Answering The Co-Location Storage Question - Industry Trend or Event

Computer Technology Review, March, 2001 by Jason Schaffer

As technology and next-generation storage and networking protocols drive to unite the global economy, businesses are faced with managing an increasingly complex and costly infrastructure. In parallel, the global Internet economy is pushing business information to the forefront of the battle to differentiate and succeed. Information has become a core enterprise asset.

The combination of these two pressures is driving businesses to rethink the distribution of corporate resources and to seek alternative methods to ensure the scalability of their infrastructure and the availability of their mission-critical information.

Internet Infrastructure Service Providers (IISPs) have developed to meet this demand. IISPs provide guaranteed infrastructure security, availability and scalability, and ensure performance with service level agreements (SLAs). Within storage and data management, this overwhelming demand has led to the birth of the Storage Service Provider, or SSP, a company whose expertise and resources make it uniquely equipped to guarantee the continuous availability of mission-critical information.

Data storage has become a highly complex process that demands the best enterprise-level storage technology and the highest level of technical expertise. SSPs are able to bury these complexities and costs into an integrated service, enabling corporate storage and data management solutions that meet today's extremely dynamic IT requirements. With the right storage service, businesses can quickly scale up their storage infrastructure without having to worry about the latest security protocols or long-term capacity planning. Plugging into such a storage utility allows enterprises to focus on core business competencies and dramatically mitigate the overall costs of maintaining an infrastructure at 99.99% or greater uptime.

In the past seven years, the Internet has become central to the success and longevity of virtually every business. Pacing the growth of the Internet has been the rapid growth of the co-location industry. Co-locating in Internet data centers makes sense for the same principal reason that outsourcing to a storage service provider does: the company providing co-location services can offer a more scalable, reliable, and secure environment at substantial cost savings. By outsourcing, businesses do not have to shift key resources from their core competencies to a peripheral area that is every bit as demanding in terms of skill, experience, and capital investment.

From the end user point of view, the storage decision is not an isolated one, but part of a larger decision that includes the selection of a co-location provider, a network service provider, and (in many cases) a managed service provider. Ultimately this leaves businesses with the problem of trying to select the right best-in-service combination to meet their needs.

There are four distinct levels of service within the co-location industry. At each level, the interface with the customer changes, as does the relationship between the customer and the SSP. The customer-SSP relationship and service complexity migrates from a direct buyer-seller relationship at the basic co-location level to transparent, fully integrated services.

Climbing The Internet Infrastructure-Service Ladder

The four distinct levels of service within the co-location service industry are: basic co-location services, co-location services with bandwidth, managed service providers, and hosted service providers.

From the point of view of end-customers, the SSP relationship changes significantly as they move up the hierarchy. At all levels, however, from the straight co-location center up to the structured, integrated infrastructure service, there is a clear and accelerating trend toward the outsourcing of data storage and management.

Basic Co-location

The basic categories of co-location service are businesses that provide only facility-based products, such as racks, power, and network cross-connects, and no site monitoring or egress bandwidth. Basic co-location companies, including Colo.com and Equinix, focus on offering the business consumer complete network and service provider neutrality. This means that the end business consumer is required to individually contract with every service they need to meet their requirements. The co-location company will often provide a list of the available service providers in their facilities, but they will not recommend, sell, or integrate any of these services.

While basic co-location providers rarely have direct relationships with SSPs, they generally provide references upon customer request. No reseller relationship is involved and end users deal directly with whichever SSP they choose. This gives the business customer complete flexibility in selecting a best-in-service solution but gives them no assistance in integrating that solution.

Co-location Plus Bandwidth

At the next rung of the Internet infrastructure-service ladder are companies like Level3 and UUNet, which bundle co-location space with network bandwidth. These service providers focus on providing combined data center and network access solutions for business customers. Their services will include network and facility monitoring, but will not be bundled with storage or other services. This means that the end business consumer will have to purchase, install, and manage their own server and storage architecture, or select storage service providers.