Colocation vs. Cloud: What's the difference and how do you choose the right one for you?

There are many reasons why a business might decide to outsource its IT operations: it might have to quickly add new capacity to keep up with the demand for its services, or substitute an ageing data center, look to place the responsibility for its infrastructure on someone else, or simply to cut costs. Once you've made the decision to outsource, you're faced with two options: colocation or cloud.

Modern colocation data centers often offer several types of services with varying degrees of support. The traditional colocation model requires customer to pay for space, power and cooling, with their IT department providing the equipment and taking care of it. In this scenario, a third-party data center serves as a hotel for your servers.

This model is suitable for organizations that have outgrown their in-house data center, but still want to maintain as much control as possible over their hardware. It is one of the cheapest outsourcing options, but the one that relies on your in-house skills the most. It is also the best, and often the only, option for non-standard IT - if you like your servers high density, if you're running a supercomputer cluster or if you're particularly enamored with ARM-based CPUs, colocation is the way to go.

In the past few years, we've seen growing popularity of various types of managed services. With managed colocation you still pay for and own the servers, but the maintenance and upkeep of the hardware are the responsibility - and the headache - of the service provider. This model is suitable for smaller organizations or those who have less involvement with the actual IT infrastructure.

If you decide to opt for cloud, there are once again several considerations to keep in mind. Public cloud from a colocation provider is essentially an extreme form of managed services: the hardware layer is completely abstracted and all you will be dealing with are virtual machines. At the same time, you can still call the company and shout your lungs out, should things ever go south.

You can also buy public cloud services from one of the major vendors like AWS, Google, MS Azure or IBM. In theory, since these businesses operate some of the world's largest data centers, they can capitalize on the benefits of scale and offer VMs at the lowest possible price. Such services are always priced on a pay-as-you-go basis and won't tie you down with lengthy contracts.

In practice, however, I've heard plenty of stories about customers who have mishandled their migration, misconfigured their virtual estate and ended up paying more, not less, for their public cloud environments. Another recent trend in outsourcing is managed cloud services – with the service provider taking the responsibility for the well-being of your cloud machines into their own hands.

Public cloud offers ultimate flexibility and is a fantastic resource to augment your existing IT operations when you need extra capacity. It's also suitable for young and agile companies that are born ‘cloud-first’ and have no plans to ever own their IT.

The truth is, you're unlikely to stick with a single type of outsourcing; hybrid IT, a combination of in-house facilities, cloud and colocation, is already the dominant model of infrastructure deployment, and will likely remain so for years to come. Meanwhile, more and more businesses discover that they don’t have to be tied down to a single cloud provider: according to a recent study by 451 Research, 75 percent of businesses are already using more than one public or private cloud.