’s connection features, such as redundant fiber optic networks or dual pathways. Another important feature to consider is monitoring and management capabilities. While some data centers offer 24/7 notification and secure remote access, some don’t.

See more Data Center News


Erdem Yasar

Erdem Yasar

Erdem Yasar is a news editor at Cloud7. Erdem started his career by writing video game reviews in 2007 for PC World magazine while he was studying computer engineering. In the following years, he focused on software development with various programming languages. After his graduation, he continued to work as an editor for several major tech-related websites and magazines. During the 2010s, Erdem Yasar shifted his focus to cloud computing, hosting, and data centers as they were becoming more popular topics in the tech industry. Erdem Yasar also worked with various industry-leading tech companies as a content creator by writing blog posts and other articles. Prior to his role at Cloud7, Erdem was the managing editor of T3 Magazine.

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