In the B2B tech world, there's always talk around the decline of the data centre and how the cloud will replace it in the foreseeable future. Why? Data centres are supposedly stuck in the past and only suitable for big corporations with a lot of money to spare.
While there may be some merit to the argument that data centres aren't perfect for every business, the rise of colocation says something different. As an industry, it's booming and isn't showing any signs of slowing down.
According to a report published in April by 451 Research – which monitors 4,800 data centres annually – the data centre colocation market will be worth $33.2 billion (around £25 billion, AU$44 billion) worldwide by 2018. In the first quarter of last year, it made $27 billion (around £21 billion, AU$35 billion) globally. For the most part, this revenue and growth came from local providers.
A number of questions need to be answered here. Firstly, why is colocation so lucrative in the age of the cloud? It's clearly an area that's contributing a lot to B2B technology. And from a business perspective, what are the benefits for firms, especially SMEs? That's what we're going to discuss in this article.
Understanding colocation
Businesses deal with a mass of data and information on a daily basis, so managing it effectively is crucial. Data centres, traditionally, have been a great way of doing this. However, actually owning one is virtually impossible for many businesses. Colocation gives smaller businesses the chance to reap the same benefits as larger firms.
This route provides SMEs with the ability to rent space, equipment and bandwidth at an affordable cost. Usually, a colocation data centre will offer facilities such as power, cooling, space and security for server, networking and storage equipment. It's not much different than outsourcing staff to complete certain tasks and contribute to overall business needs.
The benefits are wide-ranging and not only focused around cost-saving. That's an important part of colocation, of course, but another main attraction is the fact businesses get to focus on other areas. With most providers, there are experienced professionals on hand to manage the day-to-day running of your facilities. This also means you don't need to worry about having complex technical knowledge.
Brian Hall, key account sales director of critical infrastructure tech provider Emerson Network Power, explains that colocation has led to businesses moving away from ownership of their own data and server rooms. Why? Because it's so flexible.
Hall says: "Colocation data centres have risen in popularity over the past few years as companies move away from owning their own physical computer server rooms and opt for third-party providers. Most commonly, businesses rent space for their own servers and racks, either as their core facility or as a disaster recovery facility.
"An advantage of colocation data centres is the flexibility that it brings to an organisation's IT needs. When a company expands or contracts its operations, it can rent more or less space in the data centre depending on its current need. This avoids oversized data centres being built, which saves money, but also gives instant capacity should a company need it."
A lucrative opportunity for SMEs
Not every business has the time and resources to build in-house systems to handle their data, which is what makes colocation so lucrative. Jon Healy, associate director of data centre designer Keysource, says it's a simple and reliable way for firms to handle their data needs and save money at the same time.
"Colocation is an easy way for businesses to outsource their data centre requirements. Recent history saw the market oversupplied, with the 'build it and they will come' mantra. However, we are now in a period of sustained growth with 'demand' outstripping the rate of supply. This is driven by an unprecedented upsurge in cloud services, digitisation, IoT and competition driving down costs, making it more cost-effective than ever," he says.
In particular, he sees major benefits for small and medium-sized firms. Healy continues: "SMEs benefit from reduced capital expenditure (normally associated with a design and build project), greater flexibility to expand on demand and potentially greater efficiency and resilience associated with being in shared professional white space."
