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The true cost of colocation

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For years both large and small corporations have been migrating their in-house servers to data centers that specialize in colocation services. Colocation facilities provide the space, power, cooling and security the servers require.

The challenge for most companies is that they have to purchase all of the servers and networking equipment that will be placed in the colocation facility. This makes colocation a huge capital expenditure.

By financing servers that are going to be placed in a colocation facility, an implicit decision is being made to acquire an investment guaranteed to lose value over time. Servers are not cheap. For example, a server with the following hardware requirements is going to be in the ballpark of $4,000: Intel Xeon E5-2620, 2.00GHz, 8GB of RAM, single 500GB SATA hard drive with Windows server 2012 as the operating system. Top-of-the line servers today are nearing obsolescence in five years, making colocation an expensive solution.

In addition to the cost of servers and networking equipment, one must factor in the cost for square footage, electricity and bandwidth. After all is said and done, most colocation facilities throw salt on the wound by insisting on long-term contracts.

Cloud computing eliminates a lot of this capital expenditure. With cloud computing, businesses do not use their own hardware; they simply rent resources from a cloud hosting provider. While the cost of the servers and data center space is still passed on, there are no long-term commitments and the cost of resources is dramatically less than purchasing hardware. Cloud hosting providers virtualize resources on the servers, allowing customers to pay only for what they use.

Cloud hosting providers understand that IT professionals are concerned about up-time and security. This is why reputable cloud hosting providers adhere to strict SLAs that guarantee uptime. In addition, a cloud hosting provider will adhere to industry security standards.

By moving servers from a colocation facility into "the cloud" it is possible to dramatically reduce capital expenditures and increase performance at the same time. By having hardware upgraded on a regular basis by the cloud hosting provider and not the business, businesses can rest assured they are using the latest equipment. Cloud computing can also reduce labor cost by keeping IT staff in the office and not in the colocation facility.

To find out how much you can save by moving from colocation and into the cloud, call CARI.net today, 858-974-5080, ext. 105.


Submitted by Mike Dowdy, vice president of sales for CARI.net.

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