Colocation vs Cloud: Which One is Better for Businesses?

neuCentrIX - 27/10/2021 12:00

Despite the ongoing pandemic, Indonesia’s economy has been recovering since the second half of 2020 aided by the gradual re-opening of the domestic and global economies. The nation’s digital economy, driven by massive digital transformation, is set to contribute significantly to economic growth. As Indonesia’s businesses adopt digital technologies, digital infrastructure, including data centers and cloud computing, is becoming critical. Regarding these two, one question has been raised: which one is more suitable for businesses, colocation or the cloud? Let’s take a look at the similarities and differences  for both.



With the concept of shared facilities and flexible pricing, both colocation and cloud-based infrastructure services offer cost effectiveness to their clients. Both also provide companies with the ability to quickly respond to increasing demands and scale up their business. Moreover, as service providers, both are experienced and well equipped at handling both physical and cybersecurity issues. With dedicated resources and talents, they can identify threats quicker and mitigate risks more comprehensively than in-house IT specialists. Finally, colocation and the cloud offer companies reliable networks, backups, and disaster recovery measures compared to on-premises alternatives.



A major difference between colocation and the cloud lies in the level of control their clients have over  the partnership. Most colocation facilities allow their tenants to provide their own hardwares and softwares and be in charge of the configuration, leading to greater control over said assets. The providers will then assist tenants by providing resources for security and routine upkeep. Meanwhile, with cloud services, providers supply and manage hardware infrastructure and are responsible for day-to-day administration, routine maintenance, troubleshooting, and problem resolution.


When it comes to security, cloud facilities provide all security frameworks. Thus, the right provider determines the security benefits a company can get. Reputable cloud services providers have robust, multi-layered security frameworks in place and are proven for their resilience. Meanwhile, by opting for colocation data centers, a company can be actively involved in the security frameworks. A colocation provider can handle the framework’s physical and infrastructural elements while the client’s team manages remote security operations to cover the rest.


Another difference lies in their cost effectiveness. With colocation, although capital expenditure for hardware acquisition is rather high, companies can reduce their ongoing operating costs. Companies that opt for colocation won’t need to worry about resources, including equipment and employees, for routine maintenance. Meanwhile, with the cloud, the initial capital expenditure is low, but the operating costs can increase along the way. As additional resources are required, a company might need to upgrade to more expensive packages.


Which One is Better?

In general, cloud computing services are typically attractive to businesses, mainly small to medium, that don’t have enough capital for buying equipment (security devices, networks, servers, disk storage, etc.) and enough technological expertise to configure and maintain them. For example, today’s startups have a tendency to establish their IT systems solely on the cloud due to its low entry cost and scalability. Meanwhile, more mature and established organizations with resources and talents to manage assets, and would like to have more control over the architecture of their off-premise digital infrastructure, typically choose colocation.


Nonetheless, despite the major differences between colocation and cloud solutions, the decision between the two options isn’t a mutually exclusive one. Companies can choose a hybrid approach between third-party cloud providers and colocation to best suit their needs and gain the best of each by integrating aspects of the two services. According to the analyst group Frost & Sullivan, the hybrid cloud and colocation are two of the leading trends for corporations  in 2021 and present significant opportunities for players in the cloud industry. 


All things considered, deciding the best option for a company should be made by skilled IT professionals and executives by taking business requirements, objectives, assets, technical capabilities, and budget into account. What’s important is getting the best features of each platform to ensure digital business growth.