10-29-08 | Blog Post

Colocation and Cap-Ex Free IT

Blog Posts

How colocation can save money in a strapped economy

We’re hearing the question a lot these days – from customers, partners, and employees – “What impact are we seeing on the Managed Data Center and Michigan colocation business with the down turn in the economy?”

The answer is that today’s economy is a double edge sword for the colocation and dedicated server business. On the downside, projects are getting delayed – especially disaster recovery projects. Disaster recovery projects originally slated for early 2008 have been pushed out to 2009 or later to delay capital expenditures.

The upside edge of the sword is that the same delay in capital expenditures has increased the number of companies looking for colocation and dedicated server solutions.

The pressure on data centers continues to rise – despite (and in some cases because of) the economy. Rather than invest the capital, in additional power, backup generators, UPS’s and HVAC units, many companies have found it’s far more cost effective to leverage colocation as a cost containment option.

Colocation not only spreads the data center capital investment and operating expenses across a number of tenants, it also provides access to experienced data center staff for a fraction of the cost.

Colocation has the added benefit of future-proofing data center needs without an upfront investment. When a data center expansion is planned, the capital is usually required to accommodate the next 5 years of expansion, making it even more difficult to justify against colocation where the expense of today’s requirements need to be paid for today, delaying any expense for future data center expansion needs.

For many CIOs and IT Directors, it can be far more cost effective to partner for colocation for their equipment than to spend the capital and additional operating expenses to build or expand their data center to meet their expanding data center requirements.

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