Data centers: how to benefit from colocation

Organizations require a lot from their data centers but often cannot meet these requirements on their own. This is because planning, building and operating a modern and energy-efficient data center is a complex process.

It simply doesn’t make sense for many organizations to operate their own data center. They first need to find the space, then invest a great deal of capital in the construction – not to mention the skills and know-how required for operation and maintenance. Even modernizing or expanding an existing data center can be a challenge.

For organizations looking for connectivity and access to cloud services for development and growth, colocation (or server housing) offers a cost-effective alternative. In Germany, 44% of existing data center capacity is allocated to such services. 

How colocation works

With a colocation model, organizations do not have to commit any capital toward data center services. They also benefit from the fact that operating costs are directly deductible from their business profits.

Organizations taking advantage of colocation usually bring their own IT equipment – servers, storage and network components – and pay the colocation provider for space, a power supply, cooling, network connectivity and physical security. Because they install their own equipment, they still have control of their data while benefiting from the scalability, continuity and redundancy offered by a large data center.

At the same time, “rental costs” replace the investments and ongoing operating costs that organizations would incur if they operated their own data center.

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Colocation models and options

With colocation, it’s really a case of “anything goes”. You rent the data center space you need based entirely on your current IT requirements: a single server rack, a separate rental unit (cage) in a shared open colocation space, a dedicated room (suite), an entire floor or even a dedicated building. And, you can scale up or down at any time, even while your operation is running.

An open colocation space houses equipment belonging to several data center clients. External network service connections and internet nodes, as well as connections between corporate clients and cloud providers, are available in carrier meet-me rooms.

In addition to server racks, a redundant power supply and air-conditioning, colocation data centers provide a range of services. These include on-site operational support, often referred to as “remote hands” services, where the colocation provider’s technicians take on routine or ad hoc tasks, such as replacing equipment, reviewing status information or adjusting network cabling.

Any organization can benefit from colocation

Colocation is an option for organizations of any size, in any industry. Smaller businesses with limited IT resources benefit from this solution because they gain access to professional IT infrastructure that they could never operate themselves to the same standards.

For those in industries with stringent requirements for data protection and data security, such as financial services and healthcare, colocation offers the security required for compliance, including the necessary certifications. Global businesses operating from multiple locations can use data centers in strategic locations to improve the performance of their applications and services, and reduce latency – a prerequisite for IoT scenarios.

Colocation can also be used as an alternative disaster recovery location or for data-mirroring concepts, ensuring the smooth continuation of operations even if operations at the primary location are disrupted.

The benefits of colocation

Few companies can ensure the smooth operation of a data center around the clock, as they do not have sufficient skilled resources to respond immediately when problems arise. Colocation providers have both highly skilled employees and proven, constantly improving concepts for operating and protecting systems.

Reliable fire protection systems, redundant and powerful air-conditioning and an uninterruptible emergency power supply are standard features of a colocation arrangement. For colocation providers to achieve the highest standard of security, they must have multiple separate redundant pathways for their power supply and internet connection, and provide duplicate components, such as servers and cooling systems. Such a fault-tolerant system also makes it possible to perform maintenance without disrupting operations.

Colocation data centers also have a direct connection to leading cloud providers, telecommunication networks and IT service providers. Guaranteed bandwidth and latencies make it easy for organizations to adopt software-as-a-service offerings and implement hybrid cloud concepts.

A large data center is also more sustainable than smaller standalone systems, with economies of scale supporting efficiencies in cooling, power usage and other factors that contribute to your environmental footprint.

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Challenges facing data center operators

Data center operators are experiencing two fundamental changes: digitalization and trends such as AI are giving rise to new technologies and solutions. The optimized air cooling concepts used by operators will not be efficient enough to support extremely high power densities in the long term. It is likely that cooling solutions such as direct liquid cooling, which are designed to support the current configuration of up to 200kW per rack, will no longer be found exclusively in hyperscalers but also in colocation data centers in the long term.

Another challenge is the pressure on operators to meet high standards of energy efficiency and waste-heat utilization, and switch to renewable energy. Regulatory requirements from the European Union Commission, as well as national requirements such as the Energy Efficiency Act in Germany, increase the demands on every data center operator to implement solutions that will help to address global warming and other global crises.

“Of course, every company has to consider what data center model, if any, is best suited to their goals,” says Sebastian Lai, Head of Commercial Products at NTT DATA’s Global Data Centers division in Europe, the Middle East and Africa.

“Colocation solutions offer a variety of benefits, and colocation data centers are part of the digital backbone, with direct access to cloud platforms, peering and network providers. Some cities have become magnets for the industry, where a diverse community of technology, network and IT service providers have established businesses. Modern and sustainable data centers that follow an environmentally conscious design are energy- and resource-efficient – and leading providers work closely with their clients, building trust through their high-quality services and personal contact.”