Which is Cheaper: In-house or Colo?

Hosting providers have long touted the cost advantages of colocating equipment in a hosting facility versus maintaining similar premises in a corporate office facility. Baltimore Technology Park (BTP), a colocation center that opened last year in Baltimore, has put fresh numbers on the equation based on the needs of a small- to medium sized business (SMB). Not surprisingly, the findings reinforce the financing benefits of colocation.

BTP based its analysis on a company with 20 server cabinets and plans to grow by 50 percent, which it estimated required 1,120 total square feet of space and 43 watts of power per square foot. The study found an installation of that size with a modern power design would cost about $707,000 to build, including fees for architects, engineers and a project manager. In addition, recurring operating costs for utilities, bandwidth, maintenance and security personnel would add about $270,000 per year. BTP's research found that colocating equivalent IT infrastructure within a data center would cost $39,000 in startup costs, with recurring annual fees estimated at $206,000.

"While colocating critical IT systems at a data center is generally more secure and affordable than building an in-house solution, every organization's situation is different," says Jim Weller, President of Baltimore Technology Park. "Nonetheless, our study provides essential information on the myriad factors an organization should consider when deciding the best way to meet their current, and future, data center needs."

Baltimore Technology Park, a 30,000 square foot facility which opened in March 2006, recently announced a $3 million build-out of an additional 5,000 square feet of equipment space to accommodate an additional 250 server cabinets and more space for cages and suites. BTP is operated by the owners of Baltimore-based hosting reseller specialist Alabanza.