Colocation: what is it, who needs it, and what colo features do companies value most?

All companies need IT infrastructure, and there are more options than ever, ranging from fully on-premises environments to fully hosted infrastructure, with several approaches in between.

Colocation offers a middle ground: businesses retain ownership and control of their hardware while relying on a specialized data center provider for the facility, power, cooling, connectivity, and physical security. For organizations evaluating greater control, predictable infrastructure costs, geographic flexibility, or alternatives to the public cloud, colocation can be an important part of their infrastructure strategy.

What is colocation?

Colocation, often shortened to “colo,” is an IT strategy that involves renting space in a data center operated by a third party. You provide the hardware, such as servers, storage devices, and networking equipment, while the colocation provider supplies the physical space, power, cooling, connectivity, and security needed to operate it.

You can rent anything from a portion of a rack to a full rack, private cage, or dedicated suite, depending on your infrastructure requirements.

Colocation services combine the control of self-owned infrastructure with the advantages of a purpose-built data center environment. You retain ownership and management of your hardware without having to build and operate the facility and supporting infrastructure yourself.

Why choose colocation? Who needs it?

From compliance to cost reduction, colocation can be an ideal IT infrastructure strategy in many different scenarios. The Patmos team has years of experience providing colocation services, and these are the top five reasons we see companies choosing colocation over other hosting options.

1. Compliance and control – you need to own the hardware

Retaining ownership and control of the hardware is one of the biggest factors in choosing colocation over cloud infrastructure, especially for companies working with sensitive customer data, or developing new IP, or working in regulated industries. In these cases, hosting your applications and data on servers owned by third parties, or that are shared with multiple tenants, may not be appropriate or even legally viable. You need to own the hardware.

Facilities compliance can also be a factor if you are required to host your IT infrastructure in locations compliant with SOC, ISO, or PCI standards, and your own sites don’t have those certifications. 

2. Resilience and redundancy – you need to protect your operations

Using colocation to add backup, mirrored, and disaster recovery locations to your existing IT infrastructure is another popular use case. With diverse, geographically distributed colocation sites, you can protect your business from unexpected outages and improve operational resilience.

This can also be a requirement from insurance providers. If your business is in a region prone to natural disasters, such as hurricanes, it may be mandatory to have distributed IT infrastructure to obtain certain types of business insurance. 

3. Strategic business locations – you need IT closer to clients

Deploying your IT infrastructure in a regional colocation facility can put your applications closer to your teams and customers, reducing latency while improving productivity and customer experience. Using a colocation provider can be a fast, efficient way to add another location to your infrastructure footprint.

However, proximity isn’t just about physical distance – it is equally about network latency. If you are targeting customers in Florida, for example, having your server closer to Florida might seem like a good starting point. If the facility doesn’t have excellent network connectivity, the end-user experience may be worse than with a more distant facility offering better network speeds.

One real-world customer we work with used Patmos to overcome just that challenge. A call center business based in Miami found that moving their servers to our Dallas facility delivered a substantial improvement in call quality because our network speed and redundancy were superior. 

4. Outgrowing your premises – you need a bigger boat

Sometimes colocation is the best way to support a growing business. You may start with a modest amount of equipment running on your premises, whether it’s under a desk, in an IT cupboard, or in a dedicated server room.

As you grow, your IT infrastructure needs scale with you, and many companies reach a point where it is no longer feasible to operate their own equipment on-site. Usually, that’s because they’ve exceeded the space, power, or cooling available at their facility. Access to reliable power is a particular concern for businesses in the U.S. today. Colocation enables you to retain control and ownership of your IT infrastructure while using specialized off-site data center facilities to host it, with power redundancy built in. 

5. Transition from hyperscale – you need to save money

Finally, colocation is a popular option for companies looking to reduce the cost of workloads and services they are currently running on hyperscale cloud platforms such as Amazon Web Services (AWS), Microsoft Azure, or Google Cloud.

This often happens in businesses that have scaled beyond the startup phase. As a small business, public cloud hosting may have offered a quick and easy solution early on, but highly variable, unpredictable costs can become unsustainable as you scale.

Moving workloads to self-owned IT infrastructure can provide a more predictable, stable OPEX model. With colocation, you retain ownership and control of the hardware while your colocation provider takes care of the physical data center infrastructure, power, cooling, connectivity, and security. 

What should you look for in a colocation provider?

We’ve touched on many of the most important colocation features in the use cases above, but there are several factors to consider when evaluating a provider:

Physical locations

The physical locations available will be an important consideration for customer proximity, latency, and disaster recovery. There are many colocation providers offering a single physical location, and that’s fine: you may be happy managing a mix of providers to cover the locations you need. However, it can make more sense to partner with a colocation provider that offers multiple locations, not just to reduce the management overhead, but to simplify scaling when you need to expand to new regions. 

Carriers and networking 

Closely related to physical location, the number of network carriers and available bandwidth at a colocation facility are critical considerations. Look for blended bandwidth and colocation providers with deep network peering relationships and connections to Internet exchanges. Your network should provide flexibility and redundancy as well as strong performance through high-speed Ethernet and fiber connectivity. 

Power and cooling redundancy

Not all data centers are created equal. Reliable IT infrastructure needs reliable power, so your colocation provider should have built-in redundancy (N+1 or better) and connections to multiple power providers, as well as UPS facilities. And, of course, it should be able to power 20A or 30A set-ups and 100 kW+ cabinets with ease. You may not need that capacity today, but the overhead gives you room to scale in the future.

Physical security

All good colocation providers invest in physical security to protect your servers. After all, they are your servers. Look for multi-factor physical access with biometric authentication, CCTV/video surveillance with at least 90 days of recorded footage, on-site 24×7 security teams, robot surveillance, and more. 

Certifications

If compliance is important to your business or required for the industry you work in, look for a colocation provider with the appropriate data center certifications. SOC2, SOC3, ISO 9001, ISO 27001, ISO 14001, and PCI-DSS are good starting points, along with any industry-specific standards your business requires. 

Patmos colocation services

Patmos provides colocation services for organizations ranging from small businesses and service providers to medium and large enterprises. Our colocation infrastructure gives customers the flexibility to retain ownership and control of their hardware while taking advantage of Patmos data center facilities, network connectivity, power, cooling, and physical security.

Colocation for Small and Medium Businesses

Our colocation services offer options ranging from single-server rack space to whole cabinets at Patmos-owned facilities strategically located in Phoenix, Dallas, and Kansas City – with multiple carriers, blended bandwidth, N+1 to N+N redundancy, and stringent physical security measures. 

Colocation for Enterprise

At enterprise scale, colocation typically extends beyond individual racks or cabinets to multiple aisles within a data center – and, in some cases, an entire facility. These larger deployments can support significant infrastructure requirements while allowing enterprises to maintain ownership and control of their hardware.

One growing enterprise colocation use case is hyperscale, high-density AI cloud infrastructure. GPU servers have significant power requirements and require custom cooling and cabinet designs.

From one perspective, it is still colocation. But at this level of scale, density, and customization, Patmos treats it as a separate AI Campus / high-density data center service. 

Want to discuss your colocation needs?

Every infrastructure environment has different requirements. Visit our colocation page to learn more about Patmos colocation services, or explore our AI Campus solutions for high-density infrastructure. Get in touch with our team to discuss which approach is right for your organization.