Skip to content
Colocation or Cloud Services

Table of Contents

    Colocation or Cloud Services: Which is Right for You?

    Colocation and cloud services are both great options for businesses looking to scale their IT infrastructure. Deciding between cloud and colocation services can be a tough choice, however.

    This guide will educate you on the pros and cons of colocation and cloud so that you can make the best decision. If you have additional questions or would like a quote for cloud or colocation services, Brightlio is here to help.

    Overview of the Colocation and Public Cloud Markets

    A surge in demand for colocation space has accompanied the rise of cloud services. In fact, according to Statista, the market for colocation data centers is expected to grow from $50 billion to $136 billion by 2028. Some of this is driven by the needs of the public cloud providers and hyperscalers for ever more data center space.

    Reports show that the cloud services market is set to grow from $442 billion to $1.369 trillion in the same period, at which point the cloud market will be roughly 10x larger than the colocation market. As you can see, the demand for both services is significant, but the demand for public cloud is truly extraordinary.

    Both technologies have eliminated the need for on-premise data centers. Both also allow companies to put data closer to their customer. Finally, both solutions offer greater redundancy and scalability than was previously available.

    Let’s discuss the differences between the two services, how they can help your business grow, and which one might be best for you.

    What Are Colocation Services?

    As stated by 365 DataCenters, “Colocation is the practice of housing privately-owned servers and networking equipment in a third-party data center.” Colocation is frequently referred to as colo, or sometimes, collocation.

    Colocation is an alternative to housing computer equipment in your office. The “co” in colocation indicates that it is a shared data center facility, meaning other customers’ equipment will be housed in the same facility as yours. There are numerous customers in the same building, and because the facility is purpose-built for IT infrastructure, the facilities have much better infrastructure to support your hardware.

    Advantages include:

    • A more secure physical location where your equipment is kept safe from any outside dangers such as theft or natural disasters. This is complete with security guards, mantraps, keycards, biometric scanners, cameras, etc.
    • Redundant power sources to keep your equipment online. Many colocation facilities also have backup generation using diesel or other methods for extended runtime in the event of a complete failure from multiple utilities.
    • Redundant cooling infrastructure and containment systems are meant to keep IT equipment in an optimal temperature range (50 to 82 degrees).
    • Numerous redundant connectivity options.

    Brightlio’s “Ultimate Guide to Colocation” breaks down colocation services in great detail.

    Colocation is a good option for customers looking to continue to own and manage their hardware and software stack. Colo is also an excellent fit for customers that understand their storage and compute requirements and can procure hardware that meets their capacity needs. 

    What Are Public Cloud Services?

    As Google Cloud states, “A public cloud is an IT model where public cloud service providers make computing services—including compute and storage, develop-and-deploy environments, and applications—available on-demand to organizations and individuals over the public internet.”

     Public cloud enables real-time, on-demand access to shared configurable computing resources that you can quickly provision and release with minimal service-provider interaction.

    You don’t own the physical hardware or software with public cloud services. Instead, you rent capacity on demand. There are no upfront costs—your only expense is what you use each month, plus additional bandwidth charges.

    Cloud computing offers many advantages over traditional, on-premises services. Cloud providers offer easy access to resources, scalability, flexibility, and more. The cloud provider is also responsible for the uptime and patching of the cloud environment, eliminating the need to handle this in-house.

    Although you don’t own or maintain the hardware or software, you are still responsible for provisioning and managing your cloud instances. You are also responsible for ensuring your internet connectivity meets the needs of your cloud deployment. The cloud provider’s shared responsibility model outlines your responsibilities in a public cloud environment. A customer that would prefer an even more hands-off approach should consider a managed public cloud service. If you are deciding between managed and unmanaged cloud, Brightlio has a helpful guide.

    Cloud vs. Colocation – The Key Differences

    Cloud and colocation are different in many respects. We’ll outline them here.


    Scaling in a colocation model requires you to procure, install, and configure hardware, software, and colocation space. Scaling could be a months-long process. If you can forecast demand, you can scale effectively. If not, you may run into capacity constraints.

    The cloud allows you to scale your infrastructure on demand. It eliminates the need to forecast hardware capacity needs. It also eliminates the time needed to scale.


    Colocation allows complete access to your infrastructure. You manage and maintain the entire hardware and software stack. You have all the flexibility you need to build systems as you prefer and complete control over your cyber security posture.

    With cloud services, however, it’s not possible to physically access the servers. Instead, all interaction takes place over the internet. If systems are down, you must wait for the cloud provider to bring them back up. You are also entrusting a lot of your cybersecurity to your cloud provider.


    Another difference between colocation and cloud services is customization. If you choose colocation for your business, you’ll have much more freedom when customizing the hardware and software to meet your specific needs.

    Cloud services give you fewer options for customization on the hardware or software stack, as these are provided to you as a service. The underlying hardware or software is sometimes unknown to you. If you require specific hardware or software, the cloud provider may not be willing to offer it.

    Hardware and Software Management

    Colocation requires that you manage your hardware and software. You’ll need to take care of everything from installing new components to upgrading software and operating systems. If something breaks down, you’ll be responsible for fixing it.

    Cloud computing is a comprehensive service, so you don’t have to worry about maintaining your hardware or software. You are only responsible for provisioning and managing your cloud instances.

    Service Level Guarantees

    Colocation services have extremely rigorous service level guarantees. Even brief outages may entitle you to a service credit. I’ve worked with colocation facilities that have gone a decade or more without downtime. Remember that the guarantee applies to physical and electrical components and environmental control systems managed by the data center. The uptime of your hardware and software is up to you in a colocation model.

    In contrast, cloud providers typically have much less rigorous guarantees. AWS’s S3 cloud SLA credits kick in at or below 99.9% uptime, for instance. In a 30-day month, this equates to 43.2 minutes of downtime per month before you are entitled to a credit. This is much more downtime than would be acceptable by a colo provider.

    Security and Privacy

    Security is a concern in both procurement models. You will have more control over your security posture with colocation, as all the hardware and configuration are yours to manage. You will also have all the responsibilities.

    With the public cloud, the cloud’s security is the provider’s responsibility. Public cloud providers have tremendous resources to put towards security. They have much better security engineering capacity than most businesses. Unfortunately, they are also massive targets for cybercriminals.


    Connectivity is a key consideration for both colocation and cloud. As critical applications and data will be housed in each, you will need fast, reliable, and secure connectivity.

    Most colocation facilities are carrier-neutral. This means they partner with many carriers, and you can choose the best provider for your needs. If you are on an MPLS network, you can choose a colocation provider with connectivity to your service provider, which will make your data center part of your MPLS WAN.

    Colocation facilities will typically have several ISP options to choose from, and sometimes dozens. The number of carrier connectivity options is dictated by the size of the facility, its location, and its relative importance as an internet connectivity hub.

    You can connect to cloud providers over the public internet via a broadband connection. This presents performance and security concerns, however. You can also access the cloud via direct connections called cloud onramps. These are dedicated, secure paths from your private IT infrastructure to the public cloud provider of your choice. Many colocation facilities offer cloud onramps, as well.


    You incur costs much differently with colocation than you do with public cloud. Let’s break down colocation and cloud services costs in greater detail.

    Colocation Costs

    With colocation, you will incur three primary charges:

    1. The ongoing operational expense of the colocation service. Colo pricing is based primarily on how much space, power, cross-connects, and network capacity you use. These costs are fixed if you stick within your contracted allowances.
    2. The capital expense of the hardware and software.
    3. The operational expense of managing and maintaining the hardware and software with employees or contractors.

    Colocation is a more cost-effective option if:

    1. You already own the hardware and software needed for your applications.
    2. You can easily forecast your hardware and software needs, and they stay predictable.

    Cloud Services Costs

    With the cloud, you will incur three primary costs:

    1. The variable operational expense of the cloud.
    2. Network connectivity charges.
    3. The operational expense of managing the cloud with employees or contractors. Cloud management costs should be less than operating your own hardware in a colo.

    Cloud makes more financial sense if:

    1. You cannot afford the capital expense of the hardware and software needed.
    2. You have unpredictable demand, which would cause you to over or under-provision.
    3. You have spikey demand.


    Colocation is again more do-it-yourself. If you want to take advantage of the benefits of automation, it is up to you to build it or procure off-the-shelf automation software.

    One benefit of cloud computing is the ability to automate repetitive tasks. Many providers offer software development kits and APIs that allow you to automate development, deployments, resource provisioning, and other tasks.

    Application Development and Deployment Speed

    Application development and deployment in a colocation environment require you to acquire, install, and configure hardware and software in your data center. This can be a cumbersome task.

    You can develop and deploy applications faster in a cloud environment, as there is no hardware or software to provision.

    Cloud providers like Amazon Web Services (AWS) offer free tiers of their services so that developers can test their applications without paying anything upfront.

    You can deploy their application using the AWS console and quickly scale it up as needed. You pay only for what you use while developing your product further on your terms.

    When Should You Choose Colocation Over Cloud?

    You should consider colocation over the cloud under the following circumstances:

    1. You already own the hardware and software your applications will need for the foreseeable future.
    2. You require physical access to your hardware and software to meet compliance or technical requirements.
    3. You have predictable capacity needs.
    4. You have specific security or compliance requirements not met by cloud providers.

    When Should You Choose Cloud Over Colocation?

    You should consider cloud over colocation under the following circumstances:

    1. You do not own the hardware and software you will need and may have difficulty affording the capital expense.
    2. You are not able to forecast demand.
    3. You expect demand to be spikey.
    4. You do not have the technical staff to manage and maintain the IT stack.

    You Can Choose Both

    It’s clear that both cloud and colocation services have their benefits and drawbacks, but which one is right for your business? There is no one-size-fits-all solution when choosing a colocation data center vs. cloud. Many of Brightlio’s customers leverage colocation and cloud services for different use cases.

    How Can Brightlio Help with Colocation or Cloud Services?

    Brightlio is a technology consultancy and telecommunications broker with expertise in both colocation and public cloud. We leverage our relationships with a global network of colocation and cloud providers to deliver solutions that meet your technical requirements and budget. If you are still determining if colocation or cloud is right for your use case, we would love to schedule a no-cost technical review to help.

    In addition, we have expertise in network connectivity, unified communications, and more. We would love the opportunity to be your trusted IT partner. Engage Brightlio today!

    Let's start

    a new project together