What Is Colocation and How Can it Help Your Business Thrive?


The demand for colocation services has been growing steadily for the past few years. The data colocation market is predicted to reach a whopping $19 billion by 2024. 

What sparked this amazing growth? Why are companies large and small flocking to colocation services? What’s in it for you?

We’ll answer all these questions. But first, a primer on colocation.

Is colocation the same thing as cloud hosting? 

Short answer: Nope!

Long answer: See the differences in our side-by-side guide.

[hubspot type=form portal=8610865 id=3ff44fa3-f882-45df-b8e9-ee1551596756]

What Is Colocation?

Colocation is the practice of renting space in a third-party data center to house your privately owned servers and/or network infrastructure. This practice replaces the old way of hosting your servers in-house, usual in a room or designated area within your company’s headquarters. Instead, with colocation, your hardware and data are hosted in a third-party location, along with the infrastructure of other companies.

The main advantage of colocation is that it allows you to bypass infrastructure investment. But that is just the beginning. Let’s take a closer look at the benefits of colocation.

Top 4 Benefits of Colocation

Have you already started considering your colocation strategy? If not, here’s why you should:

Cost Savings and No Overhead

Data center infrastructure is expensive. Colocation helps you save all the money that would otherwise go into security, energy usage, air conditioning, and other fixed and variable costs. 

Better yet, you get to enjoy state-of-the-art technology, hardware, and security without the overhead that comes with buying your own equipment and hiring your own staff. This is one of the main reasons why more and more businesses are opting for colocation services.

Better Security

Can you be sure that your data is monitored 24/7 if it’s kept on-premises? Perhaps, if you have a large IT department.

But large IT departments and security professionals can get very expensive very fast. Colocation data centers provide a secure and affordable answer to increased data security threats

When you opt for a colocation service, you benefit from multi-layered physical and cybersecurity protocols, along with a dedicated team of security professionals that are on-call 24/7.

Other security perks—depending on the colocation data center—include access control, 24/7 camera monitoring, fire detection and control, timely updates, and more.

Minimized Downtime

Did you know that a single outage can cost a company up to a few million dollars? One hour of downtime cost Amazon almost $100 million dollars back in 2018! And even though you’re not Amazon, imagine what an hour without access to your data and critical business systems would mean for your bottom line.

A colocation data center ensures permanent internet connectivity, flexible bandwidth, adequate cooling, and more so you’re always connected.

Scalability Made Easy

What happens when your company’s data volume outgrows your on-prem infrastructure? You could build an add-on or change headquarters…but that’s pretty drastic just to accommodate a few more servers.

The easiest and most affordable solution is data center colocation. When your business needs grow, your colocation plan can grow along with you. Plus, you don’t need to invest in pricey infrastructure before you’re ready to use it. Colocation makes both growth and downsizing easy and painless.

Colocation in a Data Center vs. Hosting on the Cloud

To many, colocation sounds like cloud hosting, which you’ve undoubtedly heard about from the likes of Amazon, Microsoft, and Google. But there are big differences that the big guys don’t cover in their buzzword-laiden marketing. 

Data center colocation means having your own equipment safely stored in a dedicated facility. The provider offers the space, the racks, on-going maintenance, support, and power. But the equipment is yours. 

On the other hand, cloud storage is managed solely via the internet. Usually, you don’t even know where the servers that host your data are located. You access them completely online.

Colocation gives you more control over your data and more flexibility—along with transparent, predictable pricing. 

There are big business implications when you’re deciding whether to host in the cloud or take a colocation strategy with a regional data center.

Curious about the differences between colocation and cloud hosting?

See the comparison to better understand your options.

[hubspot type=form portal=8610865 id=3ff44fa3-f882-45df-b8e9-ee1551596756]

There is no one-size-fits-all when it comes to storing your data and your assets, so feel free to reach out to our specialists to request a free consultation. 

Iowa Colocation in Action

There’s another significant reason why data storage should be a customized solution, not a package deal for everyone: location. You want to be relatively close to your assets and backups, and you want to make sure that your colocation provider takes the necessary steps to ensure that your assets are safe no matter what.

Here’s an example: In August 2020, a derecho swept through the Midwest. Power and internet connection were down for weeks for many residents and businesses across Iowa. 

Do you know whose data was safe and easily accessible? That’s right—the data of companies that opted for a colocation strategy before the derecho hit. On the other hand, companies that had their data stored in the cloud were unable to get to their data and backups because they had no internet connection.

This was a wake-up call for a lot of Iowa-based companies. It made them realize how colocation can save their business even in the most extreme of circumstances. 


Your colocation strategy seems like something that can be put off endlessly…but do you really want to wait to think about it until it happens and you’re up a creek without a paddle? Start planning now.

At Heartland Technology Data Center, we are ready to support you with advice on how to create a colocation strategy that fits your company’s needs. Get in touch with us if you need an expert opinion or if you want to tour our facility!