Why is Colocation Important Today?

Colocation in third-party data centers provides key benefits.

Despite the growing popularity of the cloud, many data center professionals firmly believe some applications simply aren’t meant to run on virtual machines but need to be placed on physical servers.
There are several reasons which include software licensing and compatibility, which could be interpreted as an argument to upgrade. It can also be due to performance, security and compliance barriers which aren’t as easily overcome. Either way, these concerns demonstrate the case for cloud isn’t always as clear-cut as some commentators suggest.
In addition, the move reflects how hybrid IT is still on the rise and the demand for suppliers that can do more to bridge the gap between physical servers and virtual machines. In fact, the latest research suggests that nearly 50% of firms that have adopted the cloud have done so as part of a hybrid IT estate. Therefore, often times cloud infrastructure is viewed as an adjunct, not a replacement, to physical servers.

Traditional colocation market is still needed

What does all this mean for the traditional colocation providers now that cloud rivals are gearing up and offering their own take on non-virtualized infrastructure?
Perhaps not much, as there are still obvious reasons for companies to favor true colocation over what are essentially dedicated servers provisioned in a cloud-like way.
Cost management is a big example. Colocation enables companies to use their own hardware as opposed to renting from someone else. This minimizes a firm’s exposure to the risks of subscription-based pricing such as sudden price increases and hidden or unpredictable costs.
Even where there’s an argument in the longer term to replace legacy infrastructure with applications and services that can be delivered from the cloud, colocation is still the most obvious way to maximize ROI on that infrastructure until it reaches end-of-life.
More generally, colocation offers a level of hands-on control and flexibility that is critical for companies with very specific requirements from their hardware – something that off-the-shelf dedicated servers or bare metal instances will never really be able to match.

Supplier diversity is also an important consideration

Finally, it should be stated that a common driver for companies to use hybrid IT is to improve their supplier base diversity – whether for cost management or as a business continuity measure – and it would be a step backwards for them to consolidate all their infrastructure under one cloud provider.
Given the above discussion, it remains important for data centers to preserve traditional enterprise colocation as a core offering.

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