Updated Characteristics of the Colocation Market

- Updated on

May 22, 2024

Updated Characteristics of the Colocation Market

Written by Issar Krausz, Sales Executive at MedOne

Early last year, I received an enquiry from a large international company, searching for a colocation space in a Data Center. It was mentioned in the email that the selection process of the colocation provider is expected to take couple of months, so I was asked to hold tight. For those readers that are less familiar with the data center hosting market, a lengthy selection process is quite typical. The process is lengthy because data centers hosting contracts are normally long-term contracts. Once a corporate is choosing a colocation space and a hosting Agreement is signed, the servers are moved into the new location, and they are installed and connected. Disconnecting the servers and moving them again is a time-consuming and costly process that involves service interruption, and therefore changing a hosting location frequently should, under normal conditions, be avoided.  

In any case, the enquiry sounded quite promising and as a Sales guy who is used to pursue any promising opportunity, I immediately offered the client to visit our Data Centers. When the delegation arrived and saw our Data Centers, they were impressed with many things starting from cleanliness, our high maintenance standards, the electromechanical systems, the building itself and so forth. This gave me hope that the process may now be faster. Unfortunately, this was not yet the case. After asking quite a few questions regarding the decision-making process, I quickly understood that the expected lengthy sales process is not related to MedOne or to any other data center provider. The lengthy process is related to a higher-level strategic discussion, namely, if a data center hosting in the cloud era, is the right way forward. This may sound like a simple decision, but to many organizations today, it is not a simple one at all.

The truth is that the migration to the clouds is happening all over. Together with this migration, companies and organizations frequently ask themselves if they still need to keep a certain portion of their production computing on prem. If the answer is no, there is obviously no room for data center hosting models any longer. If the answer is yes, and that may still be the answer for some or even many companies, it needs to be justified internally, and that takes time. This is exactly what I have experienced with this client. The migration to the cloud started already. The decision to keep one leg on Prem in a colocation space was the right decision. For many reasons, certain data cannot stay on the cloud, or at least cannot stay only on the cloud, and it was not a popular decision to get approval for. It was like walking against the stream and that takes time. My plan for closing the deal was based on a two-pronged approach. One was related to the data center, namely, to convince the client that our hosting services have the best SLA (Service Level Agreement) in the market. The second one was related to the cloud services which we are also offering. I also planned to get involved in drawing the exact boundaries for the client between the cloud and the data center. This was my plan, but what happened in practice was different. The client was tolerant to hear about the cloud and about recommended separation models between on-prem and the cloud, but was, quite typically, reluctant to share with us their considerations. The client also made a complete separation between the data center part and the cloud part. It was also very clear throughout the process that we are leading the data center part. It took around 8 months until we received the message that the client would like to proceed with us.  The data center hosting agreement has already been signed, hoping for the cloud part soon to follow.