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November 11, 2005
• Vol.27 Issue 45
Page(s) 29 in print issue
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The Best & Worst Of Co-locating
Find The Right Level Of Comfort For Co-locating Critical Applications
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Co-locating some of your small to medium-sized enterprise’s critical applications or perhaps your entire data center to a third-party co-location provider can sound attractive for a number of reasons, including costs and the ability to tap the expertise and infrastructure of a specialty provider. Perhaps your internal or external clients are asking your SME to support an application that is more robust than the other applications your data center supports.
Steven Harris, director of data center planning for Forsythe, an infrastructure consulting firm, says, “We are seeing the trend amongst our small to medium business clients to co-locate portions of their data center.” He further remarks, “Co-location facilities typically are not designed for use as a primary data center. They typically are very empty environments from a people standpoint. A co-location provider’s data facility is a secure facility housing co-located systems from a number of customers. The customer’s systems sit in their own locked cages. Such a physical facility setup isn’t conducive to frequent onsite visits from customer staff.” The free access typical to authorized data center staff to infrastructure just isn’t part of the co-location package.
The technology boom and bust tossed a number of co-location providers against the rocks of the market during 2001 and 2003. However, in “The Fall and Rise of Wholesale Collocation Service Providers and Bandwidth Exchanges,” industry analyst Yankee Group states, “Although the market in 2003 certainly was not what the industry had hoped for, there was a healthy shakeout of the participants. The Yankee Group believes the quest for differentiation has left stronger survivors behind.”
While some of the stigma surrounding failure of co-location providers is lifting, in today’s market, it’s important to grasp the best- and worst-case scenarios in moving some of your data center operations to a co-location provider. Co-locating a key application requires that you perform upfront analysis and plan the goals you want to achieve when co-locating your application.
 The Best
Co-locating certain key applications can be a boost to your data center team by bringing in core expertise and best practices to monitor, maintain, and protect your key applications. SMEs should look to co-location providers for the hosting of critical applications that have special requirements for load sharing, mirroring, and disaster recovery that are beyond your own data center capabilities.
Co-location providers also bring a focus to hosting critical applications because it is their core business, so they keep up with the latest maintenance tasks such as patches and service packs.
Rising security concerns are a big draw for co-location providers and often why an SME considers its first critical application for co-location. The Yankee Group’s 2004 SMB Infrastructure Survey states, “61% of SMBs and midmarket enterprises believe protecting their company from security breaches is a major concern. SMBs don’t have the skills to manage, track, and update the ongoing patches, revisions, and bug fixes to keep their network running optimally. MSPs are there to ensure the endless SMB software rules are appropriate and patched, keeping them abreast of current threats. They also can provide historical reporting for the board of directors or other investors who want to be sure their investments are well-protected.”
Disaster recovery in light of Hurricane Katrina and other recent natural disasters has put co-location in the spotlight for many SMEs. Working with a co-location provider to secure a critical application can put information security expertise that is probably out of reach to your SME’s budget in your corner.
The Worst
It's important to understand prior to entering a co-location agreement that you are making a financial investment into a co-location provider's environment by entering, maintaining, and exiting a co-location agreement. Forsythe’s Harris stresses, “The co-location provider has control over you.” This third-party hosting of a corporate asset such as critical application infrastructure cuts both ways. Outsourcing the hosting of a critical application to a co-location provider lets you take advantage of its infrastructure and expertise while freeing up your own staff and systems for your business. The arrangement can cut the other way when your reputation and technology system is left to a vendor who could potentially fall short of your expectations.
Perhaps the most uncomfortable element of co-locating key applications is the true or perceived loss of control. The loss of control hinges on the restrictions you are under when you enter a contract with a co-location provider. Harris points to the SLA as the “bible from the co-location provider’s viewpoint.” Your SLA needs to be tight from both business and legal standards. So spend the necessary time to craft and review a contract and SLA with a co-location provider that meets your requirements.
One worst-case scenario is your co-location provider being acquired by another company. While the acquirer has to follow the letter of your original contract and SLA, you can still be in for a surprise at contract renewal time.
Another worst-case scenario is that your co-location provider goes out of business. This was a typical scenario during the technology industry bust. Though today’s co-location providers have gone through a spate of market consolidations, acquisitions are still a possibility because the co-location provider market is generally cash strong as compared to a couple of years ago.
Making The Move To Co-locating
Moving some of your key applications to a co-location facility should not be without adequate due diligence during the RFP and proposal phases. Forsythe’s Harris offers that costs vary between hosting an application in your own data center vs. a co-location provider’s site and advises, “Because co-location providers provide a multitude of services that can quickly add up on your monthly bill, you need to have your act together or re-evaluate your co-location requirements.” 
by Will Kelly
Co-locating’s Positives & Negatives
Small to medium-sized enterprises need to weigh both sides before making the decision to co-locate their critical applications.
Positives
• Frees up your staff to focus on the core production issues
• Enables you to serve customers who require applications with more redundancy and other technical requirements your data center can’t support
• Offers you access to IT security expertise typically out of your SME’s reach
Negatives
• Causes you to lose control over an application
• Means you are putting up a financial investment entering the co-location agreement, in monthly service fees, and exiting the agreement
• Means working with a third-party provider that might be acquired or go out of business entirely |
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