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Should You Build Your Own Data Center Or Rely On Colocation?

As the world turns toward cloud technology to store its data, data centers are truly coming into their own. Unfortunately, because massive amounts of electronics are needed for data centers to function, they can cost millions of dollars to set up and keep running; in fact, it’s estimated to cost around $200 per square foot to build a center, and the average size of a “medium” data center is between 5,000 and 20,000 square feet.

Additionally, when company’s change (either by expanding or shrinking) the costs to change their data center can be exorbitantly high; at the same time, smaller companies are excluded from the opportunity due to the expenses involved. Considering the U.S. is the second largest construction industry in the world, cost is about the only limiting factor here.

Now, however, a new option has become available for those unwilling to commit to the incredible price of an in-house data center; rather than pay for the equipment, space, and cooling systems personally, businesses have the option to rent space in a colocation facility. Colo facilities are starting to rise in popularity as they offer more flexibility, but deciding between the two is dependent on the personal needs of your company. Let’s take a look at the pros and cons of each.


  • Advantages: When you have access to all of your own hardware, performing maintenance and troubleshooting is much easier. Your security and uptime are at the disposal of your IT department, which allows you to implement tailored measures for your unique needs. At the same time — because you own everything — you won’t need to deal with fluctuating software license costs or service level agreements.
  • Disadvantages: Owning your own data center means you alone are responsible for all aspects of infrastructure provisioning and management; you need to pay for its construction, and operations costs are usually higher than colocations. You won’t have added protection from catastrophes, and small to mid-size companies may struggle to afford divergent internet connections and robust emergency backup facilities.


  • Advantages: Because you are sharing the facility with other companies, cooling and power costs are greatly reduced; since 80% of data center owners are looking to install hot and cold aisle containment systems to reduce energy use (and costs), the trade-off is huge. With total energy consumption in the United States already at approximately 97.4 quadrillion BTUs, anything that can reduce your usage is welcome. In addition, due to their large volume, colocation facilities are able to better negotiate contracts with Internet providers. Uptime is maximized, disaster recovery is accounted for, and high-end physical security features are available.
  • Disadvantages: Unfortunately, these benefits have to be balanced. The fact that colocation centers are based off-site, maintenance and troubleshooting require extra work. Since you don’t actually own what you’re using, you’ll have to pay software licensing cost. Physical access can vary, bandwidth between the company and its equipment can decline, and you still remain responsible for any compliance issues regardless of whether the colocation provider is the source of the problem.

Determining which option is best for you has to do with the needs of your company as it stands. Do your research, talk to multiple providers, and make a choice.


Welcome to the Night Helper Blog. The Night Helper Blog was created in 2008. Since then we have been blessed to partner with many well-known Brands like Best Buy, Fisher Price, Toys "R" US., Hasbro, Disney, Teleflora, ClearCorrect, Radio Shack, VTech, KIA Motor, MAZDA and many other great brands. We have three awesome children, plus four adorable very active grandkids. From time to time they too are contributors to the Night Helper Blog. We enjoy reading, listening to music, entertaining, travel, movies, and of course blogging.

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