There is no single answer, or even a series of short ones when it comes to deciding what is best for your organization. The three primary options: self-host, colocation, and cloud-hosted all have advantages and disadvantages that apply to all businesses. In this article, Rack Alley looks at the specific situations that colocation makes the most sense:
Only new organizations and startups have the luxury of starting from a clean slate. Everyone else already has some form of existing hardware and infrastructure that is not at the end of its lifetime. The more equipment you have, the more it makes send it to make use of it.
Another segment that should use colocation are the companies that have a local focus. For example, a business that operates out of, and server’s users in LA, would have a massive performance and latency advantage if they use an LA data center. The users would get faster responses, and better speeds from a site they access that is physically closer.
Software like advanced ERP systems and GIS software come with expensive licensing terms. Much like server costs, it does not make sent to write these off and switch to online versions. Also, in some cases, there are no concessions when you switch from on-premise to cloud versions, making a move more expensive. If you have a pre-existing license for costly software, colocation is the way to go.