Discover The Pros & Cons of Colocation vs. On-Premise DataCentres


Pros & Cons of Colocation vs. On-Premise DataCentres

There’s no doubting that conventional datacentres have given way to colocation hosting in recent years.

Due to high capital expenditures, organizations with outdated datacentres will prefer to have somebody else maintain their basic infrastructure instead of building/expanding through their own.

And many organizations today can do exactly that thanks to colocation! Colocation offers the best alternative to securing your data online on third party premises.

Colocation facilities are no longer just for large enterprises with infinite resources.

These typically available services provide the security and infrastructure of a specialized datacentre without the significant expenditures of operating such large facilities. 

Exabytes offers excellent colocation services that can help organizations to scale up in the right way! 

In this blog we will learn more about the distinctions between on-premise and colocation centers, in addition to the benefits and drawbacks of each. 

This blog will also help you determine which option suits your organization needs and you can accordingly opt for the best services.

What’s the Difference Between an On-Premise Data Center and Colocation?

virtual private server

Before deciding on in-house or colocation options, one needs to first grasp what those terms represent and how they vary.

An on-premise data center is an internal setup. What this means is that you company’s servers are within the premises of your company’s office.

The term on-premise is derived from the fact that this option is available on-location.

A specific area or designated space is kept aside to accommodate the servers and any additional hardware requirements.

On the other hand colocation is where you lease a server space from a third-party data center. So all of your organization’s data is stored on the data center of another location.

With colocation, the servers are outsourced and stored in a location that may not be close to your office space, however the data is still fully secured.

The server space for colocation is rented out based on rack, cabinets, cage or suites. This space is completely dependent on the business requirements and needs.

Let’s understand this in more detail:

On-Premise Datacentres

An on-premise facility, also known as an enterprise data center, is a collection of servers that are individually constructed, owned, and maintained.

This implies that servers are in-house within a space of an institution’s own business infrastructure.


Colocation, in contrast, is the technique of storing privately operated servers or network components in a 3rd data center.

Rather to having infrastructure on-site, firms “co-locate” gear by renting rooms at a distant facility, also known as a colocation center. 

In this setup, organizations normally purchase their own servers, firewalls and space but pay a colocation provider for storage, cooling, electricity, bandwidth, and security protocols. 

Additionally, with colocation, the person is liable for configuring and setting up their server colocation and retains control of any future hardware/software configurations. 

On-premise and colocation may both supply your company with the information technology infrastructure it requires. 

The model you select will most likely be determined by the degree of security necessary to fulfill compliance requirements along with your organization’s pricing structure.

Let’s take a deeper look at the benefits and downsides of colocation vs. data center to determine how the two models contrast.

On-Premise Pros

Let’s look at the benefits of choosing on-premise

  • Control: On-premise gives businesses complete control over their information and who is granted access to those systems. This means you have complete control over when and how you edit, update, or extend. This is especially useful for businesses that have significant, proprietary assets or confidential customer details that must be managed in accordance with tight compliance standards.
  • Compliance: Many firms have complicated compliance requirements that they are afraid to outsource. They may regularly check their compliance status and reduce risk by managing everything on-premise.
  • Compatibility: If a business depends significantly on outdated hardware or software, moving to another technological solution may cause significant challenges with an on-premise option.

On-Premise Cons

  • Inefficiency: The vast majority of on-premises solutions are extremely inefficient. Because the expense of constructing a personal data center is so expensive, these facilities are either fairly antiquated or repurposed from structures designed for another purpose.
  • Inflexible: An on-premise data system was most likely built to manage the network requirements of the time, but nothing beyond that.
  • Unreliability: Several on-premises solutions, additional to being antiquated, lack substantial backup systems to enable disaster recovery abilities.

Colocation Pros

Let’s look at the benefits of choosing colocation

  • Scale economies: Colocation service plans are complete packages that include built-in services such as support, redundancy, security and connectivity at a packaged or discounted price as compared to on-site hosting.
  • Enhanced Security: High-end security personnel, cameras, and tech are available to offer businesses with a better degree of safety than they could afford by themselves, when they choose colocation.
  • Enhanced Connectivity: Carrier-neutral datacentres offer consumers a wide choice of connectivity alternatives. Colocation users may simply design the network infrastructure to fit their individual demands by selecting from a variety of internet providers, cloud platforms and network services.
  • Scalability: Colocation enables customers to grow without incurring capital costs. As a result, in the event of unexpected company development, your IT infrastructure may be expanded to accommodate it for a substantially lower cost.

Colocation Cons

  • Less Power: Troubleshooting and maintenance become more challenging when IT infrastructure is located some distance from workers.
  • Increased Start-up Costs: Due to early set-up fees and license expenses, colocation hosting has substantially higher start-up expenses than leasing servers from hosting firms.

Which One Should You Choose?

Facility Pros Cons
On-Premise – Complete control over their information
– Verify their compliance status on a regular basis.
– Compatibility with moving to another technological solution
– Facilities are often converted from buildings intended for another use.

– Developed to handle the era’s network demands

– Lack substantial backup systems

Colocation – Scale economies

– Enhanced security personnel, cameras, and tech

– Wide choice of connectivity alternatives

– Grow without incurring capital costs

– Challenge of troubleshooting and maintenance

– Higher start-up expenses


Choosing between colocation and on-premise datacentres completely depends on your business requirements.

However, generally colocation is a preferred option for more security. It also helps save space on your office premises and provides third-party data protection mechanisms as well.


If your company’s demands are generally constant, colocation is typically a better alternative than on-premise hosting in regards to both cost and resource allocation.

Those business operations that really are mission-critical and require extensive supervision and oversight should stay on-premise.

If you wish to explore various colocation services available to businesses, you can get in touch with an Exabytes professional today!

Server Colocation Services

Related articles:

8 Distinct Benefits of Co Location Data Center

How to Choose a Colocation Data Center Provider

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