If you’re looking at your on-premises data center and thinking you should be pursuing alternatives to hosting all of your critical applications and data by yourself ... well, you’re not alone. Even in the midst of this pandemic, or perhaps because of it, the industry is seeing a significant increase in the number of companies that are outsourcing the care of some — or even all — of their information to third-party companies.

Omdia reports revenue for global colocation companies is expected to rise by more than 6%, reaching more than $40 billion annually within four years. 451 Research said “The leased data center model offers a place where infrastructure and services combine to better deliver applications and content by improving performance, bandwidth cost, and latency. These benefits have only become more important following the lockdowns resulting from COVID-19 and the need for video and other applications to work smoothly from home offices.” And an International Data Corp. (IDC) report from earlier this year noted that 55% of organizations believe a colocation provider can do a better job than they do in monitoring environmental conditions and power consumption in the whitespace.

So, the opportunity is there. But, you don’t want to be in a position where you leap, only to realize too late that you didn’t do your due diligence. There are a number of issues you should examine before making this kind of a decision. Let’s take a look at the top 10.

 1. Global footprint

Increasingly, companies with operations around the world are moving in the direction of implementing a colocation strategy. They know all of their eggs — data and applications — cannot be located in one basket. Your colocation vendor should have multiple facilities located in the markets where you’re doing business as well as those where you anticipate doing business. In some cases, “global” may denote sites throughout North America. More often than not, however, it will also encompass the EMEA and PacRim regions. Do your due diligence and ask for details about the data centers in the markets where you’re looking.

2. Cloud connectivity

You no longer have to choose between cloud or colocation. Companies of all sizes are implementing hybrid strategies where their data and applications reside across a myriad of locations. Some may be held in a colo center, on a public or private cloud, and some data may still be held on-premises. Your colo vendor should be able to help you map out a strategy for deciding what information will be located where and provide a transport mechanism to enable it.

3. Scalability/flexibility

This is huge. You don’t want to be locked into a contract with a company that can’t meet your changing needs. In a recent report, Uptime Institute said, “Outsourcing provides the ability to readily and quickly adapt to changing capacity needs without the burden of managing the full stack of IT and applications.” If you’re looking at a data center in a given market and the provider can’t tell you if they have room for your servers, or if they say they’ll have it when the next phase of their data center opens, be wary. You’re asking the provider to be flexible, and this may be a warning flag that they’re not. Additionally, you may start out with your information in one data center and choose to expand it or shift it to another facility. Make sure your vendor can help you accomplish those tasks efficiently.

4. Cost optimization

451 Research said “outsourcing shifts cost allocations from CapEx toward more repeatable OpEx models.” Certainly, as many companies and government agencies move to close and consolidate their data centers, the cost factor becomes a major consideration. If you’re looking to move in this direction, work with your vendor and CFO to map out both short-term and long-term cost considerations and determine a true ROI.

5. Managed services

Customers increasingly voice that they want to deal with one vendor to handle a wide range of services. And as anyone who’s had to administer a data center will tell you, there’s far more to making sure it’s running properly other than just space and power. Ask your colo provider about the following.

  • Remote Hands — The pandemic has taught us that having someone else making sure your configuration is running smoothly and fixing problems when they invariably arise is far preferable than having to do it yourself. Your provider must have this option available. Ask them what additional steps have been implemented in order to keep its workers’ health safe so that if any members of your team must visit the center, their health is not endangered. Increasingly, remote hands is being viewed by many as “table stakes.”
  • Security — This isn’t just about cybersecurity, although that’s a must. It deals with the physical security of your colo provider’s site. How many levels of security are there? What checks are in place to ensure that only those authorized people can gain access to the site? Are there areas that are off-limits to virtually everyone?
  • Systems administration — Cloud-based managed services are increasingly becoming the norm, and you should insist your provider be able to focus on them, working in tandem with the customer’s existing team. Beyond that, you may want to ask a provider what types they provide. From basic “lights on” services to O/S patching, user management, backup, and DR configuration, to performance tuning and more, there’s an entire range of services that your team may be currently providing that you want to wholly or partially offload to a third party.

6. Edge

This is where much of the industry is headed. IDC predicts what it calls the “Global Datasphere” will grow from 33 ZB in 2018 to 175 ZB by 2025, adding that, in 2025, each connected person will have at least one data interaction every 18 seconds. Many of these interactions are because of the billions of IoT devices connected across the globe, which are expected to create over 90 ZB of data in 2025. That data will have to be stored somewhere, and while there’s a slow adoption of edge computing strategies today, that will be changing rapidly in the next several years. Ask your data center vendor about their plans to implement how they’re going to handle the onslaught of data generated from devices at the edge? Where will that data be stored? How will you be able to access it and in what time frame? And how soon?

7. Professional services

Ideally, your vendor takes the time to understand your challenges and your opportunities and may be able to help you beyond merely signing your company up for colocation services. I’m biased, but I prefer to have someone who’s tenured, and has been around the block a time or two helping me in this area as a consultant. Chances are, they’re not only well-versed in the latest technologies but have been able to solve business challenges through the years. This gives them an advantage in helping you design the solution that works best for your firm.

8. Financial stability

This should almost go without saying, but it doesn’t. We’ve seen too many cases of companies notifying their customers that they’re abruptly shutting down, leaving them stranded. Last December, for example, 20 VPS providers gave their customers two days to retrieve their data before closing for good. A payroll company abruptly shut down last September; thousands of people went without paychecks for several weeks. The good news is that most data center firms have substantial assets built up around the world; there’s little chance of that happening. But it’s always a good idea to ask your account executive to help you better understand how their company is funded.

9. Power metering

When working with metered power, you first need to understand if your situation requires it because not all deployments do. If you’re consuming high amounts of power or have very large footprints in data centers, metered power is your best choice. Understanding how the data center calculates metered power will be important to your overall monthly charges. Does the data center calculate by kWH or by amps? How does the PUE calculation figure into things? Are there large “base” fees charged? (These usually revolve around covering the general real estate costs, etc.) Knowing the answers to these questions will help you keep tight controls over your monthly power charges.

10. Advanced technology

Uptime notes that third parties “may provide you with access to a wider range of resources, including technology, interconnections, software tools, services, and application environments.” In a competitive environment, it’s obviously in the provider’s best interest to make advanced technology available to you, frequently at a lower price than if you were to buy it yourself. The technology is evolving at breakneck speed; we’re seeing stories almost daily about improvements (e.g., hydrogen fuel cell-powered data centers, liquid cooling). All of these, and more, will directly impact the cost and value delivered from data centers. You may want to ask about your data center company’s road map.


As you work toward implementing your digital transformation strategy, you’ll want to consider a partner to help you along the journey. Choose a vendor that works with a methodology that you feel comfortable with. Their initial approach to scoping the project, analyzing the apps or infrastructure, building the initial scorecard, creating the migration road map, and how the implementation teams engage your staff must be a good fit. These professional service providers really need to become true “trusted advisors” to your business so your efforts in the beginning will pay off dividends in the end.

You may have other questions, and they’re bound to be valid. After all, it’s generally accepted that your data and your applications are, by far, your most valuable asset. Choosing a colocation partner is increasingly seen as a wise decision. You have the opportunity to find a partner that will meet your needs today and into the future.