On-Prem vs Colo vs. Cloud vs. Hybrid: How to Choose

With the ever-increasing demand for digital services, organizations face the questions of how will they keep up and where will they store and access their data and applications.

The evolution of hosting options from on-premise infrastructure to colocation, cloud, and hybrid deployments has provided a diverse set of choices for organizations, and it is critical to select the option that best suits your unique needs.

On-Premise Data Centers

An on-premise data center is owned and operated by an organization and located within their own facilities. It can range from one or two servers in a closet to a dedicated server room or multiple data center facilities.

Top 3 Advantages of On-Premise Data Centers

• Complete control. Organizations own their buildings and equipment which allows them to customize their IT and facilities to meet their specific needs.
• Long-term cost-effectiveness. Although building a data center requires a significant initial investment, the ongoing expenses are typically lower than alternatives and the ability to optimize infrastructure utilization can result in cost savings over time.
• High visibility. Direct oversight and access to infrastructure facilitates quicker detection and response to issues and vulnerabilities.

Top 3 Disadvantages of On-Premise Data Centers

• Large upfront costs. The investment in facilities, hardware, software, and personnel may not be feasible for all organizations.
• Facilities management. Dedicated facilities staff with specialized skills are necessary to maintain the building and troubleshoot issues. Regular investment in new infrastructure and technology is often required.
• Fixed infrastructure. Resources are typically provisioned for peak demand, making it impractical and costly to scale down the footprint with significant reconfiguration and decommissioning processes.

An on-premise data center may be the right choice for…

• Large enterprises with complex IT environments, high security requirements, and the ability to bear the upfront cost.
• Government agencies that handle sensitive data that cannot be stored offsite.
• Financial institutions or other organizations processing cardholder data that must comply with PCI-DSS regulations.
• Healthcare providers storing patient data that must comply with HIPAA regulations.
• Research institutions with specialized equipment and high-performance computing needs.

Colocation Data Centers

A colocation data center is a facility where organizations can rent space to house their IT equipment. The colocation provider supplies the building infrastructure, cooling, power, bandwidth, physical security, and managed services.

Top 3 Advantages of Colocation Data Centers

• World-class facilities. Organizations without facilities expertise can still rent state-of-the-art facilities with advanced cooling systems, redundant power, and robust security measures.
• Flexibility. Resources can easily be expanded or reduced according to changing needs.
• Low upfront costs. Other than an initial investment in IT equipment, the rest of the cost of colocation is in the form of predictable monthly payments.

Top 3 Disadvantages of Colocation Data Centers

• Lack of visibility. Tenants have little control over their physical infrastructure and must rely on their provider to accurately execute work orders.
• Migration challenges. Moving equipment to a colocation data center requires meticulous planning, an accurate inventory, and the ability to track every change.
• Ongoing costs. Additional costs for power consumption, network bandwidth, remote hands services, and cross-connects can quickly add up.

A colocation data center may be the right choice for…

• Small- to medium-sized businesses that require reliable infrastructure to store and manage large amounts of data.
• Fast-growing enterprises that need to quickly scale their data center infrastructure to meet their customers’ demand.
• Organizations with compliance requirements that can be met by a reputable colocation provider.
• Online services such as e-commerce and digital media companies that want to reduce latency and improve customer experience by locating equipment near the areas they serve.

Cloud Data Centers

A cloud data center is a facility owned by a cloud service provider such as Amazon Web Services, Microsoft Azure, or Google Cloud. These providers offer virtualized environments that enable organizations to store, process, and analyze data and run applications over the internet.

Top 3 Advantages of Cloud Data Centers

• World-class facilities and IT. Organizations without facilities or IT expertise can leverage state-of-the-art infrastructure, hardware, and software from a cloud provider.
• Extreme agility. Customers can easily scale up or down very incrementally based on demand, enabling rapid provisioning and time-to-market.
• No upfront costs. Usage-based pricing models enable organizations to quickly deploy services and applications without any initial investment in physical IT or facilities.

Top 3 Disadvantages of Cloud Data Centers

• Security concerns. Entrusting sensitive data to a third-party provider may raise concerns about data privacy, potential breaches, or regulatory compliance.
• Data sovereignty issues. Data may be stored in different jurisdictions, potentially leading to compliance complexities, regulatory conflicts, or access limitations.
• No control. Cloud providers own and operate their data centers, leaving customers no input into infrastructure or security measures.

A cloud data center may be the right choice for…

• Startups or small businesses with limited IT budgets and rapidly changing needs.
• Large enterprises that want to take advantage of cloud services such as big data analytics, artificial intelligence, machine learning, or blockchain, have distributed workforces that need to collaborate and share data in real-time, or need to leverage cloud solutions for disaster recovery.
• Seasonal businesses that need to quickly scale to meet spikes in traffic or other organizations with unpredictable or fluctuating workloads.
• Development and test environments to allow developers to quickly build and tear down environments and focus on innovation.

Hybrid Data Centers

A hybrid data center is any integrated combination of on-premise, colocation, and cloud infrastructure.

Top 3 Advantages of Hybrid Data Centers

• Flexibility. Organizations can distribute their workloads to the most appropriate buckets to efficiently meet changing business needs.
• Security and compliance. Mission critical infrastructure and sensitive data can be kept on-premise or in colocation facilities ensuring a balanced approach that addresses security concerns and regulatory requirements.
• Cost optimization. It can be more cost-effective to leverage cloud services for periods of variable demand or to rapidly deploy new services before eventually migrating them off the cloud.  

Top 3 Disadvantages of Hybrid Data Centers

• Complexity. Integrating and managing multiple environments introduces challenges and risks that require experienced professionals and robust management and monitoring tools to navigate.
• Performance issues. The distance between environments can introduce latency that slows down data processing and application responsiveness. Plus, cloud services will require a constant internet connection.
• Unexpected costs. Organizations with limited budgets and resources may not be prepared for unanticipated issues that can add up quickly.

A hybrid data center may be the right choice for…

• Enterprises with diverse IT needs that have already invested in on-premise data centers and want to gradually migrate some workloads to the cloud.
• Organizations with compliance requirements such as governmental, financial, healthcare, and legal entities that must keep sensitive data on-premise or in a colocation facility.
• Businesses seeking cost optimization that can leverage different hosting options based on the characteristics of their workloads.
• Companies prioritizing business continuity that use the cloud for data replication and backup.

How to Choose the Right Data Center for You

You must carefully consider all viable options and determine the best fit for your organization. While the selection criteria may look different for every organization, your process should include these steps:

1. Assess your business needs. Consider your organization’s size, growth projections, budget, technical requirements, and compliance obligations and understand your current infrastructure’s limitations to lay the foundation for your decision-making process.
2. Define your goals. Know your key objectives (i.e., reduce costs, increase scalability, improve performance, enhance security, streamline operations) to guide you toward a solution that most aligns with your goals.
3. Evaluate your requirements. Define your technical requirements (i.e., processing power, storage capacity, network connectivity, software compatibility, data transfer speeds, latency, redundancy, disaster recovery options) and security requirements (i.e., physical security, data encryption, access controls) now and in the foreseeable future.
4. Evaluate costs. Compare the upfront costs, ongoing costs, and potential hidden costs of each option.
5. Consider organizational readiness. Determine your organization’s ability to adopt and manage each option in terms of the available internal resources and expertise as well as the need for training, additional staffing, and ongoing maintenance responsibilities.
6. Evaluate SLAs and reputation. If you opt for a colocation or cloud provider, carefully review the SLAs from each prospective vendor. Assess their uptime guarantees, support response times, and penalties for non-compliance. Also consider their reliability and track record by checking customer reviews and speaking with references.

Easily Manage Your Data Center Infrastructure – Wherever It Is

Even in the age of cloud computing, modern data center environments are complex, distributed, and difficult to manage. The best data center professionals are turning to Data Center Infrastructure Management (DCIM) software to centrally manage all their physical data center resources in a single pane of glass, regardless of their infrastructure deployment model. The benefits of DCIM are found in improved uptime, better capacity planning and utilization, increased energy efficiency, and more productive people.

DCIM and On-Premise Infrastructure

DCIM software simplifies on-premise infrastructure management, enabling you to get the most out of your limited resources. DCIM makes it easy to track your assets and their port-level connections, manage your power, space, cooling, and port capacities, and streamline moves, adds, and changes. Comprehensive monitoring and reporting capabilities provide data-driven insights to help you optimize uptime and efficiency. Plus, electronic door lock support, audit logs, and security reports help you comply with stringent security requirements.

DCIM and Colocation Infrastructure

DCIM software provides visibility into your colocation infrastructure so you can remotely manage it even better than being onsite. 3D visualization allows you to see your entire data center and overlay power and environmental conditions, real-time monitoring lets you know of potential issues so you can proactively create tickets to resolve them, and visual work orders with rack elevation diagrams ensure remote hands perform moves, adds, and changes quickly and accurately. If you’re paying for full power circuits regardless of utilization, automatic device power budgeting helps you unlock up to 40% more rack power capacity to defer purchasing more power.

DCIM and Hybrid Infrastructure

In a hybrid environment, DCIM software allows you to monitor and manage all your physical data center infrastructure from anywhere with a single browser-based solution. It provides a single source of truth for all your physical resources, relationships, and dependencies that simplifies management and collaboration for data center, IT, and facilities teams. While DCIM enables you to manage your physical data center like a cloud provider (i.e., addressing increasing demand with responsiveness and agility), cloud monitoring and management platforms are more specifically designed to handle cloud-based infrastructure.

Many of today’s enterprises leverage hybrid data centers and benefit from using DCIM software to manage their physical infrastructure across their entire corporate IT estate, including data center, server rooms, remote edge sites, and IDF closets. Check out some of their success stories:

• Comcast gets 40% more utilization out of existing resources
• Workday automates device provisioning, orchestration, and much more
• Vodafone improved energy efficiency to meet sustainability objectives
• eBay reduces manual effort with ServiceNow integration
• UF Health increased asset tracking efficiency by 50%

Bringing It All Together

Selecting the right infrastructure option is crucial for your organization to thrive.

On-premise data centers offer complete control and customization but require significant upfront costs and maintenance. Colocation data centers provide cost savings, flexibility, and reliability, but come with limited visibility and migration challenges. Cloud data centers offer unmatched scalability, although dependence on internet connectivity and limited control are factors to consider. Hybrid data centers combine the flexibility, control, and redundancy of multiple options, but complexity challenges may arise.

What all deployment options have in common is the need to monitor and manage the infrastructure. A modern DCIM tool is needed to proactively resolve issues that may impact downtime, improve capacity planning to maximize the utilization of existing resources, and intelligently reduce energy consumption, and automate manual tasks to boost productivity.

By understanding the strengths and limitations of each option and leveraging modern data center management tools, you can confidently navigate the ever-changing landscape of digital infrastructure and position your organization for success now and in the future.

Want to see how Sunbird's world-leading DCIM software can simplify how you manage your data center infrastructure no matter where it is? Get your free test drive now.