In the Part 1 of this series on private cloud, we talked about different approaches of building private clouds.

One important aspect is where to build your private cloud; on premises or off premises.

In this post, we dive into private cloud at off premises - also know as colocation.

What is colocation

Colocation (as the name implies) is co-locating computing infrastructure of different businesses in one data center.

You can also call it data center space as a service.

A company offering colocation service (aka a colocation provider) builds a data center complete with civil, power, cooling, and a fleet of empty data center racks. You can rent rack space from a colocation provider, install your computing hardware including servers, switches, storage, and build your private cloud.

If you do not own a data center already, colocation is the way to build your private cloud as it gives you several advantages over operating on-premise data centers:

#1: Reduce upfront investment

Building a data center on-premises is a huge investment.

A data center needs specialized civil infrastructure, power with backup, and stringent cooling requirements that are at quite a different level from ordinary office premises. You can never justify investments on these stuff unless you are going to build a very large scale private cloud. And these investments tend to have extended payback periods - 15 years or more.

So, colocation is the viable option for most businesses to build a private cloud.

In the colocation model, you will still be investing on your computing hardware and software that make up the cloud. But you can totally eliminate the upfront investment on building the data center.

#2: Cut down time to market

Building the civil, power and cooling infrastructure is not only a huge investment. It's also a project that usually spans from 12 to 18 months.

So, if you start today, you have to wait one year at minimum for your private cloud to be ready for application deployment.

You can significantly cut down this time to market by choosing colocation for your private cloud. Then your time to market would be the hardware lead time and commissioning time. This should be less than three months for most cases.

#3: Do away with data center operations

Data center operations is nothing like IT operations.

Maintaining power and cooling infra in a data center is not a scope that you can fit into your IT department. This work demands expertise in a domain that's different from IT operations.

So you must have a dedicated team of professionals for maintaining your data center. It's not a feasible option for many businesses.

You can entirely do away with these data center operations by colocating your private cloud.

#4: Outsource hardware logistics

Handling computing hardware is no fun.

When you buy computing hardware like servers and storage, your supplier will ship them to your warehouse. From there, you need to unpack and install them on your racks. Then, you need to hook up the cables and do the initial work to get them up and running.

What about handling hardware faults?

When any hardware component like hard disk, memory card, power supply, etc., goes faulty, you must go through a series of troubleshooting steps. Often, these steps need you to pull out and plug back the faulty component several times. If the fault is not recovered, you must replace the faulty component.

To attend these work, you need staff physically located near your data center. Good luck with your remote first strategy!

When colocating, you can outsource this labor-intensive hardware handling to the colocation service provider. Then, the staff at the colocation service provider will attend to the physical work of hardware handling and your DevOps team can happily work remotely.

#5: Get high bandwidth network connectivity

Resilient network connectivity with adequate bandwidth is a major requirement for private cloud.

Getting this network connectivity to your own premises may be challenging due to geographic reachability of optical fiber networks. Even when a fiber network is available, high bandwidth connectivity could be quite expensive.

The colocation centers have already provisioned high-capacity network links from ISPs. You can utilize this network connectivity at a fraction of a cost compared to establishing similar connectivity at your premises.

Wrapping up

Colocation is the best approach to private cloud for most businesses.

You can enjoy all benefits of a private cloud while avoiding the tedious work of data center maintenance by choosing the colocation option.

Colocation is big business with nearly USD 90 billion worldwide market.

Equinix is a global player in the colocation business. There are many other big and small players.

Often, telecom operators are into colocation business. They already have the data centers and high capacity optical fiber networks that give them a very good strategic advantage for colocation business.

Also, colocation is a growing market with 20% annual growth for the past five years. This growth rate also shows that more businesses are choosing colocation for their private cloud.

If you are building a private cloud in 2025, colocation is the way to go, unless you have a very good reason to build your cloud on-premises.