Colocation due diligence: what to check before you commit

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Comparing colocation providers

When organisations compare colocation providers, the conversation often starts with rack space, power, resilience, security, certifications, connectivity and, inevitably, cost. And whilst a provider’s facilities, standards, tier rating, network options, scalability and physical security should clearly all form part of the decision, there is more to consider.

In fact, if the comparison is based only on price and headline facility specifications, it can quickly become a case of comparing apples with oranges. Two providers may both offer colocation, but that does not mean they offer the same level of stability, investment, service or long-term assurance.

Hidden costs of cheap colocation

A low-cost deal can be tempting, particularly when budgets are under pressure, but unusually cheap colocation should prompt questions. Some providers may offer great deals because they need the revenue, some may be financially stretched, whilst others may have inherited older facilities through acquisition and are trying to fill space before carrying out meaningful investment. None of that automatically means a provider is unsuitable, but it does mean potential clients should look beyond the monthly figure – a well-run older facility can still be a strong option, but the key question is whether the provider is actively investing in it.

Look at the business behind the buildings

A data centre is more than a room with racks, power and cooling – it is also a business that needs strong management, financial stability, operational discipline and a long-term investment plan. And because the data centre sector is not regulated in the same way as some other critical industries, standards can vary significantly, which puts more responsibility on clients to carry out their own due diligence.

Before choosing a provider, it is worth asking:

  • How long has the company been operating, and what is its track record?
  • Has the leadership team been stable, or has there been constant change?
  • Is the business financially sound, or does it show signs of pressure?
  • Is the provider continually investing in infrastructure, maintenance and upgrades?
  • Is there a clear plan for maintaining and improving the site?
  • Has the provider acquired older sites, and if so, what has been done to bring them up to standard?
  • Are commercial promises and service commitments written into the contract?

Older facilities

The data centre market has seen a lot of acquisition activity. Some providers are buying older sites and adding them to their portfolios. That can be positive when there is a proper investment plan behind it.

However, older facilities can also be run on a shoestring if the focus is simply on filling capacity at the lowest possible operating cost. In those cases, clients may find that infrastructure updates are delayed, maintenance is reactive rather than planned, and resilience is not always provided through continual improvement.

How to carry out due diligence

A good starting point is research to find out about a provider’s history, ownership, financial position, news coverage and reputation.

For organisations new to colocation, it can be useful to speak with brokers, connectivity partners, IT consultants or others who work across the sector. They often have a wider view of the market and may understand which providers are investing properly, which sites have a strong reputation, and which offers may need closer examination.

Most people would not buy a house simply by knocking on the door and accepting what the owner says. They would use surveyors, estate agents, solicitors and local knowledge. The same principle applies here. Likewise, when buying cloud services, most organisations would be cautious about choosing a completely unknown provider purely because they were cheaper than AWS, Microsoft or Google.

The right provider should stand up to scrutiny

A good colocation provider should be able to explain not only what it offers, but why it is structured that way. It should be able to talk clearly about investment, maintenance, resilience, operational standards and the people behind the business.

If a provider is more expensive, there should be a reason. That reason may be stronger infrastructure, better operational processes, continual investment, experienced management, greater resilience or a more sustainable approach to service delivery. The cheapest option is not always the wrong one, but if a deal looks too good to be true, it deserves careful examination.

Choosing a colocation provider is a long-term decision about where critical infrastructure will live, who will be responsible for it, and whether that provider is likely to remain stable, capable and accountable over time. And that’s why we highly recommend that all prospective clients visit our London edge or Manchester sites to meet the team, see the infrastructure first-hand and ask the questions that really matter. Get in touch to find out more.

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