Let’s first look at the features and benefits of Co-Location and then share the hidden costs that make it 194% more expensive than a new, superior alternative that is one of the fastest growing hosting solutions out there for mid-sized companies.
Co-location Data Centers are popular with mid-sized companies for many reasons. The benefits include:
- Risk mitigation,
- Greater security,
- Better roadmap for disaster recovery,
- Redundant power, cooling and internet connectivity,
- Higher reliability due to redundant systems,
- Scheduled backups,
- Real-time monitoring, and
- Experienced staff.
Co-location is a popular way to outsource your infrastructure management so you can focus on your business and core competencies.
Co-location, however, is 194% more expensive than Cloud Hosting (more on this in a moment).
Here’s why.
With co-location, you pay for your server and related support fees, such as hardware and software maintenance. In most cases I see, the servers are sized for future growth or just plain oversized because most users only need a fraction of today’s high-capacity, high-performance servers.
Quite simply, you pay more for the server than what you need. The related support fees are based on the size of the server instead of the small portion you actually use.
Despite all the co-location benefits, the monthly fee generally ranges around $2000-$2500 per month.
Here’s A Superior Solution At A Fraction Of the Cost
With Cloud Hosting you only use a fraction of a server at a co-location data center – instead of the whole server.
Think about it. When you buy a server, you generally buy more than you need because you project how much you may need for peak demand and future growth. So you wind up buying more than you need now. Sometimes, more than you will ever need.
With Cloud Hosting you only use what you need when you need it. This means you pay for only the small portion of the server resources you use and only for as long as you need it. If you need more capacity, you can easily upgrade when you need it.
With Cloud Hosing you share the cost of the server and related support fees with other tenants on the server.
Specifically, with Cloud400 (IBM i/OS400 Application Cloud Hosting), you share the cost of IBM hardware and software costs, the most popular IBM Licensed Program Products, and the cost of the co-location data center. You pay no core activation or user-based fees.
Here’s A Simple Example Comparing The Cost Of Hosting An IBM POWER Server vs. Cloud400
Let’s say you are thinking about co-locating a new IBM POWER server with IBM i.
- You have 150 users.
- You want 32 GB of memory, 5 TB disk storage and 1 core active with IBM i.
- Your cost for this server with 5 years of support is easily $110,000 – $120,000. Based on what I see, your colocation fee over 5 years is about $120,000. Add it all up –$230,000, easy.
In contrast, if you go with a Cloud400 Logical Partition (or LPAR) with comparable capacity you would spend about $2000 per month, or $120,000 in 5 years. A savings of $110,000…
That makes the co-location solution 194% more expensive!
Let’s say you are considering an entry IBM POWER i with 1 active core, 16 GB of memory, 1 TB disk storage and 40 users. The acquisition price and IBM support over 5 years is about $40,000. Add the co-location fee of about $120,000 and you get $160,000.
In comparison, a Cloud400 LPAR with comparable capacity is about $60,000 for the same period – a savings of $100,000.
My sense is that this dramatic savings contributes to the high growth I see with Cloud Hosting, particularly since 2013.
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