Colocation increasingly popular among banks and other enterprises

Many companies are deciding to forgo building and maintaining their own data centers in favor of colocation options offered by third-party providers. There are numerous advantages to this approach, especially now that organizations are crafting their own applications, many of them mission-critical, designed to scale for many users.

What can be accomplished through colocation? Key benefits include:

  • Physical and data security: Colocation providers typically manage highly secure facilities that feature closed-circuit cameras, biometric scanners and alarm systems. Furthermore, actual server cabinets may be locked and full-time security staff may be on site. With an in-house data center, the costs of such measures would be exorbitant, but they are included in many colocation plans.
  • Scalability: Keeping up with evolving requirements and user demand can be tricky with an in-house data center. When a change is needed, extra equipment may need to purchased and additional staff hired. With colocation, upgrading is a much simpler matter of simply changing the service plan.
  • Redundancy and reliability: Colocation facilities are often decked out with environmental monitoring to ensure that conditions are optimal, plus they usually feature redundant power supplies. Similarly, top-flight equipment enables high network reliability. Clients can worry less about the fallout from natural disasters, power outages or downtime that would more acutely affect a self-run data center than a colo site.
  • Performance: Building on the last point, colocation data centers have strong, consistent performance as a result of redundancies, as well as optimal power and networking arrangements.
  • Support: Colocation packages feature around-the-clock client support. Rather than having to troubleshoot an issue in the middle of the night on their own, IT personnel can contact a representative for technical assistance.

Taken together, these perks facilitate economical and reliable utilization of data centers. Colocation helps enterprises keep pace with the emergence of cloud computing and new requirements for application development and data processing, all while controlling costs. Unsurprisingly, colocation providers have been ramping up their budgets to serve the growing number of organizations interested in their services.

Colocation spending surges as enterprises spend less on in-house data centers
Rising interest in colocation has forced providers to expand capacity and services. An Uptime Institute study found that almost 90 percent of surveyed colocation companies had increased their budgets year-over-year.

Similar growth hasn’t occurred within enterprises, with only half of them (excepting financial institutions) reporting larger budgets than the year before. However, more than 60 percent of banks and other financial services providers saw gains.

Across the board, though, more resources are being moved off premises and into colocation data centers or cloud computing environments. The study found that:

  • One quarter of respondents’ capacity was running in colocation facilities, while seven percent was tied to public cloud.
  • Almost 40 percent of companies using at least 5,000 servers – most of them in finance – relied on more than five providers.
  • Availability, geographic scalability and capital cost reduction were primary drivers of colocation adoption.

These findings give a good cross-section of where enterprises are at as they try to deal with the expanding roles of software and cloud computing. Colocation gives institutions in verticals such as finance a leg up in controlling costs and improving reliability.