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Colocation vs cloud vs on-premises: how to choose
Most organizations end up with a mix. The useful question is which workload belongs where.
Updated: 2026-11-09
On-premises
You own the room, the power and the equipment. You get full control and the full burden: cooling, backup power, physical security and staff. It suits small, stable needs or special equipment that cannot move.
Colocation
You own the servers and rent space, power, cooling and connectivity in someone else's data center. It suits steady workloads, specialized hardware, data that must stay in a country, and companies that want carrier choice and direct links to cloud providers.
Public cloud
You rent computing as a service and pay for what you use. It suits variable demand and fast starts. Costs can grow quickly for steady, heavy workloads, which is one reason many companies move part of them to colocation.
Questions that decide it
Is demand steady or spiky? Do you need specific hardware, such as GPUs or storage arrays you already own? Must data stay in one country? How much network traffic leaves the facility? Who staffs it at night?
Can I use colocation and cloud together?
Yes. Many colocation sites offer direct connections to the major cloud providers, so workloads can sit where they fit best.