As we approach 2026, many organizations have already moved beyond the question of whether to transition their IT infrastructure off site. Now it’s a matter of choosing the setup that best supports their needs, whether it’s colocation, cloud hosting, or hybrid. In this article, we’ll examine all three options and their main differences to help you determine which is the right choice for your business.
Understanding your IT infrastructure options
The right choice starts with a clear picture of each approach.
What is colocation?
Colocation involves placing your servers and networking equipment in a data center owned by a third-party provider. You retain full ownership and control of the hardware, while the provider delivers critical services such as power, cooling, bandwidth — with built-in redundancies for all three — and 24/7 physical security.
What is cloud hosting?
Cloud hosting shifts your infrastructure to a provider’s virtual environment. Instead of purchasing and maintaining physical servers, you lease computing resources delivered over the internet. As a result, you can adjust capacity as needed and pay only for what you use. In addition, the provider handles hardware maintenance, system updates, and uptime, allowing your team to focus on business operations instead of infrastructure management.
What is a hybrid setup?
A hybrid setup combines elements of both colocation and cloud hosting. Critical systems remain on dedicated hardware at a colocation facility while others run in the cloud, so you retain flexibility without sacrificing total control.
Key differences between colocation, cloud hosting, and a hybrid setup
From a business perspective, the key differences between the three setups typically come down to five factors: cost, control, scalability, security, and performance.
Cost
Infrastructure costs vary depending on the model you choose.
- Colocation: You pay for the hardware and a fixed monthly fee covering rack space, power, cooling, and connectivity. Costs stay stable unless you expand your setup.
- Cloud hosting: You eliminate upfront hardware costs but introduce variable monthly charges based on usage. Expenses fluctuate depending on your computing power, storage, bandwidth, and data transfer needs.
- Hybrid: Because you keep essential systems on dedicated infrastructure and use cloud services for variable workloads, you minimize capital expenses by avoiding infrastructure investments that you don’t need all the time.
Control
Each model offers a different level of control over your systems and hardware.
- Colocation: You select, install, and manage all equipment, giving you complete autonomy over your infrastructure.
- Cloud hosting: You operate within the provider’s environment, which reduces administrative workload but also limits control over system-level configurations.
- Hybrid: You maintain direct control over critical systems and offload less sensitive workloads to the cloud for easier management.
Scalability
All three models offer greater scalability than traditional on-site infrastructure, but they scale in different ways.
- Colocation: To expand capacity, you must purchase additional hardware, secure more rack space if necessary, and install the new devices in the data center.
- Cloud hosting: You can easily increase or decrease computing power, storage, or bandwidth by working directly with your provider.
- Hybrid: You can scale cloud resources to meet short-term demand and expand data center infrastructure to support long-term growth.
Security
Every model must address data protection and compliance, but each assigns responsibility differently, either to your team, the provider, or both.
- Colocation: While you’re responsible for setting up firewalls, access controls, and encryption, the provider is in charge of maintaining the physical security of your hardware.
- Cloud hosting: Many cloud providers offer managed, built-in measures such as data encryption, traffic monitoring, and routine updates. However, users have limited control over implementation, which can complicate compliance with regulations such as HIPAA or PCI DSS.
- Hybrid: You can secure sensitive data on your own infrastructure and entrust physical security to the colocation facility. At the same time, you can rely on a cloud provider’s tools to protect less critical systems in the cloud.
Performance
All three models aim to provide reliable performance, but they use different methods to achieve it.
- Colocation: You get consistent performance through the provider’s backup power, cooling systems, and redundant internet connections.
- Cloud hosting: Providers use a network of distributed data centers and redundant servers. If one server fails or slows down, traffic automatically shifts to another, minimizing downtime and disruptions.
- Hybrid: You can run core systems on dedicated infrastructure for stability and use the cloud for added redundancy, supporting high availability.
When each setup makes sense
After understanding the key differences, you can evaluate which option best fits your operations.
- Colocation: It’s ideal for organizations with reliable hardware or those seeking full control over their systems. Colocation is also great for businesses handling sensitive data or running applications that require dedicated servers for compliance or high performance.
- Cloud hosting: This solution works well for businesses that need rapid scalability, remote accessibility, and minimal maintenance. It’s also a practical choice for teams that prefer simple, subscription-based IT models.
- Hybrid setups: These are perfect for businesses that need hardware firewalls, posses proprietary software that can’t be virtualized, or manage archive storage. They are also ideal for organizations that require both physical and cloud environments but lack the space or utilities to support on-site hardware.
Depending on your business’s top priorities, each option has distinct benefits. The key is to choose the IT setup that aligns with your long-term goals, rather than simply following trends.
Liberty Center One provides all three solutions, supported by secure data centers and an expert team ready to assist you. Contact us today to discuss which option is best for you.