Key Opportunities & Challenges in Data Center Colocation Industry

Colocation industry is witness to interesting developments as far as the current market trends are concerned. Colocation providers are required to deal with diverse market forces in terms of daunting challenges as well as sound opportunities.

There is an ever growing stress on colo providers to improve sustainability and greater efficiency backed by accelerated cloud adoption across all industry verticals. Add to this a perpetually growing list of advanced digital trends and constantly evolving spectrum of buyers.

All these forces are exerting either a positive or a negative pressure on colocation providers who are engaged in fighting battles on several fronts at the same time. They need to chalk out a robust plan for their own survival while showing remarkable resilience in responding to as well as handling these forces with proficiency.

In order to achieve multiple and seemingly impossible objectives, colocation providers are exploring advanced architectures evaluating state of the art tools, and acquiring greater operational efficiency and reliability by ensuring const efficiency. In the ensuing paragraphs, you will be able to have glimpses of diverse opportunities as well threats that are faced by colocation providers.

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The changing profile of colo consumers

Thanks to the involvement of C-level executives, and other stakeholders in business organizations, the conventional relationships between colocation providers and procurement professionals have undergone a significant change.

One has to deal with a wide array of decision makers in present market scenario. These are Chief Information Officers, Chief Operating Officers, IT managers, and Chief Digital Officers just to name a few.

This involves adapting an entirely new skill sets in terms with of ability to deal differently with individual decision makers and gaining an exceptional prowess to speak in business language.

Evolving face of colocation business

The change is an all-pervasive phenomenon as the colocation companies as well as customers are undergoing remarkable changes. These changes are primarily driven by an objective of exploring fresh opportunities and involve migrating to entirely different market segments such as retail, wholesale, regional, or carrier segments.

The businesses are able to augment their business footprint with help of partnerships, mergers and takeovers and can set their visions on global markets by obviating the need to acquire new technologies or services.

The time is right for colo providers to assess their strengths and weaknesses in order to find a right position in the vast and diverse market that is extremely volatile. This will help them design a proper strategy for growth and maintain an effective market presence.

There is an interesting opportunity in the form of micro forces including Internet of Things, and Big Data. These are proving as hurdles for customers who have not been able to come to terms with these new technologies. Colocation service providers can definitely help such customers invest in right solutions for designing a robust IoT strategy. These solutions can comprise of capacity management, data aggregation, analytics, and data collection points just to name a few.

There is huge demand for edge computing, which is driven by Big Data and Internet of Things. It leads to need for more and more data center or colocation resources, thus creating huge number of opportunities for colo service providers.

Impact of cloud computing and big internet players

Cloud computing is and will always be a subject of debate in terms of its opportunities versus threats. There is sufficient room to perceive cloud computing as both. Users of cloud computing are able to leverage elasticity of cloud for adapting to changes in levels of data traffic and can also exploit its capacity of catering to analytics, IoT, and other compute intensive tasks.

It is up to the providers of colocation services to identify various opportunities of cloud computing, which is growing exponentially in terms of its adoption by all types of organizations. Depending upon their own resources and capabilities, colocation service providers can either offer an infrastructure, cloud services, or a combination of both.

As far as big players of internet services are concerned, colocation providers are perfectly placed to fulfill infrastructure needs of these internet giants. Colocation providers can be the right resources for big players in new markets that are being explored by these biggies. Colo providers can offer their infrastructure of data centers to support their expansion into new and uncovered markets.

Managing infrastructure of DCs

Data Center Infrastructure Management is an entirely new strategy of looking after management of data centers. Colocation providers are in a position to make the difference by providing value added services to clients. Colocation services can support DCIM by empowering data centers with improved assurance of service in addition to predictability and consistency.


Rapid paced of transformation and advent of new technologies has resulted in challenges as well opportunities for colocation providers that are flexible and service oriented. There will always enough space for colocation providers in the constantly evolving digital landscape so long as there is a need for cost efficient and high performance data centers.


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