How To Optimize Cloud Cost and Customer Experience during the COVID-19 Induced Recession

After 10 years of economic expansion, we are in the beginning of an unprecedented recession created by the sudden stop of many business activities due to the COVID-19 lockdown. It is  imperative for businesses to reduce their expenses to survive this downturn. 

For many businesses, their expenses on public clouds has been growing steadily after years of migration of their applications and services to the cloud. With most businesses running on the “hybrid cloud” architecture, they need to decide what stays “on premise” and what should be on infrastructure completely virtualized, automated, orchestrated, and maintained by a private or public cloud service provider.
In the challenging economic climate, colocation could offer some key advantages over public cloud, especially on the cost optimization, and customer experience.  A business can architect its technology stack for its specific needs with control of the hardware hosted in a data center, while taking advantage of the colocation provider’s core competencies of in space, power, network, cloud exchange and edge computing services. .

Whether you are representing a startup that is evaluating moving some instances and expenses out of the public cloud or a large enterprise moving away from owned data centers and server closets, colocation offers potential benefits. Here are some key considerations in your evaluation of cloud vs. colocation services. 

Consideration 1: Flexibility vs Cost

The calculus comparing colocation to the public cloud is a little more complicated due to the customized infrastructure needs of your compuete, storage and network service requirements. The main benefit of the public cloud from AWS, Microsoft Azure, and the Google Cloud Platform, is their flexibility, scalability and elasticity. Like everything else in life, these benefits come with its own hefty price tags. Many startups or enterprises could realize many cost savings with colocation services, once their cloud services demand grows to a certain size.  Colocation would also allow companies with strict compliance and legal requirements ring-fence or separate sensitive HIPAA/PCI data according to their own compliance mandate.

Consideration 2: Capex vs Opex?

Constructing and operating a data center requires a business to predict its computation and storage needs almost a decade in advance, besides the lengthy processes of securing the real estate, obtaining permits, negotiating with utility companies on the power usage and cost etc. It is a major capex investment with a very long return on capital period.
In contrast, colocation providers offer flexible 1-7 years contracts, specialize in constructing data centers for optimal air and energy flow, to be customized and leased to any enterprise IT requirements. It offers lower capex, greater scalability and proximity to major internet and cloud exchanges. Furthermore, there are colocation providers all over the world and in every major metro area, so that you could deploy your service anywhere you like.

Consideration 3: Edge Computing, anyone?

With the right colocation services, you could set up your servers and connectivity close to the internet or cloud exchanges, which allows you to decrease your networking costs while improving key network services metrics like latency, packet loss and throughput. Besides the benefits connecting your infrastructure directly to network service providers, peering exchanges for optimized internet experience, colocation services also allows businesses to have servers near all of their key audiences and enables edge computing, CDN services, making everything feel faster to your end user. Being closer to your customers could offer a key competitive advantage in this challenging environment.
It is our belief that once a business matures enough to be able to predict storage needs and compute, it is time to consider colocation as a part of an optimized hybrid tech stack. Feel free to reach out to us at [email protected] should you want to discuss colocation service with our experts.

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