The Pros and Cons of Data Center Colocation

Data center colocation plays a strategic role in modern IT operations. For many companies, it presents an attractive alternative to building and maintaining a sizeable data center.

Housing servers and network equipment off-site does offer companies a number of benefits, but the picture isn’t as simple as black and white. Before you commit to colocation, here are a few things to consider:

Data center colocation allows you to…
- Eliminate the up-front costs associated with building your own data center,
- Deploy IT infrastructure based on your company’s current network requirements with less impact to your budget, and
- Relocate the company without subjecting your network to downtime or other interruptions.

Data center colocation becomes a less attractive option when…
- The overall space and load requirements are substantial,
- Your data center requires intensive management, and
- Physical security is a major concern for your company.

Data center colocation providers can charge based on a number of requirements, including total physical space, amount of bandwidth, amount of UPS protection, quantity and type of power distribution, and the degree of physical security needed. That’s in addition to the cost of other managed services that take the place of your in-house staffing and tools. It’s easy to see how the costs can add up if your data center is high-maintenance in one or more of these areas.

Colocation is not a one-size-fits-all solution for data centers. Much like choosing between buying your own house versus renting an apartment, the decision to maintain your own data center or hire a colocation provider should be weighed based on your company’s present and future needs. Companies often benefit from colocation in the short term, but the option to house servers and network equipment off-site needs to be evaluated based on your big picture.

Datacenter Solution: Server Virtualization

You’ve probably heard the phrase, “Don’t put all your eggs in one basket.” Does this folksy wisdom hold true when it comes to server virtualization? Virtualization is an increasingly popular datacenter solution that divides the resources of your physical server into multiple isolated virtual environments. Instead of maintaining one application per physical server, virtualization enables dominant workloads to run simultaneously on the same server.

Although conventional wisdom tells us that putting all your eggs in one basket is fool-hardy idea, carrying a bunch of baskets around doesn’t seem like a smart solution either. Should you consolidate many physical servers into fewer servers hosting virtual machines or would you be better off maintaining a 1:1 ratio of servers to applications? Deciding which solution is the best for your datacenter depends on a number of factors. To help you weigh your options, here are some pros and cons of server virtualization:

Reasons to Keep Your Eggs in One Basket:
The Benefits of Server Virtualization

Carrying one basket is better than carrying several mostly-empty baskets.
- Virtualization makes better use of datacenter resources by utilizing more of the available capacity on each server, thereby increasing the operational efficiency of your datacenter.

You don’t want to use more than one arm to carry your eggs.
- By reducing the number of servers that are required to run your applications, you improve the manageability of your facility. This means that fewer administrators are needed, allowing you to reduce costs.

You don’t have space for all those other baskets.
- Virtualization enables datacenters to reclaim space in the server room and allows companies to better handle future growth without high capital cost support infrastructure changes. Instead of adding a new physical server for each new operating system, the number of servers can be reduced while the number of operating systems stays the same or increases.

Reasons NOT to Keep Your Eggs in One Basket:
Problems with Server Virtualization

If you drop your basket, all of the eggs could break.
- With multiple applications hosted on each server, a catastrophic failure in a single server could cripple your operations. The cost of establishing an adequate contingency plan should be factored into your virtualization strategy from the beginning in order to make this datacenter solution effective.

An egg-filled basket is heavy – you’d need to invest in a stronger basket.
- If all your eggs are in just a few baskets, you want to make sure those baskets are sturdy. Many organizations use inexpensive servers without high-availability (HA) components for lightly-used applications. Once virtualized, a server must be HA in order to support the mission critical load. Thus virtualization often increases the overall cost of each server while reducing the quantity of servers.

You might need to hire someone to help carry that big basket of eggs.
- Before introducing virtualization technology, you’ll need to send your IT staff for training in virtualization deployment and management, or hire an outside firm to provide virtualization support. Also, while virtualization may reduce your overall hardware costs, the datacenter solution increases the complexity of your operations. This introduces new support costs since you have to maintain the virtualization software in addition to your existing operating system and applications.


Egg-basket metaphors aside, the decision to enhance your datacenter using a virtual machine model is a matter of weighing the benefits against the expenses of virtualization. Server virtualization is not a one-size-fits-all datacenter solution, but it’s an approach to consolidation that many businesses may find beneficial.