Back to Basics: Understanding Cloud and Colocation Environments

It’s 10 p.m. Do you know where your data is? ‍

Your data is the lifeblood of your business. Whether you’re hosting business-critical applications or accessing sensitive financial documents, the reliability, performance, and security of the systems keeping that information safe and available can keep business owners and IT professionals up at night. Despite the seemingly endless number of technologies and providers on the market today, finding a solution that satisfies your unique concerns — whether those pertain to cost, security, management, scalability, or compliance — doesn’t have to be a nightmare. 

Starting with the two most common solutions, colocation and cloud, this article goes beyond the buzzwords to break down what each option means for you — and what factors to consider when deciding how to keep your precious assets safe. ‍

What is Colocation?‍

Colocation (often shortened to “colo”) is more than just floor space in a building. Utilizing an external data center, a colocation model includes space, power, cooling, connectivity, and security components all wrapped into one easy-to-consume service. Given how much data center providers invest into each of these elements, they can typically provide a level of service that goes unmatched by a company’s own internal data center. ‍

What is Cloud? ‍

Cloud has so many meanings nowadays that it’s important to establish a common understanding when discussing the topic. Put simply, in a data center context, cloud consists of the necessary resources (such as networks, computing power, storage space, and application services) that are readily available, accessible over the internet, and require little to no direct management by the end-user. Cloud services typically come in two forms: public and private. ‍

‍Public Cloud:‍

In a public cloud model, the infrastructure is already in place with large pools of necessary resource components (compute, storage, security, etc.) available to you. This model tends to be consumption-based, meaning a company pays based on its usage each month. Public cloud can yield tremendous benefits in terms of elasticity and flexibility, enabling your company to rapidly scale your resource demands up or down based on real-time need.  ‍

Private Cloud‍

A company using a private cloud model has dedicated infrastructure designed and implemented to meet the business’ specific needs. Because it’s completely private, this option can be built to suit a company’s unique makeup and can allow for more control by the end-user. In a private cloud environment, it is you and only you, which means any patching, updating, or other maintenance happens on your schedule. It also means you can customize how to leverage the dedicated infrastructure components to produce the best overall cloud strategy for your business.

Each cloud option has distinct advantages over the other, but each comes with its own potential pitfalls, too. When determining which cloud or colocation solution is right for your business, there are a few key considerations to weigh. 

Attempting to calculate the total cost of ownership of cloud versus colo solutions can be a risky proposition.

Cost ‍

Does your organization prefer operational expenditures or capital expenditures? Some companies prefer keeping their OpEx spending to a minimum, while others prefer their expenses as subscriptions. This is usually a result of the company’s very makeup — public company, private ownership, various business models, maturity of the organization, etc. 

Attempting to calculate the total cost of ownership of cloud versus colo solutions can be a risky proposition. Multiple costs tend to get left out of the overall calculation, many of which fall under the umbrella of soft costs. These costs tend to constitute overlooked fees like software licensing, ingress or egress fees (charges associated with moving data into and out of your cloud environment), labor costs, and more. Because of these sneaky expenses, it’s important to do a comprehensive review when comparing the overall investment required for each model. 

Colocation can be a very predictable, low-cost way to ensure a company’s IT assets are in the best possible position to deliver their expected reliability and performance. If your company has already made the large investment to acquire necessary IT infrastructure components, having the proper redundancies in place for power, cooling, connectivity, and more is an essential part of that strategy. Colo offers businesses those redundancies and often does so for less financial commitment than keeping hardware on-premises.  

Cloud can be a bit tricky — but it doesn’t have to be! Your ability to predict and control cost has a few variables impacting it, such as your preference of public or private cloud, whether your workloads are consistent or variable, your backup and recovery strategy, and more, but going to the cloud generally eliminates the need to undertake a large capital investment in favor of a recurring monthly cost for IT infrastructure needs. ‍

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IT Management‍

The makeup of your IT team can be a good indicator of which model best suits your business. If you’re considering converting to cloud, does your team currently have the requisite skills to develop and execute a successful transition? Is your team composed of members who specialize in particular technologies, or are they considered generalists? No specific composition is better than the other, but knowing the strengths of your current team will certainly make an impact on which direction is the best strategic fit for your business.

Some teams are fully staffed and capable of handling the ongoing management duties of an IT environment with little issue. Others are stretched so thin that the day is a success if they’re just able to tread water. A team of the former variety might be best suited for a colocation environment, outsourcing power, cooling, and the like to a facility while still running point on actual system management. A team in the latter position could find great relief in a cloud model, allowing them to focus on strategic endeavors instead of merely “keeping the lights on” each day. 

Each move is unique and requires careful planning and forethought. Determine whether your current team is capable of handling such a move or if you’ll need additional assistance.

Size of the team aside, experience plays a critical role in the success of your chosen solution. Some organizations hear about the cloud and decide it will fix any and all of their problems, so they go all-in. Depending on the cloud model, your team might be ill-prepared to execute such a strategy if they lack the necessary experience. Each major cloud provider is unique in terms of the navigation and administration of the overall environment, which creates potential gaps in the know-how required for a successful transition. 

Moving to a colo model also requires experience and the appropriate amount of committed hours, so that move shouldn’t be taken lightly, either. Each move is unique and requires careful planning and forethought. Determine whether your current team is capable of handling such a move or if you’ll need additional assistance from your new colo provider, your specific technology manufacturers, or professional IT moving organizations to make the transition. Assessing the overall strength and experience of your team goes a long way in helping your organization choose the best path forward. ‍

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Business Position ‍

Another key factor in deciding whether colo or cloud makes sense for you is your business itself. Factors like your business model, compliance and regulatory requirements, maturity of the business, growth trajectory, and more can significantly impact your decision. Both colo and cloud can offer valuable solutions regardless of where you fall within these categories. 

In terms of yearly revenue, is your business rather consistent, or do you find yourself ramping up for busy seasons, anticipating peaks and valleys throughout the year? Because of its consumption-based model, public cloud can provide great options for organizations with large swings in workload demand. You’ll be in a position to spin workloads up and down as business needs dictate. If your business runs in a steadier state, the cost predictability of private cloud or colo tends to lend better results. 

Consider the agility of your business. Are you constantly creating new lines of business, or have you dramatically shifted focus in the past 18 months? Some companies are constantly reimagining themselves while others are in a similar position today as they were 10 years ago. Neither approach is necessarily better than the other, but it can make a difference in the success of your chosen solution. Companies that maintain a single core focus tend to have a more predictable environment. Both colo and cloud solutions have something to offer for those businesses. New, emerging, or constantly evolving companies might see more benefit in the flexibility of the cloud. 

Successful compliance can be achieved in both colo and cloud environments, but it greatly depends on how the model is selected and implemented.

The tech field has plenty of acronyms, and the world of compliance and regulation is no stranger to the alphabet soup, either. Whether it’s HIPAA, PCI, SOC 2, FISMA, or any other regulation, your business might be subject to one or more compliance requirements that can greatly impact your decision to migrate to the cloud or to a colocation facility. Successful compliance can be achieved in both colo and cloud environments, but it greatly depends on how the model is selected and implemented. You’ll want to do your due diligence to ensure that the administrator of your selected solution can help you meet the necessary requirements. ‍

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Making the Decision‍

As solution providers, we at TierOne often get asked which is best, colo or cloud. As this article has outlined, many factors influence that answer, and as a business leader, you need to weigh multiple considerations to arrive at the solution that’s best for you. Although every business is different, there are a few key takeaways you should be armed with going into this decision. 

What Hybrid IT isn’t is going out and trying a little bit of everything; rather, it means deploying workloads where they perform best to successfully meet the needs of the business. 

First, the answer doesn’t have to be one or the other, cloud or colo. Businesses often look at this decision as if it were black and white, choosing one direction and abandoning the other. Nothing could be further from the truth. In fact, we see the most success when combining the best of what each solution has to offer. Colo, private cloud, and public cloud each have distinct advantages and can deliver incredible results when implemented the right way. The marriage of these models in a business’s IT strategy is called Hybrid IT. What Hybrid IT isn’t is going out and trying a little bit of everything; rather, it means deploying workloads where they perform best to successfully meet the needs of the business. 

The final takeaway is to get help! When making this decision, organizations often venture into this crowded and confusing field alone, but you don’t have to, and doing so might end up hurting you. Regardless of your chosen direction, there are a number of proactive steps that should be taken at the outset, and missing out on those can be costly in the immediate and long term. 

Having access to a neutral, consultative voice during these discussions can add tremendous value because these partners care about one thing above all else, and that’s your business. Aligning with a company that keeps your best interest in mind is paramount. Whether you work with the cloud and data center specialists at TierOne or with another consultant, having a neutral voice to walk you through the ins and outs of this decision ensures that the decisions you make are backed by the best and most comprehensive industry knowledge.

Do you feel ready to explore the world of cloud and colocation solutions? Follow along with our ongoing blog series demystifying the data center sphere, and when you’re ready to turn curiosity into action, drop us a line to start your risk-free consultation.