Is Data Center Rental the Same Thing as Colocation?

Written by Hadley Jones | May 21, 2015 12:30:00 PM

What do clients understand by the term “data center rental?”

That understanding can vary widely depending on the circumstances, needs, and expectations about renting data center resources.

To get relationships off to a good start, it’s helpful if a provider can position simply the main categories of rental. Clients will then know which option is likely to meet their requirements best.

Whether or not a potential client chooses a given provider, a quick, effective explanation at the beginning will likely save both parties time and effort.

Wholesale Rental versus Retail Colocation

One way to start the explanation is to use the conventional office space rental analogy.

A business can either seek to rent an entire building, just a floor or a part of a floor.All three options can be attractive compared to constructing your own office building (data center) from scratch because they avoid lengthy waiting times and large capital investments.

Between them, the three options differ as follows:

Capacity. Having the whole data center to yourself will give you the most capacity. But will you know what to do with it? IT business models are increasingly based on a “pay-as-you-grow” model to avoid previous problems of either running out of capacity or buying more than needed, “just in case.”

Cost. Renting a whole data center will usually be more expensive in absolute terms. The cost per square foot in a wholesale rental solution is likely to be less than the cost per square foot for colocation. The financials may work out in favor of wholesale rental if you are sure that you’ll use it all. Otherwise, beware of false economies.
Flexibility. Colocation can offer the ability to extend or reduce the amount of the service taken. On the other hand, wholesale rental is inflexible – it’s an all-or-nothing deal.
Management. Colocation services can include managed services provided at a cost, which may be factored into a monthly fee. However, the cost may be reasonable compared to trying to manage everything remotely. Wholesale data center rental may push you the other way, obliging you to sort out your own management solution.
Security. The wholesale rental has the undeniable advantage of control and security. If you have the whole building, you won’t have to deal with other tenants or their visitors. However, good colocation services can also offer tight security to restrict access to authorized visitors only and monitor premises inside and out to avoid incidents.

Common Data Center Rental Requirements

Whether a client chooses the wholesale data center rental or the retail colocation model, certain items must be provided in both cases.

Clean, uninterruptible power supplies with backup generators, reliable network connections with sufficient bandwidth, and heating, cooling, and fire detection systems are all mandatory for a service that clients can rely on. Competent colocation service providers make sure that all their clients are properly served in all of these areas, and to the same level of quality as for a wholesale rental solution.

Are colocation services or wholesale rental offers better suited to particular industry sectors? Or is company size the only factor that matters? Share your thoughts with us by writing your comments in the space below.

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