As Colo Providers Change How They Do Business, Customers Benefit

Flexibility – The right data center provider allows you to transfer your spend over the term of your agreement as your needs evolve, with no penalty.  Working with providers who have portability allows you to allocate your contracted spend as needed between various services including data center locations, from colo to cloud, trading space for services, and more.

Cloud Connectivity – Colocation providers are incorporating tech innovations. This includes new cloud connectivity services – such as Megaport, PacketFabric and Console – that enable corporate users to run secure lines from their server to more than 300 different cloud providers, where the user can connect to these services in minutes through the provider's portal. Some of the bigger colos are even partnering with these service providers to white-label their services. Others are creating their own internet exchanges with access to the cloud.

Strategy Consulting – Studies are showing that most corporations using the cloud today are doing so inefficiently – and they are spending more than they should. There are a few colo providers now offering services and software to help clients evaluate their cloud usage and create strategies to better leverage this platform moving forward. Some are even hiring in-house cloud architects to work with their customers. In a recent conversation, a leading colocation executive remarked that if a business goes to the cloud through a colo operator that has the proper tools, it could save as much as 35% over that same business going to the cloud directly.

Eliminating Overprovisioning – There are colo providers who work with clients who are planning to go to the cloud and need to reduce space, power and connectivity in their cage.  The colo provider works with the client by shifting their spend to managed services, remote hands, hosted private cloud, connectivity and DDoS Migration.  These services help eliminate overprovisioning and it helps the client get the right space and power it needs.

Lease Flexibility and Rent Portability – Embracing the philosophy that something is better than nothing, many colocation providers are structuring leases that anticipate a reduced revenue stream. First, they are offering rent portability into the cloud. For example, a client with a current $50,000 monthly spend in a colo may plan to move $10,000 to the cloud and this will allow the user to save approximately $8,000 of the $10,000 spend. This is not a dollar-for-dollar reduction, but it is a significant reduction in monthly spend. We are seeing rent portability within colocation spaces as well. If a company with a current $100,000 monthly lease on the East Coast wants to move half of this to a West Coast facility with the same colo provider, the operator is likely to accommodate that (provided the client pays for any incremental differences in the local rental rate, build-out of the new space and associated migration costs).  This rent portability move is closer to a dollar to dollar exchange except the transaction cost.