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The Reasons Behind the Rise in Demand for Colocation

Mar 2022

According to Mike Gallagher, Senior Business Development Manager at Panduit, more and more organizations are making multi-tenant data centers (MTDCs) part of their distributed IT infrastructure. One key reason? The global pandemic.

“In the early days of COVID-19, organizations had to quickly find a way to support a 100% remote workforce, and many of them did so by deploying workloads to MTDC providers,” says Mike.

“We have customers in regulated industries, for example, who couldn’t leverage the public cloud. They needed to proximate data center resources in different parts of the world in order to keep employees connected and productive, but couldn’t actually get to those places because of restrictions,” adds Mike. “Instead, they shipped equipment to colocation facilities, and then worked with the provider’s in-house teams to set it up and get it up and running quickly.”

How MTDCs Are Helping Businesses Meet Needs Now and Moving Forward

The pandemic continues to impact how people work and how businesses operate. It has accelerated technology trends such as cloud repatriation, or unclouding, which is the process of reverse-migrating application workloads and data from the public cloud to a private cloud or a colocation provider.

By shifting (or repatriating) workloads to MTDCs, organizations can boost application performance in order to provide employees and customers with a best-in-class experience, be better positioned to meet changing regulatory requirements, and find ways to operate more efficiently.

“Many global enterprises are expanding beyond on-premises and the public cloud to distributed architectures that are comprised of colocation, public cloud and edge environments in order to meet regulatory and workload requirements, improve performance and reduce costs,” says Mike. “Larger MTDCs in particular often have relationships with public cloud providers, and provide public cloud access, or have on ramps in place to enable more efficient data transport between a public and private cloud. In this sense it’s a win-win-win for cloud providers, MTDC operators and enterprise customers.”

But cloud repatriation isn’t the only force driving customers and their workloads to colocation providers. According to Mike, many younger, smaller organizations that have been 100% in the public cloud have reached the size where the economics are now upside down. Thus, they are moving select workloads out of the public cloud and into MTDCs in order to lower costs.

New eBook: Three Key Considerations for Colocation Providers

For more insights into the case for colocation, and what colocation providers need to know as they navigate the future, download the eBook, Three Key Considerations for Colocation Providers.


Michael Gallagher