The Pros and Cons of On-Prem vs. Colocation vs. Cloud

In today’s digital economy, technology has become an essential component of every business. Without a reliable network in place, companies will have difficulty attracting new customers and delivering services to their existing customers. When building out their network systems, organizations must decide what type of infrastructure they want to work with. Typically, their three choices are an on-premises solution, a colocation data center, or a public cloud platform. Making the best choice between on-prem vs colocation vs cloud requires a careful examination of the advantages and disadvantages of each.

The Pros and Cons of On-Prem

On-premises data solutions were once a mainstay of IT infrastructure. Whether it was a dedicated private data center or a modest server closet, organizations had to manage every aspect of their network from the software applications down to the outlets delivering power to them (and the cable behind the outlets as well).

About one-third of companies using physical infrastructure rely solely upon an on-premises solution of some kind. There are some benefits to keeping their technology infrastructure completely in-house.


  • Control: Keeping data, applications, and essential infrastructure in-house means retaining complete control over all aspects of a deployment. The IT department knows doesn’t have to worry about anyone outside the organization changing configurations or accessing data inappropriately. They don’t have to deal with a third-party vendor’s rate or policy changes.
  • Compliance: Many organizations have complex compliance needs that they are hesitant to entrust to a third party. By keeping everything in-house, they can continuously monitor their compliance status to mitigate risk.
  • Compatibility: If an organization relies heavily upon legacy hardware or applications, it could create severe problems by migrating to another technology solution. While it’s certainly possible to move legacy applications into a new environment, there are often risks associated with the process. If migrating legacy systems could endanger business operations, it might make sense to stick with an on-premises solution.


  • Inefficiency: Most on-premises solutions are woefully inefficient. Because the cost of building a private data center is so high, these facilities are often quite dated or converted from structures that were intended for some other purpose. That means they’re rarely well optimized for the power and cooling needs of modern, high-density servers, leading to much higher operational costs.
  • Inflexible: An in-house data solution can typically handle whatever it was designed to manage, but usually nothing more than that. That means if demand increases or if new services need to be offered, new equipment or software will need to be provisioned and installed. This process can take a great deal of time, and may not prove to be a worthwhile investment if the initial opportunity is missed.
  • Unreliability: In addition to being outdated, many on-premises solutions lack extensive backup systems to provide for disaster recovery capabilities. They may suffer from frequent system downtime and usually aren’t staffed by IT technicians 24x7x365. When a server goes down at 2:00 AM on the weekend, it will usually take quite a while for someone to address the problem.

The Pros and Cons of Colocation

Data center colocation is a fast-growing trend that allows companies to place their servers and other essential IT hardware within a third party facility that provides the essential infrastructure for their systems. The customer retains control over their assets once they’re migrated, while the colocation provider handles the power, cooling, security, and connectivity.

About two-thirds of companies using physical infrastructure use a colocation data center either exclusively or in combination with an on-premises solution of some kind.


  • Reliability: Colocation data centers tend to use much more robust infrastructure than the average on-prem solution. They have extensive operational redundancies that allow them to keep their essential systems up and running even in the event of a natural disaster. A quality colocation provider should guarantee nothing less than 100% uptime reliability through their SLA.
  • Versatility: Since colocation facilities have the ability to accommodate multiple tenants, scaling capacity is as easy as installing a new server into a rack. Unlike an on-prem solution, there’s always enough power and cooling infrastructure to support additional growth. Direct cloud on-ramps also make it possible for customers to scale into the cloud by constructing hybrid IT environments that leverage the advantages of a physical data center along with the expansive power of cloud computing. More importantly, since the colocation provider is managing the infrastructure, internal IT teams are freed up to work on developing innovative products and services rather than troubleshooting hardware issues.
  • Efficiency: Modern colocation facilities keep pace with the latest developments in data center power and cooling, which allows them to keep costs under control more effectively. Setting aside the substantial cost savings of not having to build a data center (which is a prohibitively expensive investment for most companies), colocation also saves money month over month due to better optimization and energy efficiency.


  • Potential Lack of Visibility/Control: Many colocation providers fail to provide customers with the tools they need to monitor their deployments effectively. This can leave companies feeling like they’re in the dark when it comes to determining how much power and bandwidth they’re using each month. This isn’t always an issue for every provider, however. vXchnge customers can use the in/site intelligent monitoring platform to get real-time data about every aspect of their colocated assets.
  • Potential for Poor Customer Service: Dealing with any third-party provider creates potential challenges related to customer service. If a colocation data center isn’t well-managed or dedicated to customer success, it may be slow to respond to issues and fail to deliver the assistance companies require.

The Pros and Cons of The Cloud

Cloud computing has had a tremendously democratizing effect on many industries, allowing companies to gain access to computing infrastructure they would never have been able to amass in an on-premises solution in years past. While many hosting providers offer virtual private cloud hosting, most people think of public cloud providers when they talk about cloud computing.

A little under one-quarter of companies exclusively use public cloud services for their infrastructure needs, but nine out of ten companies are using cloud platforms in some capacity.


  • Scalability: One of the key advantages of cloud computing is the ability to scale computing power rapidly to meet capacity demands. This allows organizations to quickly add more processing and storage resources when they need them, which makes it easier to adapt to changing market conditions and take advantage of opportunities.
  • Versatility: Almost every type of software application is available today as a cloud-based service. Cloud providers also offer development tools and environments that can be used to create and host new applications. Almost anything that can be done with a conventional server and network can be accomplished via cloud computing services, which opens a world of possibilities for companies that might not otherwise possess the infrastructure resources to build their own solution.
  • Cost: Cloud services are typically billed on a month to month basis according to usage. Many organizations can substantial costs by shifting away from the capital investment of physical hardware and opting instead for a purely operational expense of a cloud computing service.


  • Downtime: Most public cloud providers offer uptime SLAs of 99.99%, which translates to about an hour of downtime each year. That may not sound like a lot, but considering that customers aren’t likely to forget that time they tried unsuccessfully to access online services, the risk of revenue and reputational loss is often too great for many companies to tolerate.
  • Transparency: Public cloud platforms are often very opaque when it comes to evaluating resource utilization. This results in companies using more resources than they expected and getting hit with overage fees on their monthly bill. Since the cloud platform is managed by the provider, it’s often impossible to get a sense of what is being done on the infrastructure side of things to ensure high uptime and operational efficiency.
  • Security: While the public cloud has proved to be a more secure platform than many people feared in its early days, there are still some key concerns companies have when it comes to managing their data. A public cloud may not meet the exacting compliance requirements of every industry, and changes made to the provider’s infrastructure may have an unintended or unforeseen impact on data security.

On-Prem vs. Colocation vs. Cloud: Which is Best for Your Needs?

Choosing the right data solution is a complex decision that will depend a great deal on the organization’s networking and computing needs. Resources are often a key determining factor. An enterprise with a large IT budget and complex compliance requirements, for instance, will find an on-premises solution much more viable and attractive than a startup company that can barely afford a single server.

For the median company, however, colocation provides the best combination of performance and affordability. This is especially true if with a colocation provider that offers infrastructure monitoring capabilities and excellent customer service, which addresses the two key areas of concern when it comes to colocation.

With multiple data center locations in key growth markets across the US, vXchnge delivers superior colocation services thanks to our innovative in\site intelligent monitoring platform and unmatched remote hands services. With in\site, customers can monitor every aspect of their deployment, viewing their power and bandwidth utilization in real-time to avoid unpleasant surprises on their monthly bill. Our data centers are engineered for perfection and backed by 100% uptime SLAs to ensure superior reliability and risk mitigation.

To learn more about how we’re redefining what a colocation provider can do for your business, talk to one of our data center experts today.