Why a Hosted Private Cloud is the Modern Colocation Alternative

Colocation has long been the go-to solution for businesses seeking control over dedicated hardware without building their own data centers. The appeal is clear: you own your servers, configure them exactly as needed, and typically achieve significant cost savings compared to public cloud providers once you reach sufficient scale.

However, while colocation can reduce costs over time for larger deployments, it still requires high upfront investments and ongoing operational overhead. The hidden complexity of managing hardware procurement, data center logistics, and physical infrastructure often catches organizations off guard.

The Traditional Appeal and Hidden Costs of Colocation

Traditional colocation attracts businesses for obvious reasons. You get near-complete control over dedicated hardware, avoiding the shared resource limitations of public cloud. But here’s what many don’t anticipate: the hidden costs and operational complexity that come with colocation deployments.

The Reality of Colocation Complexity

You need someone with the right project management skills to put aside a good amount of time to pull this off within 6-12 months. You also need to have an executive sponsor, think CTO or Head of Infrastructure. That is key as getting your colo site up and running requires staff time, hardware purchasing, agreements signed, and other one off “non-recurring” charges. A key executive must be involved.

The process involves multiple challenging phases:

Hardware Procurement Challenges: You’re responsible for sourcing equipment from vendors like HP, Dell, or Supermicro. Warning: Time to deliver hardware has been super variable. Think two weeks to six months. Yes, up to six months and sometimes past that! This unpredictability can derail project timelines and business goals.

Power and Space Negotiations: Power – for the servers and for cooling – is the main currency and colocation cost inside the data center. You’ll commit to paying for a specific amount of power whether you use it or not, and annual rate increases of 3% to 5% compound over multi-year contracts. Agreements tend to be a minimum of 3 years and go up to 7 years to get the best colocation pricing.

Networking Infrastructure: Setting up redundant internet connectivity requires negotiating with multiple providers like Lumen, Cogent, or Zayo, then configuring routers, DDoS mitigation, and complex network topologies.

Ongoing Operational Burden: Dealing with bare metal servers in colocation can be a headache. Provisioning, monitoring, and just keeping the hardware running smoothly takes a lot of time and effort. You need dedicated staff for parts inventory, playbook maintenance, and periodic on-site visits.

Why Hosted Private Cloud is a Better Option

Hosted private cloud combines the control and cost benefits of colocation with the operational simplicity of public cloud. Instead of managing physical infrastructure, you get fully dedicated hardware that’s already deployed, configured, and ready to use in minutes rather than months.

With OpenMetal’s hosted private cloud, you still get the same fully dedicated hardware that colocation provides, but you can offload all the physical and operational complexities to us. Our solution addresses every major pain point of traditional colocation while maintaining the benefits that drew you to dedicated infrastructure in the first place.

This approach represents a fundamental shift in how organizations can approach infrastructure deployment – moving from the traditional choice between public cloud vs private cloud to a more nuanced understanding of different cloud deployment models available today.

Eliminating Procurement and Timeline Risks

Rather than navigating unpredictable hardware delivery schedules and vendor relationships, your hosted private cloud infrastructure comes online immediately. We handle all hardware sourcing, testing, and deployment using our established vendor relationships and procurement scale.

Our hyperconverged Cloud Core provides a three-server cluster powered by OpenStack and Ceph, delivering compute, storage, and software-defined networking capabilities from day one. This eliminates the 6-12 month deployment timeline common with colocation projects.

Cost Comparison: CapEx vs OpEx Model

The financial model differences between colocation and hosted private cloud fundamentally change how you approach infrastructure investment and cash flow management.

Colocation’s CapEx Challenge

Colocation usually involves highly upfront investments, such as buying hardware, setup charges, and long-term leasing of data center space. Maintenance and hardware upgrading are the responsibility of enterprises, thus increasing CapEx.

Traditional colocation requires substantial capital expenditure for:

• Server hardware purchase and configuration
• Network equipment and redundant connectivity setup
• Power distribution units and cabling
• Multi-year space contracts with non-recurring charges
• Initial setup and professional services fees

Hosted Private Cloud’s OpEx Advantage

Cloud hosting works on a pay-as-you-utilize model. Unlike on-premise VPS hosting, it reduces upfront costs, shifting the expenditure to OpEx. This shift can dramatically improve cash flow and make dedicated hardware accessible to smaller businesses that can’t afford large upfront investments.

Our hosted private cloud pricing model provides:

• Predictable monthly costs tied to your service agreement rather than variable usage
• No large upfront hardware purchases – we handle all capital investments
• Included maintenance and upgrades without additional staff or inventory costs
• Flexible scaling without procurement delays or contract renegotiations

For example:

• Small Scale (100 VMs, 10TB): Private cloud saves you $2,924 annually over colocation, with no need for hardware procurement or space contracts.
• Medium Scale (500 VMs, 50TB): The savings grow to $21,550 annually, alongside the convenience of managed infrastructure.
• Enterprise Scale (2000 VMs, 300TB): Enjoy over $67,690 annual savings compared to colocation, while retaining the API-driven simplicity you expect from public cloud.

Networking Without the Headaches

One of the most complex aspects of colocation is networking infrastructure management. You need to handle everything from BGP routing to DDoS protection, often requiring specialized expertise that’s expensive to hire and retain.

Traditional Colocation Networking Complexity

You will need at least 2 internet providers. Think Lumen, Cogent, HE, Telia, Zayo, etc. Those two 100Gbps ports will go to your two independent routers from Arista, Cisco, Juniper, etc. Then likely through a DDoS mitigation system. Then a core switching layer, then top-of-rack switches.

This complexity requires ongoing management, monitoring, and troubleshooting by skilled network engineers.

Hosted Private Cloud Networking Ready From Day One

Our hosted private cloud eliminates networking management overhead entirely. You get access to superior networking capabilities without any of the operational complexity:

• 200Gbps+ edge network with enterprise-grade performance
• 20Gbit connectivity per server (2x10Gbit LAG) with built-in redundancy
• Included DDoS protection up to 10Gbps per IP address
• Dual power supplies on all switches and core routers
• Automated monitoring that detects and alerts on link degradation in real-time
• Redundant network paths to fully independent “A” and “B” switch fabrics

Our high-availability network design ensures no single network component can disrupt service availability, from individual NICs to top-of-rack switches.

Storage and Infrastructure Ready in Minutes

Colocation is best suited for medium to large enterprises that require control over their physical servers and hardware also need the security and reliability of a professional data center. However, building storage infrastructure in colocation environments often becomes a bottleneck.

Colocation Storage Challenges

Colocation teams typically need to design, build, and manage their own storage arrays. This requires expertise in storage architecture, ongoing capacity planning, and handling hardware failures. The complexity grows when you need features like high availability, automated backup, and multi-tier storage performance.

Enterprise Storage Ready Immediately

Our Ceph-powered storage system provides enterprise-grade capabilities from the moment your cloud comes online:

• High-availability cloud storage with automatic data replication
• Multiple performance and resiliency tiers for different workload requirements
• S3-compatible object storage for modern application architectures
• Direct disk access via LVM for maximum performance when needed
• Scalable storage clusters that can grow to over 20 petabytes

Unlike colocation storage that you build and maintain yourself, our storage infrastructure includes built-in monitoring, automated healing, and capacity management. You get enterprise storage capabilities without the operational complexity.

Beyond Cost Savings: The Developer Experience

While cost considerations often drive the initial interest in colocation alternatives, the developer and operational experience differences are equally important for long-term success.

API-First Infrastructure

Cloud hosting is renowned for its high uptime and reliability. Its distributed nature means it’s unlikely for a single point of failure to cause significant downtime. Our hosted private cloud delivers this same operational reliability while maintaining dedicated hardware benefits.

Our OpenStack-based platform provides full API access for automation and management, with no license fees for any supplied features. This means you can:

• Automate infrastructure provisioning using standard OpenStack APIs
• Deploy Kubernetes clusters with easy integration and management
• Create multiple autonomous virtual private clouds with isolated networking
• Scale resources programmatically without manual intervention

Day 2 Operations Support

Beyond initial deployment, our platform includes comprehensive Day 2 monitoring and operational support. This addresses one of colocation’s biggest ongoing challenges: maintaining operational expertise and 24/7 monitoring capabilities.

Perfect for Cloud Repatriation

Many organizations initially considering colocation are actually looking for an exit strategy from expensive public cloud deployments. Strange thing, your cloud bill grew, but faster than your business? You thought as you got bigger and spent more that your per unit costs would go down. Unfortunately, this is the dirty secret of public cloud!

The Public Cloud Cost Tipping Point

You have crossed the public cloud cost tipping point. Boiled way down, you are past when the automation you love can be provided by your own cloud and the fundamental resources like VMs and block storage are fairly priced based on your scale.

This is where hosted private cloud becomes an ideal solution for cloud repatriation. You get:

• Cost-effective dedicated resources without public cloud markup
• API-driven automation that maintains your existing DevOps workflows
• Faster deployment than traditional colocation alternatives
• Enterprise support through dedicated Slack channels with 24/7 access to engineering teams

For organizations exploring alternatives to traditional colocation approaches, understanding the differences between colocation in data centers vs hosted private cloud can help clarify which approach best serves your cloud repatriation strategy.

Maintaining Cloud-Native Workflows

The conversation has evolved beyond whether organizations should adopt DevOps to how they can refine it to fit a cloud-native reality. Automated pipelines, continuous integration and delivery, and Infrastructure as Code (IaC) have allowed teams to keep pace with the ephemeral nature of containerized workloads.

Our platform maintains full compatibility with modern cloud-native toolchains while providing the cost predictability and performance benefits of dedicated infrastructure.

Making the Switch to Modern Infrastructure

The choice between traditional colocation and hosted private cloud depends on your organization’s priorities around control, cost, and operational complexity. Organizations with compliance requirements such as governmental, financial, healthcare, and legal entities that must keep sensitive data on-premises or in a colocation facility now have a third option that combines dedicated hardware with managed operations.

Security and Compliance Built-In

Our hosted private cloud addresses enterprise security requirements through multiple layers:

• DDoS protection and firewall rules at the hardware node level
• 24/7/365 onsite data center security with professional monitoring
• SOC 1, SOC 2, SOC 3, PCI-DSS, NIST 800-53/FISMA, HIPAA, and ISO 27001 certifications
• Dedicated hardware isolation ensuring no resource sharing with other customers

The Complete Solution

Rather than managing the complexity of traditional colocation or accepting the cost escalation of public cloud, hosted private cloud provides a third path. You get dedicated hardware performance and control with cloud-like operational simplicity and predictable costs.

For organizations evaluating this as a colocation alternative or exploring it as a public cloud alternative, our hosted private cloud platform delivers enterprise-grade infrastructure without enterprise-grade complexity. Our customers enjoy dedicated hardware performance, cloud-native automation, and predictable costs – all supported by direct access to our engineering team through dedicated Slack channels.

Understanding what constitutes a cloud in today’s infrastructure landscape helps clarify why hosted private cloud represents such a compelling middle ground between traditional colocation and public cloud services.

Ready to explore how hosted private cloud can modernize your infrastructure approach? Contact our team to discuss your specific requirements and see how we can eliminate the operational overhead while maintaining the control and performance you need.

Want to calculate your potential savings? Use our cloud deployment calculator to compare costs across different deployment models and see how hosted private cloud compares to your current infrastructure approach.

Ready to discuss your specific requirements? Whether you’re exploring this as a general colocation alternative or for more specialized needs like enterprise application management delivery, our team can help you understand the benefits for your unique situation. Learn more about our data center locations and how we can support your infrastructure needs.