Find out what draws companies to data center colocation services, and what keeps them away

by Brianna Crandall — October 13, 2017 — Power management solution provider Vertiv, formerly Emerson Network Power, released last week the results of an online survey of 226 U.S. enterprise data center managers regarding their use of colocation services and their future needs for services. Respondents indicated that future information technology (IT) application deployments will become more diverse and complex and that they seek colocation providers that can quickly scale capacity when needed, provide edge connectivity, and offer price transparency.

For this survey, the term “colocation” included multi-tenant data centers, off-premise computing, managed hosting and cloud hosting data centers.  The survey addressed organizations that ranged in size from more than $1 billion to under $10 million in industries such as financial services, education, manufacturing, healthcare, government, professional services and telecommunications.

A full 65% of respondents said that their organizations are using colocation data centers or will use them within the next 12 months. Among current users, most are recent adopters, with 64% indicating that have used “colos” five years or less.

The survey’s key findings include:

  • Colocation providers must prepare to meet new demand. Over half, 57%, of enterprise companies indicate that they will increase their usage of colocation and cloud hosting data centers within the next two years.
  • Colocation providers must be able to quickly support customer scalability. Improving capacity scalability is the number one reason customers move to colocation, followed by carrier diversity and latency, so providers must ensure flexibility in their IT and infrastructure deployments.
  • To achieve growth, colocation providers must go up the value chain, offering diverse services to support growth. Nearly half, 47%, of enterprises use more than one type of data center, and 52% include colocation in their mix. IT capacity deployments have become increasingly diverse and complex, and colocation providers must build and scale to support a variety of deployments, with high levels of security and at a competitive price.
  • Adoption of colocation services is being constrained by concerns over cost, security and internal staffing bandwidth. The move to colocation services is rife with complexity for managers outsourcing applications to off-site locations. It often requires new change management procedures, redeployment of IT personnel, and changes in security processes and compliance. Almost half, 45%, of respondents cited cost among their top three challenges in moving more applications to colocation, while 31% cited security concerns and 18% cited internal staffing-constraints. Smaller companies were constrained more by staffing, while larger companies were constrained more by the challenges of migrating cloud services and meeting compliance requirements.
  • Pricing models are complex, and colocation providers must demonstrate greater price transparency. Colocation users cited more than 20 combinations of services used in pricing colocation contracts. Pricing is the biggest complaint of colocation customers, and providers can demonstrate higher value if they provide transparency in how they structure their SLAs around power and capacity usage and how they monitor and meter usage.

According to Amy Johnson, Americas vice president, marketing and strategy for Vertiv:

The colocation market is going through substantial change, as providers seek ways to cost-effectively meet customer needs that are growing in complexity and scale. Vertiv believes that innovations in data center power, cooling and infrastructure management can help colocation providers operate at peak performance by reducing operational costs, eliminating stranded power and cooling capacity, support[ing] scalability and provid[ing] greater insight into data center conditions and operations. This in turn can help colocation providers improve customer SLAs so they can better serve their customers.

To review the full findings of the Vertiv Colocation Data Center Usage Report or information on the Vertiv Colocation Exchange, visit the company’s Web site.

Vertiv designs, builds and services critical infrastructure that enables vital applications for data centers, communication networks, and commercial and industrial facilities. Formerly Emerson Network Power, Vertiv supports today’s growing mobile and cloud computing markets with a portfolio of power, thermal and infrastructure management solutions including the ASCO, Chloride, Liebert, NetSure, and Trellis brands.