What Is a Colocation Data Center?

Dec 12, 2019 | Colocation, Data Centers

A colocation data center is a data center shared by multiple companies who rent or lease space from the data center’s owner or operator. Colocation data centers are also called multi-tenant data centers. The popularity of these types of data centers has grown since the early 2000s, and analysts predict the colocation industry will continue to grow throughout the 2020s. Many enterprise-sized organizations are seeing value in shutting down some of their own data centers and switching to colocation facilities, which plays a major role in this growth. Small and medium-sized businesses also find value in using colocation because they can own some of their own infrastructure, rather than being tied to the public cloud. There are many reasons for making this choice, most of which revolve around hybrid cloud models and reduced capital expenditure through shared building infrastructure.

Colocation data centers allow companies to…

Afford a Higher Level of Security

Colocation data centers are often constructed with multiple layers of security, such as man traps, bullet-proof glass and biometric scanners. They also have security personnel onsite 24x7x365. This level of security is often more than most companies can afford on their own, as it involves a substantial capital investment in addition to higher operating costs. By housing their IT infrastructure in a colocation facility, the costs of all these security measures are shared. Additionally, many companies are required to ensure their physical IT infrastructure meets certain security compliance standards. Many colocation providers have their data centers and personnel certified to meet these standards so companies don’t have to worry about them.

Achieve Higher Availability

Availability is the extent to which a system is up and running when it is required for use. This is often measured as a percentage in the data center world, such as 99.99% availability. Achieving these levels of availability and higher is a result of redundancy. By having two or more substations, power lines, water lines, network feeds and multiple pieces of equipment, such as chillers and generators, data centers can provide these high rates of availability. Building a data center with this kind of redundancy is extremely expensive. According to the Data Center Journal, it is nearly double the cost to build a data center that provides 99.995% availability (.4 hours of downtime annually) compared to a data center that provides 99.75% availability (22 hours of downtime annually). By sharing redundant power, cooling, network infrastructure in a colocation data center, companies get more availability at a lower cost.

Facilitate Hybrid Solutions

More companies are turning to colocation data centers to help them facilitate an efficient and secure hybrid infrastructure – a combination of public and private clouds. Many colocation data centers provide direct connectivity to major public cloud providers, like AWS and Azure. When companies do not use private connectivity, their data must traverse the public Internet, which results in latency and a lower level of security. It is costly for companies to set up their own infrastructure and pay for connectivity to their offices only, which is why they choose to access the cloud through a colocation provider.


Another reason companies choose colocation data centers is they don’t have to predict how their infrastructure will be in 5 to 10 years. As most infrastructure experts will attest to, it is extremely difficult, if not impossible, to predict a company’s infrastructure 10 years down the road. If they overbuild the data center, they have paid for more space than they need. If they under-build, they don’t realize the full value of their investment before they have to build again.

Take Advantage of Other IT Services

Many companies use colocation providers not only for data center space, but for other services such as network management, network security, infrastructure management, data storage and backup and other IT functions they may wish to outsource. They sometimes can’t acquire the talent needed to manage it all, or they find it is more beneficial to use their resources elsewhere. Be aware that not all colocation providers offer additional services, and not all that do offer their own services, but rather manage them through third-party vendors.

Want to learn more about what colocation data centers provide? Read about Data Foundry’s data centers and our colocation services.