David Gammie, CTO, iomart, discusses how colocation is being reshaped by emerging technologies and sustainability initiatives, and the trajectory for the sector in the future.
The growth of the colocation market is showing no signs of slowing down. In fact, it’s estimated the size of the global market grew from US$54.82bn in 2022 to US$61.47bn in 2023.
Closer to home, colocation facility revenue in the UK is expected to reach £2.7bn in 2024, expanding at a compound annual growth rate of 4.8%.
The growth in the colocation industry can be attributed to several factors; including the emergence of Edge Computing, the reliability and scalability for organisations, growing cost of public cloud and the data sovereignty assurance that comes with this type of infrastructure.
The shift towards cloud and the expansion of IT infrastructure options available to businesses of all sizes, has made colocation a popular choice for companies looking for the benefits that cloud offers without the added complexities and cost associated with a full migration to a public cloud where in many cases business applications need to be architected to gain full public cloud benefits.
Not all colocation options are equal
So, what are the main colocation options for businesses? Colocation can vary from a base level to managed colocation – each with their own benefits and use cases.
Standard colocation options at iomart gives businesses access to several standard 42U dual-powered cabinets or vendor cabinets, with full network connectivity and internet connectivity. However, standard colocation options mean the level of service provision is limited to the physical infrastructure i.e. power and cooling.
Managed colocation, on the hand, is fully managed and cared for by service provider teams. That includes monitoring, analysis, hardware replacement, or any other infrastructure service that a business’ needs. A company will still have manual access to their cabinets when needed, but this option enables customers to leave the heavy lifting to their colocation service provider and provide piece of mind at an infrastructure level.
Elsewhere, high-density colocation is designed for businesses that use power-hungry equipment and want a single footprint. This is the fastest growing use case we receive at iomart as the growth in AI applications needs power hungry infrastructure.
High-security colocation is the best option for organisations with specific compliance or security requirements. Businesses will ordinarily get access to caged enclosures with as many cabinets as they require.
Security benefits is one of the biggest draws for companies seeking colocation options. Physical security in a colocation data centre is key and will typically involve constant 24/7 surveillance, fire detection and suppression systems. Most providers will also provide 24/7 on-the-ground security presence too. This means that hardware is protected and able to run continuously.
What next for colocation
Alongside security, which has become a major focal point for colocation providers, other trends continue to emerge as the sector grows.
Artificial Intelligence (AI) technologies are completely altering the colocation market – both from a customer perspective as well the data centre operators themselves.
It’s estimated 35% of global companies are using AI in some way. The computational power needed to run AI applications is vast and is adding significant power demand on colocation providers. To combat this, data centre providers are both retrofitting existing infrastructure where possible and also looking at new build options. Providers of hardware and rack equipment are building new generations of kit that can deal with the AI workload. The biggest challenge will be the sourcing of power in many geographic areas where the grid is already near capacity.
On the other hand, however, AI is being used to completely transform data centre operations, allowing colocation providers to optimise resource utilisation, enhance energy efficiency and bolster security. By leveraging AI-driven monitoring, predictive analytics and automation tools, providers can deliver unparalleled reliability, scalability and performance.
Sustainability continues to be a major focus for the sector too – and rightly so. Data centres are estimated to be responsible for up to 3% of global electricity consumption today. This figure is expected to rise to 4% by 2030.
Most colocation providers are investing significant money into improving the sustainability of their data centres – whether that’s by switching to renewable energy such as wind or generating their own renewable energy onsite via solar panels.
Either way, for businesses opting for colocation services, one of the biggest benefits is the shifting responsibility of managing servers and their subsequent power usage, over to their colocation partner.
Moving across to colocation can also help organisations reduce or close any internal data centres that aren’t being utilised to their full extent, or those that are located in areas where renewable or ‘greener’ energy isn’t as accessible.
But customers will always be demanding better environmental credentials from the data centres they use, which means sustainability will remain front and centre for colocation providers for many years to come.
Conclusion
The colocation market continues to experience robust growth, evident in its global expansion from its US$6.65 billion growth from 2022 to 2023. This growth is underpinned by various factors, and businesses seeking colocation solutions now have a range of options to choose from to make sure it aligns with their wider business strategy.
Looking ahead, emerging trends such as AI are reshaping the colocation landscape. While AI applications are increasing power demands, they also offer opportunities for optimising resource utilisation, enhancing energy efficiency and bolstering security within data centres.
Meanwhile the ongoing sustainability discussions are shaping – and improving – the future of colocation services as businesses look to partner with more environmentally conscious providers.
The sector is growing at pace, and there are no signs of that changing anytime soon.
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