What is a Colocation Data Center?

August 28, 2023
Download PDF


Colocation data centers are offsite locations housing servers, networking equipment, and other computing hardware in a secure shared space. This option should be considered for companies looking for a more cost-effective and scalable option in comparison to investing in an on-site data center.

In today’s digitally driven world, businesses and organizations heavily rely on data centers to store, manage, and process their critical information. Among various data center options available, colocation data centers have gained significant popularity due to their unique advantages and cost-effective solutions.  

Defining Colocation Data Centers

Colocation refers to the practice of housing servers, networking equipment, and other computing hardware in a third-party data center facility. A colocation data center, therefore, is a secure and professionally managed environment that provides businesses with the infrastructure and resources necessary for housing their IT equipment.

How Colocation Data Centers Work  

Colocation data centers offer businesses the physical space, power, cooling, and connectivity required to host their servers and other infrastructure components. Rather than building and maintaining their own dedicated data centers, companies can lease space within a colocation facility, which offers a shared environment for multiple tenants.

Benefits of Colocation Data Centers

Choosing a colocation data center offers several advantages for businesses:

Cost-effectiveness: Building and maintaining an in-house data center requires substantial capital investment. Colocation eliminates these upfront costs by allowing businesses to share the expenses of infrastructure and facility maintenance with other tenants.

Scalability: Colocation data centers provide flexible options for scaling IT infrastructure as business needs change. Businesses can easily expand or reduce their server space, power, and network requirements based on demand, without the hassle of building additional infrastructure.

Reliability and Redundancy: Colocation facilities are designed to offer high levels of uptime and reliability. They feature redundant power sources, backup systems, and multiple network connections to ensure minimal downtime and improved business continuity.

Expertise and Support: Colocation providers employ teams of skilled professionals who specialize in data center management. They offer support services, including remote hands assistance, hardware installation, maintenance, and troubleshooting, freeing up valuable internal resources for core business functions.

Read more here.

Sign up today for a free Essential Membership to Automation Alley to keep your finger on the pulse of digital transformation in Michigan and beyond.


123.Net, Inc. (123NET) is a privately-owned company headquartered in Southfield, Michigan. The company delivers high-quality fiber internet, colocation, and business voice services. In 2021, 123NET also started bringing the fastest Fiber to the Home solutions to Michigan residents.

Become a Member