More and more companies are no longer building their own data centers, but are leasing data center space from professional providers. As a result, Co-location Providers are expanding their capacity to meet the increasing demand for half and full cabinets as well as cages with free standing racks in state of the art environments.

This demand is due to the reluctance of executive, financial and IT staff to commit the capital resources required for building the facilities, and acquiring the infrastructure, necessary for a data center. This commitment is expanded by the continuing need to keep the data center current as the requirements for HVAC and power change with the evolution of technology and is further expanded by ever increasing utility costs and the desire of corporations to reduce their carbon footprint (Green Computing). The initial cost and incomplete depreciation of a data center can leave a corporation tethered to a dinosaur.

Compounding the lack of available capital for data center development, the supply of data-center space that resulted from the dot com bust is no longer available. Thus, there is no ready supply of data center space and therefore there is a requirement to consider solution providers.

Internet data center demand is expected to continue to outpace supply through at least 2013, according to Tier 1 Research.

While some data center investments such as those that that reduce operating costs (virtualization projects, private cloud infrastructures) are being funded, there is a general reluctance to take on debt in a time when income and profit margins are tight. Therefore the desirable option for many organizations is to lease with the resulting increase in demand for hosted data center space that is being used for options ranging from use as a temporary facilities until the economy permits the construction of their own facilities, to using collocated space for the all or part of data center operations, to using the space for a backup/disaster recovery site.

This flexibility of function has greatly increased the acceptance of co-located data facilities and thus increased the demand for them and the increased acceptance may well become a permanent cultural change in Information Technology Operations as corporations decide they like the lack of capital commitment combined with professional facilities management that provides continuous environmental updates and the ability to rapidly reconfigure to achieve the maximum benefits from technological changes.

In addition, co-located data center facilities offer a variety of support services from basic technical support to full hands on hosting which can reduce the workload of organizational IT resources. Moreover co-located facilities offer a variety of terms from month-to-month through 1, 2 and 3 year leases to enable tenants to precisely control their costs.

Further, tenants in collocation centers have discovered operational benefits that build on their initial financial considerations. They have credited their facilities occupancy with reducing interconnection and network costs while obtaining network redundancy, reduced network costs and improved provisioning times through their access to multiple services providers at the same location.

The benefits of locating data center operations in a facility that is not only currently certified to be state of the art, but is constantly maintained and enhanced to remain state of the art unlike corporate data centers which frequently are static or which evolve slowly due to capital constraints combined with the fact that such a location requires a minimal capital investment and provides incremental operational benefits present a powerful incentive for organizations to utilize co-located environments in an increasingly space constrained world.

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