When it comes to hosting critical IT infrastructure, businesses have more choice than ever.
Two of the most common options are server colocation and public cloud hosting. Both can provide reliable, secure infrastructure, but they work in very different ways – and choosing the right approach can have a significant impact on performance, cost, security and long-term scalability.
For MSPs, IT resellers and technology providers, understanding the differences is also important when helping customers choose the right infrastructure strategy.
So, which is best: colocation or public cloud?
The answer depends on what your customer needs.
In this guide, we compare colocation and public cloud across the key considerations to help you make a more informed decision.
What is colocation?
Colocation, often shortened to colo, is where a business owns or leases its own physical IT equipment but houses that equipment inside a professional data centre.
Instead of keeping servers in an office, comms room or other on-premises environment, the hardware is installed in a secure data centre with access to resilient power, cooling, connectivity and physical security.
Colocation can range from a single server or 1U of rack space through to quarter, half and full racks, cages and larger dedicated environments.
The business retains control of its hardware while the data centre provider takes care of the underlying facility.
Colocation typically provides:
- Secure, professionally managed data centre space
- Resilient power and cooling
- High-capacity connectivity
- Physical security and controlled access
- Rack space and secure infrastructure
- Remote hands and technical assistance
- Options to increase physical capacity as requirements grow
For organisations that want control over their infrastructure without the cost and complexity of operating their own data centre, colocation can be an attractive option.
What is public cloud hosting?
Public cloud hosting provides access to computing, storage, networking and other IT resources through a cloud service provider.
Rather than purchasing and operating physical servers, organisations consume infrastructure as a service and typically pay according to the resources they use.
The major public cloud platforms provide highly flexible environments where customers can provision virtual machines, storage, databases and other services on demand.
This makes public cloud particularly attractive to organisations that want to deploy infrastructure quickly and scale resources without purchasing physical hardware.
Colocation vs public cloud: the key differences
There isn't a single right answer for every organisation.
The better option depends on factors including workload, infrastructure requirements, budget, security considerations and how quickly resources need to scale.
Let's look at the four areas that matter most.
- Performance
Colocation
With colocation, organisations have direct control over the physical hardware running their applications.
This means they can choose the servers, processors, memory, storage and networking equipment that best suit their workloads.
For applications that require consistent, predictable performance, dedicated physical infrastructure can provide significant advantages.
Colocation can also provide high-capacity connectivity and low-latency connections to networks, cloud platforms and other data centres.
For workloads that are particularly sensitive to latency or require specialised hardware, this level of control can be valuable.
Public cloud
Public cloud provides access to substantial computing resources without requiring businesses to purchase physical hardware.
Virtual machines and other cloud resources can be provisioned quickly, making cloud particularly useful for development environments, web applications and workloads where resource requirements change frequently.
However, organisations are operating within a shared infrastructure environment and performance can depend on the architecture and services selected.
Performance winner?
It depends on the workload.
Colocation can be particularly attractive for predictable, resource-intensive workloads where dedicated hardware and infrastructure control are important.
Public cloud can be better suited to workloads that need rapid provisioning and flexibility.
- Security
Security is another area where the two approaches are often compared – but the reality is more nuanced.
Colocation
A professional data centre can provide significantly stronger physical security than many businesses can achieve in their own premises.
Features can include:
- Controlled physical access
- CCTV monitoring
- Secure cages and cabinets
- Resilient power
- Environmental monitoring
- Fire detection and protection
- Multiple layers of physical security
Businesses also retain control over their own hardware and software environment.
However, the organisation remains responsible for securing its servers, operating systems, applications and data.
Public cloud
Public cloud providers invest heavily in physical and infrastructure security.
They can provide sophisticated security tools covering areas such as identity management, encryption, monitoring, access controls and threat detection.
However, moving to the cloud doesn't mean security becomes someone else's responsibility.
The customer still needs to properly configure its cloud environment, manage identities and permissions, protect applications and understand its responsibilities under the provider's shared responsibility model.
Security winner?
Neither automatically wins.
A well-managed colocation environment can provide excellent physical security and infrastructure control, while public cloud can provide extensive security capabilities.
The key is how the environment is designed, configured and managed.
- Cost
Cost is often where the biggest differences emerge.
Colocation
With colocation, businesses generally make a larger upfront investment because they need to purchase and maintain their own hardware.
However, once that infrastructure has been deployed, ongoing costs can be relatively predictable.
The organisation typically pays for its rack space, power, connectivity and additional data centre services while retaining ownership of the hardware.
For workloads that run continuously for several years, this can potentially provide a compelling total cost of ownership.
Public cloud
Public cloud reduces the need for upfront hardware investment.
Instead, customers pay for the resources and services they consume.
This can be particularly attractive for start-ups, temporary projects or businesses that need infrastructure quickly without committing capital to physical equipment.
However, cloud costs can become more complex as environments grow.
Compute, storage, data transfer, backup, managed services and other consumption-based charges can all contribute to the final bill.
For long-running, predictable workloads, it is therefore important to look beyond the monthly headline price and consider the total cost over the expected lifetime of the infrastructure.
Cost winner?
It depends on the workload and usage pattern.
Cloud can offer excellent financial flexibility when resources are variable.
Colocation can potentially deliver better economics for stable, high-utilisation workloads over a longer period, particularly where existing hardware can be used.
The right comparison is not simply monthly colo cost vs monthly cloud cost – it is the total cost of delivering the required service.
- Scalability
Scalability is one of public cloud's biggest strengths.
Public cloud
Need more computing capacity?
In many cases, additional resources can be provisioned within minutes.
Businesses can scale virtual machines, storage and other resources up or down as requirements change.
This makes public cloud particularly useful for:
- Rapidly growing applications
- Seasonal workloads
- Development and testing
- Variable demand
- Businesses launching new services
Colocation
Colocation can also scale, but the process is more physical.
If additional capacity is required, businesses may need to purchase hardware, install it and provision additional rack space, power and connectivity.
However, that doesn't mean colocation can't support significant growth.
A well-designed data centre environment can provide additional rack space, power and connectivity as an organisation expands.
For predictable growth, this can be planned in advance.
Scalability winner?
Public cloud generally wins for rapid, on-demand scaling.
Colocation can be an excellent option where growth is more predictable and organisations want to retain control over their physical infrastructure.
The comparison at a glance
|
Colocation |
Public Cloud |
|
|
Performance |
High control over dedicated hardware |
Flexible virtualised resources |
|
Security |
Strong physical security and infrastructure control |
Extensive cloud security capabilities |
|
Upfront cost |
Higher due to hardware investment |
Lower — no physical hardware required |
|
Ongoing costs |
Generally more predictable |
Consumption-based and potentially variable |
|
Scalability |
Physical but highly achievable |
Rapid and on-demand |
|
Hardware control |
Full control |
Limited |
|
Customisation |
High |
Dependent on available cloud services |
|
Deployment speed |
Requires hardware deployment |
Often very fast |
|
Long-term workloads |
Can be highly cost-effective |
Can become expensive if poorly managed |
|
Variable workloads |
Less flexible |
Highly flexible |
|
Data centre management |
Facility managed by provider |
Cloud provider manages underlying infrastructure |
When does colocation make more sense?
Colocation could be the better option if your customer:
Already owns significant server hardware
Moving existing infrastructure into a professional data centre can extend the useful life of hardware while improving the physical environment in which it operates.
Needs predictable performance
Dedicated physical hardware can be advantageous for workloads where consistent performance is important.
Wants greater infrastructure control
Colocation gives organisations control over the hardware, operating environment and architecture.
Has stable, predictable workloads
If infrastructure requirements are relatively consistent, the economics of owning hardware and paying predictable data centre costs can be attractive.
Needs specialist or dedicated hardware
Some applications have specific hardware requirements that don't fit neatly into standard public cloud environments.
Wants to avoid operating its own data centre
Colocation provides access to professional data centre infrastructure without requiring the business to build and operate its own facility.
When does public cloud make more sense?
Public cloud can be particularly attractive if your customer:
Needs to scale quickly
Cloud makes it possible to provision additional resources without physically installing new servers.
Has unpredictable demand
If computing requirements fluctuate significantly, paying for resources as they are needed can provide valuable flexibility.
Wants minimal hardware management
The cloud provider takes responsibility for the underlying physical infrastructure.
Is launching a new application or service
Cloud can reduce the time between an idea and deploying the infrastructure required to support it.
Has limited capital for hardware
Avoiding significant upfront hardware investment can be particularly useful for smaller or rapidly growing organisations.
What about using both?
For many businesses, the answer isn't actually colocation vs public cloud.
It's colocation and public cloud.
A hybrid infrastructure strategy can combine the strengths of both environments.
For example, an organisation could keep predictable, high-performance workloads on dedicated hardware in a colocation facility while using public cloud for applications that require rapid scalability.
This can create a flexible infrastructure model without forcing every workload into the same environment.
A hybrid approach could include:
Colocation
For core applications, dedicated servers, databases and predictable workloads.
Public cloud
For variable workloads, development environments, backups, disaster recovery or applications requiring rapid scaling.
Connectivity
For securely and reliably connecting the different environments.
This is where connectivity becomes particularly important.
A hybrid infrastructure strategy is only as effective as the network connecting its different components.
Don't overlook connectivity
When comparing colocation and public cloud, it's easy to focus entirely on compute and storage.
But connectivity can have a major impact on the performance and resilience of the overall solution.
For organisations using multiple environments, consider:
- Internet connectivity
- Network diversity
- Bandwidth requirements
- Latency
- Access to cloud platforms
- Resilient routing
- DDoS protection
- Inter-site connectivity
- Backup connectivity
For MSPs and IT resellers, this creates an opportunity to take a broader view of the customer's infrastructure requirements.
Instead of asking simply "Should they use colo or cloud?", ask:
"What combination of infrastructure and connectivity will deliver the best outcome for this customer?"
A practical decision checklist
When assessing whether colocation or public cloud is right for a customer, consider these questions:
- What workloads are being hosted?
Are they predictable and resource-intensive, or variable and unpredictable?
- How much infrastructure control is required?
Does the customer need to specify its own physical hardware?
- How quickly will capacity need to change?
Does the business need to scale within minutes, or is growth predictable over months and years?
- What is the five-year total cost?
Don't compare only the initial investment or monthly hosting cost. Consider hardware, power, space, connectivity, support, migration, licensing, data transfer and management.
- What are the security requirements?
Consider both physical security and the security of the applications, data and systems being hosted.
- How important is network performance?
Latency, bandwidth and network resilience can be just as important as the underlying compute environment.
- Could a hybrid approach work better?
There's no requirement to put every workload in the same environment.
So, which is best?
There is no universal winner.
Public cloud is often the better choice for flexibility, rapid deployment and on-demand scalability.
Colocation can be the better choice for control, predictable performance, dedicated infrastructure and long-term workloads.
And for many organisations, a combination of the two provides the best overall solution.
For MSPs and IT resellers, the key is to understand the customer's requirements before recommending the technology.
The best infrastructure isn't necessarily the newest or most fashionable option.
It's the one that delivers the performance, security, scalability, resilience and cost profile the customer actually needs.
Looking for a colocation partner?
At VeloxServ, we provide independent colocation and connectivity from our own privately owned data centres in the Midlands.
Our facilities provide secure, resilient environments for MSPs, hosting providers and growing businesses, with options ranging from individual 1U servers through to dedicated racks and larger caged environments.
With high-capacity connectivity, resilient infrastructure and remote hands and delivery management included with all colocation packages, we can help partners build infrastructure solutions around their customers' specific requirements.
Want to explore whether colocation could be right for your customer? Contact the VeloxServ team or book a tour of one of our data centres.
