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Colocation vs. cloud: What are the key differences?

An organization can host a private cloud in a colocation facility, but using the colocation facility isn't the same as building a private cloud; the two are exceedingly different.

Some might use the terms private cloud and colocation interchangeably, but they refer to two completely different things. The main distinction between colocation vs. cloud lies with functionality. A colocation facility operates as a data center that rents floor space to an organization that has outgrown its own data center, whereas the private cloud enables designated users within an organization to act as tenant administrators.

Simply put, an organization can host a private cloud within a colocation facility, but the simple act of using a colocation facility isn't the same thing as building a private cloud. The environment's functionality determines whether that environment qualifies as a private cloud or colocation, not the hardware's geographic location.

Cloud computing basics

To understand the differences between private clouds and colocation facilities, think about how you define the public cloud. The public cloud has gained rapid popularity over the last several years and has become almost synonymous with IT outsourcing. But the public cloud means more than simply the leasing of IT resources in a remote data center.

The main advantage of a public cloud is the cloud provider makes consumption-based pricing available for managed services. Although these managed services run in the cloud provider's data center, rather than in an organization's own data center, the remote location alone doesn't define the provider as a public cloud.

The location of the cloud provider's data center is irrelevant. What really makes a company a public cloud provider is whether they provide managed services to multiple tenants.

Colocation basics

Unlike a public cloud provider, a colocation facility doesn't provide managed services. Instead, a colocation facility is simply a shared data center that provides its customers with floor space, power, cooling and connectivity. Some colocation facilities also provide physical security.

The organization that leases space in the colocation facility provides its own racks, servers and other data center equipment. Because the organization owns the hardware it uses, it can use that hardware in any way it requires.

Understand the basics of cloud computing and colocation

Key differences between cloud and colocation

Private clouds differ considerably from both public clouds and colocation facilities, but they do have certain similarities as well.

Much like public clouds, most private clouds work as multi-tenant clouds an organization uses to host managed services. Private clouds can also isolate tenants from one another using software-defined boundaries. A colocation facility is also a multi-tenant environment and operates a remote data center. However, the similarities end there.

Although public cloud providers make their services available to the general public, cloud providers design private clouds to service internal tenants. For example, each department in a large company might act as a tenant and can create VMs based on templates provided by the organization's IT department.

Some might assume organizations host private clouds in their own data centers, and, in many cases, they do. However, an organization doesn't necessarily have to host a private cloud on premises to possess a private cloud.

Here is a summary of the similarities and differences between public clouds, private clouds and colocation facilities:

  • Public clouds reside in a remote data center owned and operated by the cloud hosting provider.
  • Private clouds can reside on premises in an organization's own data center or in a colocation facility.
  • Public clouds act as managed hosting providers, servicing multiple tenants.
  • Private clouds also act as managed hosting providers, servicing multiple tenants. The difference is that whereas a public cloud provider's tenants tend to be unrelated to one another, private cloud tenants tend to be the individual departments in the organization. Private clouds tend to have few -- if any -- external tenants.
  • Colocation facilities are also multi-tenant, but unlike a public or private cloud, colocation facilities don't offer managed services to their tenants. Instead, the tenants only lease floor space or rack space in the colocation facility. It's entirely up to the tenant to decide what they do with that leased space.

Choosing colocation vs. cloud

There are several key factors a business should consider when choosing between cloud hosting and a colocation facility.

One of the first of these is the cost. Public cloud providers offer a consumption-based pricing model in which tenants are billed only for the resources they consume. Conversely, a colocation facility leases data center space to its tenants but doesn't provide any managed services. Because of this, tenants must pay the lease cost but also incur additional costs such as hardware, software licenses, support and bandwidth consumption. The colocation provider is providing a secure facility in which their tenants can operate their own data center hardware.

Another consideration for those who are choosing between cloud computing and colocation is the degree of control the organization must have over its infrastructure resources.

Public cloud providers act as managed hosting providers to a large and diverse group of tenants. As such, security must be their top priority. This means public cloud providers can't allow tenants to physically access their data centers, nor can they allow low-level infrastructure access to server or storage hardware. Some public clouds do allow tenants to lease dedicated hardware, but even then, low-level access is limited.

On the other hand, most colocation centers only act as third-party data center hosting providers. This means organizations are generally responsible for providing their own servers, storage and other IT infrastructure. Because it's the tenant -- not the colocation facility -- that owns this equipment, it means the organization is free to configure the hardware in any way it chooses.

Another important consideration is the degree to which the organization wishes to be involved in managing and supporting its workloads. In a public cloud, the cloud provider handles all of the low-level support for its managed services. This means the provider handles hardware maintenance tasks, such as replacing failed hard disks, and applying software patches. Additionally, the cloud provider is responsible for keeping its infrastructure online and for dealing with outages and other problems.

Colocation facilities generally only guarantee they will provide constant power and internet connectivity. Tenants are responsible for managing and maintaining their own data center hardware, as well as the workloads running on it. In other words, colocation facilities can be a good fit for organizations requiring a high degree of control over their hardware and the workloads hosted on it, whereas a public cloud is better suited to organizations that would rather have a third-party handle those tasks.

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