How to Choose a Colocation Data Center

Choosing a colocation data center means renting space, power, and cooling for your servers in a third-party facility. This guide walks you through the key technical, financial, and operational factors so you can compare providers objectively and pick a facility that matches your uptime, budget, and growth needs. Before you start, gather your current power usage per rack, bandwidth requirements, and a realistic growth forecast.

What You’ll Need

• Your current server inventory: number of racks, total power draw per rack (in kW), and cooling needs.
• Bandwidth usage: average and peak Mbps/Gbps, plus monthly data transfer.
• A budget range: monthly recurring cost and any setup fees you can tolerate.
• Compliance requirements (e.g., HIPAA, PCI-DSS, SOC 2) if your industry demands them.
• Business continuity plan: your recovery time objective (RTO) and recovery point objective (RPO).

Step-by-Step

1. Define your requirements. List the exact number of racks you need today and in 24 months. Note your power density per rack (typical is 5–10 kW, but high-density compute can need 20+ kW). Also note your bandwidth needs and whether you require a specific carrier (e.g., a particular ISP).
2. Check location and latency. Proximity to your users and to your primary office matters for latency. If your business is in Chicago, a facility in Dallas might be cheaper but will add 20–40 ms round-trip time for your users. Use a simple ping test from your office to the provider’s test IPs.
3. Evaluate power and cooling infrastructure. Ask for the facility’s power architecture: is it 2N redundant (two independent feeds) or N+1 (one backup)? What is the UPS battery runtime? What is the cooling redundancy? Confirm that the facility can deliver your required kW per rack without derating.
4. Assess network and carrier diversity. A good colo has multiple fiber entrances and at least two different carriers on-net. Ask for a list of carriers and whether there is a meet-me room for cross-connects. Check if the facility is carrier-neutral (you can choose your own ISP) or locked to one carrier.
5. Review physical security. Look for 24/7 on-site staff, biometric access, CCTV with retention, mantraps, and per-cabinet locks. Ask about visitor logs and whether you can get a live video feed of your area.
6. Inspect the facility in person. Walk the data hall. Check for hot/cold aisle containment, clean cabling, and no signs of water leaks. Talk to the floor technicians – they are the ones who will actually help you on a bad day.
7. Verify uptime and SLAs. Ask for the actual uptime over the last 12 months, not just the claimed SLA. Read the SLA carefully: what is the credit for downtime? Does it cover network, power, and cooling separately? Is there a force majeure clause that exempts them from most outages?
8. Check compliance certifications. If you need SOC 2, ISO 27001, or HIPAA, ask for the latest audit reports. Verify that the facility’s compliance scope includes the specific services you plan to use (e.g., managed power, remote hands).
9. Understand pricing structure. Get a detailed quote: monthly recurring fee per rack, per kW, and per Mbps. Ask about setup fees, cross-connect fees, and fees for extra IP addresses. Watch out for minimum contracts and steep renewal increases.
10. Test remote hands and support. Ask how quickly they respond to a ticket. Some facilities offer 15-minute response for critical issues. Send a test ticket during the sales process and see how long it takes to get a human response.
11. Review the contract for exit terms. What happens if you want to leave after the term? Is there a notice period? Can you transfer your cage to another tenant? Are there any hidden decommissioning fees?
12. Plan for growth. Ask about expansion options: can you add racks in the same suite? Is there space in the building to expand? What is the lead time for adding power?

Common Mistakes

• Underestimating power needs. Many businesses calculate average power but forget peak power or inrush current. Always size for peak, not average.
• Ignoring latency to end users. A cheap facility far from your users can ruin application performance. Measure real latency before signing.
• Skipping the physical tour. Photos and brochures can hide a messy, poorly maintained facility. Always visit.
• Not reading the SLA fine print. Many SLAs only credit a few hours of service, not the actual cost of downtime. Understand the cap.
• Overlooking cross-connect fees. A $100/month rack can become $500/month once you add cross-connects, IPs, and remote hands.
• Assuming all carriers are available. Some facilities are not carrier-neutral. Check that your preferred ISP can actually deliver service there.

Tips

• Start small but plan big. You can always add more racks later, but moving a full deployment is painful. Choose a facility that has room to grow.
• Ask for a copy of the latest power usage effectiveness (PUE). A lower PUE (e.g., 1.2 vs. 1.5) means lower cooling costs and a more efficient facility.
• Check the facility’s redundancy levels. For critical production, 2N power is worth the extra cost. For dev/test, N+1 may be enough.
• Negotiate the contract. Many colos are willing to waive setup fees or offer a discount for a 3-year term. Ask.
• Verify the facility’s financial stability. If the colo goes bankrupt, you could lose access. Ask for their financials or at least check how long they’ve been in business.

Troubleshooting

If you signed a contract and things are not going well, here are common issues and how to address them:

• Frequent network outages: Check whether the issue is with the facility’s network or your own equipment. If it’s the facility, open a ticket and reference the SLA. If the problem persists, consider moving to a different carrier or facility.
• Power outages or voltage dips: Ask for the facility’s power event logs. If they are not transparent, that is a red flag. Consider installing your own UPS or PDU with monitoring to catch issues early.
• Remote hands not responding: Escalate to your account manager. If the response time is consistently poor, document it and negotiate a lower rate or a credit.
• Billing errors: Keep a copy of every invoice and compare it to your contract. Most errors are small, but they add up. Dispute in writing within 30 days.
• Difficulty adding power or racks: If the facility is at capacity, you may have to wait. Always ask about expansion lead times before signing.

Frequently Asked Questions

Q: How much does colocation cost per rack?
A: Typical pricing ranges from $500 to $2,000 per month per rack, depending on power, bandwidth, and location. High-density or managed services cost more.

Q: What is the difference between N+1 and 2N redundancy?
A: N+1 means one extra component (e.g., one extra UPS) to cover a failure. 2N means two complete, independent systems, so any single component can fail without any disruption. 2N is more expensive but more reliable.

Q: Can I bring my own hardware?
A: Yes, that is the core of colocation. You own the servers and pay for space, power, and network. Some facilities also offer managed hardware rentals.

Q: How do I know if a facility is carrier-neutral?
A: Ask for a list of carriers on-net. If they only offer one or two, they are likely not neutral. A true carrier-neutral facility has a meet-me room where you can cross-connect to any carrier.

Q: What is remote hands?
A: Remote hands is a service where facility staff physically assist with tasks like rebooting a server, replacing a cable, or installing hardware. It is usually billed per 15-minute increments.

Q: How long does it take to migrate to a colo?
A: For a single rack, a weekend is typical. For a full cage, plan 2-4 weeks including network cutover and testing. Always do a dry run with non-critical workloads first.

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