Enterprise IT strategies have shifted dramatically in recent years, with many businesses moving away from traditional on-premises architectures in favor of colocation data centers.

Put simply, colocation data centers are like high-security, shared office buildings for computer servers. Just as businesses might rent commercial space instead of owning it, companies rent space in data centers to house their servers and outsource some of the foundational operational responsibilities. The data center operator typically provides all essentials – like electricity, cooling, internet connectivity, and security – making colocation a convenient approach for businesses.

Here are five key reasons enterprises are continuing to make the move to colocation data centers:

1. Cost Savings

Colocation data centers offer significant financial benefits, instilling confidence in the potential for cost savings. By eliminating the need for businesses to build and maintain their own facilities, this shift from capital expenditure (CapEx) to operational expenditure (OpEx) provides a more predictable and scalable financial model. Enterprises can save on infrastructure and operational costs, such as power, cooling, and staffing. These savings can be redirected toward strategic investments, enhancing overall financial efficiency.

Colocation data centers enable businesses to streamline IT staff by offering extensive support. These facilities typically provide access to various managed services, from basic hardware and network maintenance to complex tasks like disaster recovery planning. This allows businesses to focus their IT resources on strategic projects instead of routine maintenance. Plus, colocation centers often have 24/7 onsite technicians and remote hands support to handle hardware issues or emergencies, so companies don’t need on-call teams.

2. Increased Reliability

Reliability is a critical advantage of colocation data centers. These facilities provide redundant power and cooling systems, minimizing the risk of outages. Stringent service level agreements (SLAs) ensure high availability, often surpassing what on-premises data centers can offer. Around-the-clock monitoring and advanced detection systems enhance reliability, ensuring uninterrupted business operations and minimizing downtime.

3. Improved Security

With data breaches rising exponentially in 2023 and costing businesses $4.45 million on average, cybersecurity best practices have never been more important. Colocation data centers help in a few ways.

First, colocation providers bolster enterprise security by applying both physical and cyber protections. Physical security measures, for example, might include surveillance, biometric access controls, and on-site security personnel. Cybersecurity protocols would typically include firewalls and intrusion detection systems as well as stringent zero-trust cybersecurity protocols to scrutinize any person and any machine trying to gain network access. This multi-layered security approach helps enterprises address complex security challenges in today's digital landscape.

Second, colocation data centers help protect against data loss, downtime, and business disruptions with comprehensive backup and recovery solutions. Robust power and cooling systems, as well as high uptime guarantees, ensure systems are always available. In the meantime, well-developed disaster recovery plans and geographically dispersed locations keep operations running smoothly – even in a crisis. This allows businesses to focus on what they do best, knowing their data and systems are secure.

Finally, colocation data centers can help companies meet government regulatory compliance requirements pertaining to security and privacy. In fact, providers like Centersquare regularly undergo thorough audits to validate their compliance with a myriad of standards (such as SOC 2, HIPAA, and PCI DSS). These audits assure enterprises that their data is handled according to the highest data security standards. 

4. Enhanced Scalability

Colocation facilities offer unparalleled scalability, allowing enterprises to adjust their IT infrastructure to meet changing business needs quickly. Unlike on-premises data centers, which are often constrained by limited available capacity and lack a diverse footprint to meet customer growth plans, colocation centers provide the flexibility to expand or contract resources as needed. Indeed, colocation providers like Centersquare, which owns more than 1.9 million square feet of space in 17 markets worldwide, are built to quickly adapt to an organization’s changing space and power requirements over time.

5. Better Performance

Optimized performance is another key benefit of colocation data centers. These facilities can provide access to the latest server, storage, and network technologies, ensuring high performance without requiring continual in-house upgrades. Proximity to major network providers also reduces latency and speeds up data transmission. By combining colocation in strategic locations with access to cutting-edge equipment ensures superior service delivery to customers and stakeholders.

Flexibility is another advantage of colocation over on-premises deployments. That’s because colocation facilities enable hybrid IT configurations, seamlessly integrating co-located and cloud environments to best fit each enterprise's unique needs and goals. This approach makes it possible to choose where and how applications and data will be hosted, enabling a strategic allocation of resources based on performance, security, and cost requirements.

The Trend Continues

Clearly, with all the advantages they offer, colocation data centers will siphon digital assets away from legacy, on-premises infrastructure. With colocation, enterprises gain hard-to-beat access to advanced technology, robust security measures, and flexible scalability options, ensuring they can run lean, mean, and clean for the foreseeable future.