When you co-locate your server at a datacenter, you are basically purchasing a server and software, then using the datacenter for bandwidth, power, rack space, air conditioning, security, and all of the other features that a datacenter provides. Co-location has fallen out of favor and has been replaced in great part by managed server hosting. With managed server hosting, the datacenter provides you with a pre-configured server to meet your needs. Since you are the only client on this server, you are free to add most popular applications and server programs to the server on your own. You are typically given root access to the managed server so that you can modify it as you wish, within some limitations.

Problems with Server Co-location

*High Initial Cost
You have to purchase the server and all of the software for it. We have clients that have spent $7,000 for one 2U application server after all was said and done. Obviously you do not need to spend that kind of money to get your own server hardware, but if your applications NEEDED a $7,000 server, it makes more sense to pay a monthly fee for the hardware and the software instead of purchasing it or going through the hassle to lease it.

*Ticking Time Bombs – Patches and Updates
You are responsible for all patches and updates that need to be performed on your server’s software. If you do not patch the software and it gets hacked, you could lose everything. That is your responsibility. Yes, I have seen it happen to clients. I have seen a client install software on their server as seemingly innocent as a PHP forum server. Then they forget about it, and a couple of months later an exploit is released for the version they are running. Unless the client is watching for updates on their software, the server becomes a target, and is eventually discovered by hackers. Keep in mind that the process of probing for vulnerabilities like this is automated by software – so your server’s weaknesses could become discovered very quickly. Clients that do not have a system administrator on staff should never consider collocation for the patches and update reason alone.

* Depreciation and Upgrades
If your business thrives, you will need more and better servers eventually. It is very rewarding for us to see a client start out with one server and move up to a full rack as they grow. When you own the equipment, you have the additional hassle of having to upgrade and purchase new equipment as it ages or as you grow. Typically the average life span for an Internet server is three years tops. When you lease a server from a large computer company (Dell, IBM, HP, etc.) , you have to keep this in mind. Even if you do not grow, and you remain with the same number of servers for years, the software that you run will become old and will need to be upgraded. Software companies continually improve their products, and they release new versions so that they can make money and stay in business. The point here is that you WILL have additional annual expenses for software upgrades that you need to be aware of and that are included in your budget.

* Manufacturer Warranty Work is Sketchy
Some customers like the peace of mind that warranties can provide from big computer companies, and this is on one of the motivating factors in why some clients want to purchase their own server. But those warranties come with a steep price, and are little comfort when you are waiting 1-3 days for replacement parts to arrive and be installed by the manufacturer’s rent-a-tech. I have seen this happen and it is not pretty when a client is waiting for a tech to show up and their server is dead in the water. This scenario is true with all major hardware manufacturers.

* Clients Purchase Servers for the Wrong Reasons
Some clients purchase servers because they have had a bad experience with a previous hosting company. With “shared hosting”, their web site was more than likely on a server with many other clients. In that scenario, it is unlikely that the client was able to install all of the software that they wanted to on the server, or have the root access necessary to do much configuration of the software on the server. Shared hosting also introduces more risk when applications are running on the server, because poorly-programmed web applications can crash a server easily. So the client looks for a new host, and decides that this time they will have their own server so that they can run it the way that they want it to. There is also a bit of “tinkerer’s pride” in being able to setup one’s own Internet server. But these motivations for going the colo route are detrimental to the client’s company because the costs, time, and risks are not considered at this stage. There is also the fear that if something goes wrong with the host, the client can take his server and move it somewhere else easily. This isn’t actually the best scenario if things go wrong with the host relationship, because your sites will be down during the move. And physically moving servers from one host to another is never as easy as you plan. With a dedicated server, you can migrate data and apps from one dedicated host to the other without all of the hassle of picking up the server.

Reasons Why Managed Servers are Better than Server Co-location

* Lower Employee Cost
Collocation customers MUST have their own in-house IT employees to manage the server properly. A skilled server administrator can earn a very high salary, which adds to your overhead. If you do not have a full-time, in-house IT person, then collocation should not even be considered. Part-time IT staff, combined with server collocation, equals an extended outage waiting to happen.

* Lower Initial Investment
With a managed server, your initial fees are usually limited to server setup and the first month’s rent on the server. The iniitial cost of collocation involve the same setup fees, PLUS the hardware, software, and additional options that come free with dedicated hosting.

* Dedicated Servers are Installed Faster
Managed hosts have servers ready to go. This can save days or even weeks getting your servers configured and launched.

* Look Past The Higher Monthly Fees to See the True Cost Savings
The monthly fees for managed servers are higher than collocation, but when you total up ALL of the expenses that are involved with collocation, managed servers are much less expensive.

* Free OS Patches
With managed servers, typically the host will want to standardize the operating systems that they host. More than likely, the OS that you want to host on will be supported, but with so many distributions of Linux available, it makes sense for the managed hosting company to standardize on a couple of them. This makes tracking upgrades and patches easier across the entire datacenter and your server is patched more quickly.

* Free Software Upgrades
Managed hosting companies get volume discounts on server software, and this usually can be included in your monthly hosting fees. This can save you thousands of dollars initially, and over time you will not have to worry about upgrading much of your server software. There are exceptions to this for unique software, so you should discuss this with your managed hosting company and make sure it is included in your agreement.

* Free Server Monitoring and Emergency Service
Since managed servers are owned by the host, they may monitor them differently than they monitor colocation servers. Monitoring options on colo servers may cost you extra money, while managed monitoring is always included.

* Pre-Configured Backup Servers
Servers break and it is a part of life. Anything with moving parts will fail at some point, so it is important to have spares ready to go. Most collocation customers do not plan well enough to have spare hard drives and servers on-hand in case something fails. This can also be due to the cost of the additional hardware. Good managed hosting companies will have spares on-hand. By standardizing the hardware that they offer, the managed host can insure that they have the right parts on hand for your server.

* Trade-In and Upgrade Options
When you outgrow a collocation server, you have to sell it and purchase a new one. With managed hosting this is not a worry as you can move to a larger server easily.

* Better Data Backups
Data backups are usually an add-on service to collocation, so you will need to find out what that costs. Most clients do their own backups to remote servers so this is not a major problem. Unfortunately, however, there are many people that do not have a disaster recover plan in place, so they are again creating a ticking time bomb. Managed hosting servers may contain backup services as part of the agreement. Make sure that you budget for a solid backup and recovery strategy.