As technology evolves and IT demands grow, it’s no longer enough to just upgrade outdated systems. Business owners like you need to decide the right approach to hosting their company’s IT operations: should they stick with an on-premises setup or consider colocation? Understanding how these two models compare can help you make an informed choice that supports your business goals, fits your resources, and sets you up for future growth.
What is on-premises IT?
On-premises IT refers to hosting your servers, storage, and systems within your organization’s own facilities. Your team is fully responsible for everything, including purchasing, maintaining, and securing hardware as well as managing power and cooling.
What is colocation?
Colocation is a setup where you place your own servers in a third-party data center. You still control your hardware, but the colocation provider handles the surrounding infrastructure. This includes power, cooling, internet connectivity, physical security, and redundancy, giving you access to a professional-grade environment without having to build one yourself.
Why many businesses are moving on from on-premises IT
While on-premises IT setups offer total control, they also come with hefty responsibilities and rising costs. In 2025, those burdens have only increased.
- Capital expenses: Hardware, HVAC, backup generators, and uninterruptible power systems require large upfront investments.
- Maintenance load: Your IT staff must manage every aspect, including physical repairs and upgrades.
- Limited scalability: Scaling your infrastructure often means physically expanding your facility’s space or electrical capacity.
- Downtime risks: Power outages or local disasters can bring your entire operation to a halt.
For small businesses or those with lean IT teams, these challenges often outweigh the benefits of keeping everything in house.
The case for colocation in 2025
Colocation has become an increasingly attractive option for businesses that want greater flexibility, performance, and peace of mind without giving up control of their IT hardware.
Some of its key benefits include:
- Lower overhead costs: By colocating, you eliminate the need to build and maintain your own data center, saving on construction, equipment, and operational costs.
- Enhanced reliability: Colocation providers ensure maximum uptime through redundant power supplies, cutting-edge climate control, and 24/7 on-site monitoring.
- Effortless scalability: Need extra server space or additional bandwidth? Scaling up or down in a colocation facility is much easier and faster compared to on-premises environments.
- Stronger connectivity: Many colocation facilities provide access to multiple high-speed internet providers, giving you reliable, enterprise-grade connectivity without the hassle of managing it yourself.
- Improved business continuity: Colocation facilities are built to withstand local disruptions, such as severe weather or power outages, making them critical for disaster recovery and business continuity planning.
When on-premises IT still makes sense
While colocation has become a popular option, on-premises IT may still be the right choice for some organizations for these reasons:
- Complete control requirements: Organizations that work with highly sensitive data or need full oversight of every part of their infrastructure may prefer to keep everything on site.
- Regulatory compliance: Certain industries such as healthcare, finance, or government face regulations that limit or restrict the use of third-party data centers, making colocation less viable.
- Established internal resources: Companies with well-established IT departments and robust in-house data centers may already have the resources to effectively manage on-premises IT.
- Stable or predictable growth: If your IT requirements are stable and unlikely to change significantly, an on-premises setup can be more cost-effective and easier to manage.
For many organizations, colocation offers the best of both worlds: the control that comes with owning your hardware and the efficiency of a professionally managed environment. It brings greater flexibility, easier scalability, and stronger uptime, all without the heavy capital investment or strain on internal IT teams.
If your business is looking to modernize its infrastructure but isn’t ready for a full move to the cloud, colocation might be the right fit.At Liberty Center One, we offer secure, high-availability colocation services built for businesses that want to stay ahead. Contact us today to learn how colocation can enhance your IT strategy now and in the long run.