Owned vs. Shared Data center: Which data center suits which company?

NDC-GARBE 05/10/2021

(Convenient translation of German version)

Today’s data center industry is very diverse, and with all those different types of facilities and jargon, it’s easy to lose track. But because data centers contribute significantly to a company’s performance and success, companies should invest some time to explore the pros and cons of the different types. In addition to individual requirements, server requirements, power distribution, and cooling infrastructure should also be taken into account. Companies have to ask themselves an important question in advance: Should I build my own data center or rent out cabinet space?

Enterprise or colocation data center?

Owned Data Centers

A corporate data center is a private facility built and operated by the company. These owned data centers can either be located at the company’s headquarters or outside at another location. The choice of location is generally based on criteria such as connectivity, power supply, and security.

• Advantages and disadvantages of an enterprise data center:
• Optimal compatibility: The data centers are adapted to business needs and IT requirements. Consideration of proprietary software applications and special network requirements.
• IT transparency: Companies can easily install comprehensive monitoring tools. For example, bandwidth and energy usage as well as the most frequently used applications can be constantly monitored.
• Privacy: With your own data centers, the company data remains within the company – and not stored by third parties. That increases data protection. Furthermore, a direct connection near the company headquarters has further benefits such as low latency and efficient processes.
• High costs: Building and equipping a data center requires significant capital investments and ongoing expenses for labor, personnel, and materials. This can be a financial burden for businesses – especially if they are smaller organizations.

Colocation providers (shared data centers)

For small and medium-sized companies for which the operation of their own data center is too cost-intensive, colocation providers are available. Here, companies only rent the racks they need. You do not own the building or the hardware in the data centers. The infrastructural services and operational support are provided by the operator that also takes care of service work on the IT equipment, patch and cross-connect services, accompaniment of service personnel and visitors, as well as project and logistics services.

Advantages and disadvantages of a colocation data center

• Access: SMEs – in particular – benefit from the significantly higher number of network operators and the resulting possible data transfer rates. That gives the organization access to various network operators, cloud services, peering partners, and network nodes.
• Consulting services: In addition to infrastructure, colocation companies also provide technical advice to companies that needs guidance on estimating computing capacity requirements.
• Control by the operator: The outsourcing of the company IT creates a dependency on the operator. While shared data center customers have round-the-clock access to the racks they rent, they are usually accompanied by data center operator security personnel. Specifications regarding sustainability as well as contractual conditions and data protection aspects also come from the operator.
• Distance to the data center: As the distance from the user or Internet of Things (IoT) device to the data center increases, so does the potential for latency or delays in communication. With a centralized data center strategy, on the other hand, organizations are at increased risk of total failure if traffic exceeds the total capacity of the data center.