How to pick the best colocation option for your company’s needs

 In Data Center, Hardware, Professional Services, Solutions

Organizations considering colocation should be wary of big promises not documented in a contract, and costs much lower than other providers. As in most situations, a colocation data center offering that sounds too good to be true probably is.

Colocation has become a competitive landscape, and data center providers are offering superb benefits for seemingly great prices: metered power, attractive space costs, and endless connectivity. But there are specific aspects of these three components that need to be studied and questioned.

Before signing the dotted line, take a closer look at power, space, and connectivity. You should also investigate the best way to make the physical migration to a colocation data center and how to optimize your colocation benefits, especially if you’re expanding to new markets.


1. Power. Providers can discount many components of colocation, but can only go so far when discounting power. Because power rates are ultimately set by utility companies, colocation providers only have so much room to discount this specific component.

Regardless, organizations have a wild card up their sleeves — demanding the right billing model for power. Typically, the two best models for power billing are a kW model or metered power billing. Some data centers may push for full circuit billing, but we’re here to warn you that this method generally isn’t most cost effective for you, the customer, as you’ll likely pay for power you aren’t consuming.

2. Space. Your space in a colocation data center can come in a variety of shapes and sizes. From individual cabinets to private cages to custom suites, organizations have their pick of how they want their infrastructure maintained in a colocation center.

But organizations must know how colocation providers bill for space. Many providers now do not charge an individual space fee, but instead bill using an all-in number for power that includes space costs.

If the colocation provider does split costs for space and power, pay close attention to these separate charges. Not all providers price their services the same, and comparing the all-in costs — power and space — of one provider against the split billing of another will give you a more accurate understanding of some cost differences between service providers.

3. Connectivity. Another core component to any colocation deployment is connectivity. That sounds simple enough, but there are aspects of how connectivity is designed and billed that should be explored.

Some data centers will offer a blended bandwidth solution, where you get multiple carriers together in one package. Customers find this attractive because they receive an optimal speed of service, extra redundancy should a carrier go down, and ease of billing as all charges are listed on the colocation provider’s monthly bill. The downside is blended bandwidth can be more expensive than a single carrier.

Customers will always have the option in any carrier-neutral data center of contracting separately with individual carriers. This can be a more cost-effective option than using a blend, but can lack redundancy depending on how many individual carriers you contract with. This also introduces more providers into the mix, which some customers prefer to avoid. If carrier options are important, customers should also understand which facilities are truly carrier neutral, as many falsely advertise that they are.

And, just like with a smartphone bill, organizations need to be mindful of bursting overage charges, as they can quickly raise a bill to many times more than what was expected. You should negotiate a realistic commitment rate that takes into account what bandwidth your organization is actually consuming and what bursting overages will cost.

Planning the move

Moving to a data center — or switching to a new colocation data center — is complicated. Organizations must develop a strategic plan for the move, which will include how equipment and data will physically be moved, and a rough timeframe of how long the process will take. The timetable to get fully integrated into a colocation data center will be based on the size and complexity of the move.

Organizations moving to a new data center must manage the logistics of exiting the current provider contract. If your organization is unsatisfied with your current colocation provider, be proactive about leaving well in advance of the end of the contract. Many contracts will auto-renew several months before expiration, so advanced planning is essential.

Already use colocation? There might be a better way.

Colocation centers expect customers to shop around when coming up for renewal, and there is nothing wrong with changing providers and lowering your data center services costs. Or maybe you’ve experienced outages or poor support with a current provider; given the competitive marketplace for colocation services and the number of capable providers, organizations shouldn’t tolerate poor performance and high renewal costs.

No two colocation data centers are created the same. Organizations expanding into new markets might need another colocation center, but have little information about data center providers at their disposal. Most organizations do what we all would do, and Google “local colocation providers.”

That’s the wrong approach, as every colocation center looks great on a website. Before expanding to new markets, organizations should understand which markets within a region are best to deploy in, and how the services, capabilities, compliances, MSA, SLA, and costs of multiple colocation providers compare. It may also be advantageous to research the local government and tax codes, and determine how business taxes are structured.

Don’t do it alone

This isn’t an easy process, and much can be negotiated. Organizations should work with a global, vendor-agnostic, non-commissioned expert that can comb through colocation offerings to show the top facilities based on your requirements. Working with a VAR, which can resell colocation, has additional advantages and cost savings, as you can combine your colocation and hardware purchases on one bill and get lower pricing than you could achieve going direct to each vendor. A colocation expert should also be capable of assisting organizations with their move, which will include contract management and logistics support.

Organizations must be diligent in researching colocation data center service providers. Uncovering every stone about how colocation centers bill for their services will result in more accurate budgeting and transparent costs. Working with a third-party expert that understands all of these aspects is the best way to ensure you get the right providers, facilities, and services at the best possible rate.

Contact your SHI account executive to learn more about colocation services.

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