Hosting Comparison
In-House vs. Colocation vs. Managed

October 24, 2017

Hosting Comparison – In-House vs. Colocation vs. Managed

Hosting Comparison – In-House vs. Colocation vs. Managed

Choosing how to host your business's application or product is crucial to ensuring your IT Infrastructure can perform and scale. Success (or failure) is defined by how you manage and apply the resources at your disposal. In-House Hosting, Colocation, and Managed Hosting require different considerations for efficient and effective deployment. Today we look at nine areas to consider when choosing, or migrating to, one of these hosting options.

In-House Hosting / Colocation / Managed Hosting: Defined

Product definitions in the hosting community have become notoriously blurred. To set a base of comparison for the rest of this article, we will define these hosting options as such:

  • In-House Hosting – Servers and networking hardware that is owned and operated within a firm's own facility, such as an office building or stand-alone location.
  • Colocation – Servers and networking hardware that are owned and operated by a firm, but located in a third-party data center and accessed via on-site or remote management.
  • Managed Hosting – Dedicated servers or cloud servers owned by a hosting provider and leased to a client.

The Comparison

1. Hardware Acquisition and Maintenance

The first consideration is the acquisition of servers and networking hardware that will host your application or product.

With In-House Hosting and Colocation, server hardware is the full responsibility of, and is owned by, the client. The client needs to evaluate its business' needs, determine the necessary specifications, and procure the appropriate hardware. Staff time will be required to configure the new hardware, migrate existing infrastructure, and maintain the new environment. In-house and colocated equipment typically carry tens to hundreds of thousands of dollars of initial capital investment, even for small deployments.

In-House Hosting will have additional facility upgrade costs for cooling, power redundancy, battery / UPS systems, and connectivity. The upgraded hardware would be owned by the organization, and could potentially decrease costs over time. When hosting in-house, the cost of renting additional floor space may need to be considered.

With Colocation, your staff will need to travel to the data center to perform any physical maintenance and repair. Often, your provider's location will be too far away for regular, ongoing maintenance. In this case, you can utilize a remote-hand service from your provider or hire additional salaried staff to work on-site.

With Managed Hosting, all hardware is owned by the provider. Its initial configuration and ongoing hardware maintenance is performed by the host. This eliminates in-house research and procurement time, but may reduce some flexibility in physical configuration.

Managed hosting providers will engineer a system that best suits your needs. Architecture including networking, switching, and server communications (by a routed internal network or public IP) will need to be considered. Consultation cost may be needed to establish the network plan; and monthly charges exist for the rented hardware and service.

Adaptive Data Networks does not operate like most hosting providers. We will not limit a client by using only off-the-shelf solutions. From a single cloud server to complex networking topologies, our Managed Hosting.

2. OS Installation and Management

The operating system (OS) handles the server's execution of submitted requests. An understanding of OS configuration will be needed to properly choose and deploy your application or product.

In-House Servers require staff to install and manage each OS. Staff or outside consultants will update, tune, and operate the servers to ensure their optimal performance. Knowledge of current technologies and their effect on performance is needed. Besides software updates, there are few hard costs of managing in-house operating systems. However, significant employee time may be needed.

Colocated Servers also require in-house staff to install and manage the OS. Once an OS is properly initialized on a server, remote management should be implemented to reduce the need for a physical presence at the data center. A management platform like IPMI, iLO, and DRAC will be required to reinstall and remotely operate an OS. Like in-house servers, software updates and OS management are the responsibility of in-house staff or consultants.

Managed Servers will most often include the OS installation. Providers will typically install, upgrade, and load any OS services packs prior to releasing the server to the client. Managed hosting also offers services to maintain the server's operation. Hosts will typically provide a base level of managed support along with the option to upgrade to premium managed support that is more comprehensive. With premium managed support, the host will monitor the system and rectify any OS failures that occur. Adaptive Data Networks provides comprehensive hardware replacement, application support, proactive monitoring, and more through Adaptive Support.

3. Application Management

Management of the actual application while adhering with compliance guidelines are essential to data security. These are often countervailing objectives and require deft administration tailored to the operating environment and the application itself.

In an In-House Hosting environment, consumer credit information or payment information need additional care. Because the physical security [more below] of the system is not outsourced to a third-party, the liability rests on the owner. The need for physical compliance documentation is less involved as the application's functionality can be reviewed on-demand; though obtaining facility certifications such as SAS70 may prove cumbersome and costly.

With Colocation, ensuring a third-party provider's legal liability and competency is essential. Physical access to the data center must be tightly controlled to maintain accountability. In addition, understanding the complete architecture of your system will ensure fluid remote management, should issues arise.

With Managed Hosting, extensive documentation is required in order to host a complex application. A full understanding of server interconnectivity in an externally hosted environment is needed to maintain control of the environment. Limitations, such as inter-server throughput or geographical latency in the instance of hosted services in multiple facilities, need to be planned for in order to properly manage your application's performance and uptime. Typical questions you must ask the provider include:

  • Do you have your own private network?
  • Are your servers hosted within a standards-compliant facility?
  • Who has access (besides you) to the remote server management?
  • Is DoD disk wiping technology used for decommissioned servers?

These, and several other, questions need to be answered when discussing application management.

All three hosting options require a thorough understanding of front-end and back-end requirements of your application. Awareness of all aspects of the company's mission will ensure a seamless experience.

4. Networking

Connectivity to any given network is achieved through switching, routing, and advanced network protocols such as BGP and OSPF. Understanding the congruency of these elements will ensure your application or product maintains stability and uptime.

With In-House Hosting, a connection to the broader internet is provided by an Internet Service Provider (ISP). The ISP will facilitate the connection at the point of entry into the client's network room / closet. They will also provide basic hardware to allow the connection of your network to theirs. It should be understood that ISPs will normally provide hardware that will support the minimum amount of needed traffic and maintaining it takes extra attention. Outside of this ISP provided hardware, all other internal networking hardware will be owned and managed by your company.

Companies that host in-house can typically gain access to the providers full routing table via BGP. However, if your staff is not well versed in routing protocols, you may elect to utilize your providers default route for incoming and outgoing requests.

Colocation and Managed Hosting involve hardware located within a data center. As such, they typically gain the advantage of using the providers high-speed switches and routers. The maintenance of this routing equipment is the responsibility of the provider, eliminating the time required from IT staff. However, In the case of unmanaged colocation, the customer would still be responsible for their own networking. Hosting fees for colocation generally include network connectivity.

Adaptive Data Networks uses redundant Cisco Nexus 7K switches for core switching. This allows for 17.6 Tb/s of load per chassis and multi-billion packet per second throughput. Each Nexus 7K uses the latest F3 and M3 series routing and switching cards. These switches, along with 40G and 100G Ethernet interfaces, provide peak performance for customers.

5. Fiber Connectivity

Fiber-optic cabling (fiber) provides key advantages over traditional copper-based mediums. It's inherent efficiency and longer run distance, make it the connectivity standard across the globe.

In-House Hosting requires dedicated internet access delivered via fiber or broadband connection. While not required, a fiber connection is advised due to its additional flexibility, lower latency, and its compatibility with higher grade interfaces that produce higher throughput. The cost of running fiber to your place of business can range from one to six dollars per linear foot ($5,000 – $30,000 per mile). The large range is due to variables in the route the cable must take. Obstructions, municipal regulations, and labor rates will affect the installation costs. In more populated areas, there is a higher chance of fiber already being established nearby. If this is the case, you can typically tap into the existing infrastructure, reducing your setup cost.

Transit can be purchased directly from an IP Transit provider or a through another avenue such as a Virtual Private LAN service. IP transit providers will deliver transit service directly to a customer's location. Virtual Private LAN services will connect you to a major internet exchange, such as Chicago or Atlanta, where consumers will then have access to a variety of transit options.

In a Colocation Environment, the colocation provider will generally have multiple ISPs available to provide IP Transit to its customers. Additionally, many providers also function as their own ISP. Colocation customers need to secure a contract with at least one of these providers. If an organization is selecting a new facility, multiple existing IP Transit providers will ensure competitive pricing and redundant connectivity options.

In a Managed Hosting Environment, the fiber connectivity to the internet is secured by the host. Customers will not need to procure IP transit, peering, or other connectivity. However, with managed hosting, it is best to have a direct high-speed connection (ideally fiber) to your hosted infrastructure. This will ensure that you have unfettered access to your product or service.

6. Data Security and Firewalls

In-House Hosting requires the purchase, management, and maintenance of a firewall at the physical or virtual entry point to the network. Both software-based and hardware-based firewalls are available. Staff will need time to research, implement, and maintain an effective firewall solution. Regardless of the firewall solution you choose, storing sensitive data in-house is generally considered to be the most secure. With in-house storage, sensitive data does not pass through external networks and is less susceptible to interception. Once a server or drive is no longer needed, executing proper server decommissioning protocols is a must.

With Colocation, data security is largely the responsibility of the owner. Although the physical server is located within the data center, a firewall will need to be installed and managed. If you do not have the staff required to setup and maintain a firewall, you're colocation provider will typically offer a managed firewall service and will assist you in configuration and maintenance.

Managed Hosting can shift much of the data security responsibility onto the provider. Your server(s) typically lie behind the providers firewall. Multiple layers of threat detection and prevention are used. Intrusion prevention, vulnerability testing, VPN encryption, and compliance conformation are some of the things your managed hosting provider should assist you with. However, the provider is not responsible for intrusion that takes place due to a vulnerability in your product or application.

Although managed hosting requires less client involvement to ensure data security, proactive monitoring of the network is always advised. Adaptive Data Networks's Adaptive Support can provide advanced monitoring options and superior firewalls.

7. Physical Security

In-house Hosting provides the most control over the physical security of your infrastructure. However, proper security measures need to be taken to ensure its protection. Controlled access and security cameras should be installed to limit the risk of accidental or intentional damage. On-site locations are also vulnerable to loss from fire, flood, and other natural disasters.

Colocated and Managed Servers generally operate within highly-secure facilities. Data centers are hardened buildings designed and built to withstand natural disasters and maintain operations under severe or adverse conditions. Adaptive Data Networks's data centers use multiple levels of physical, human, and electronic security. This includes man trap entries, 24/7 security officers, biometric readers, and motion detection. Servers are located in locked cages and racks that are only accessible to authorized clients and Adaptive Data Networks technicians.

8. Power and Cooling

With In-House Hosting, it is the responsibility of the client to provide adequate power and cooling for their infrastructure. Redundant facility power and online UPS backup systems are needed to ensure up-time during an outage. Additionally, in order to properly cool the server room, dedicated air conditioning will be required. The power requirement of these cooling solutions combined with the power requirement of your infrastructure, can make it difficult to source adequate power. Often times ,significant facility upgrades are necessary in order to provide the needed power and cooling.

Colocated Facilities and Managed Hosting data centers are provisioned with redundant UPS units, generators, and cooling systems to maintain operations in the event of an outage. Additionally, many data centers and colocation facilities are powered by dedicated utility substations. Office suites generally do not have this option, limiting their overall deployment scope. Data center staff is on call 24/7 to rectify any issues that arise and is included in the rent paid.

9. Scalability

Scalability is an important factor to consider when choosing how to host your product or service. Growth is to be expected with any business, and IT infrastructure will need to grow with it. Choosing the right location now will avoid wasting time and money later.

With In-House Hosting, initial capital expenditure (capex) is significant. All the hardware and software components of your infrastructure need to be acquired. When scale is desired, all additional components need to be purchased up-front, making growth costly. In addition, physical floor space may become an issue as you scale.

With Colocation, the up-front capex of the server and networking equipment is similar to in-house hosting; a significant difference being the lack of upfront facilities capex. This means that when scale is needed, your primary expenditure will be on the required servers rather than the supporting infrastructure. Additionally, as your infrastructure grows, your colocation provider will undoubtedly have the rack space to accommodate it.

With Managed Hosting, the up-front cost of scaling is minimal. Since dedicated servers and cloud servers are leased, your product can scale without significant capex. Your provider will also be able to provision new servers more readily, allowing your infrastructure to adapt to on-demand needs. This is especially the case when a Hybrid Cloud infrastructure is implemented.


In-House Hosting offers the most granular control of your servers, but comes with higher overall costs and more time needed to control them. Managed Hosting will afford IT staff the time and convenience to oversee a centralized and highly-connected network at the cost of lessened control. Colocation offers the good (and bad) of each. Carefully consider your organization's goals, growth, and resources to effectively and efficiently deploy your hosting.

While there are many options available for hosting your product or service, it is imperative to ensure your hosting provider has reliable support and robust offerings that are able to scale with your company's growth. Adaptive Data Networks's certified IT professionals draw from a wide range of consulting, hosting, and IT experience to provide you with the best service and resources that will meet and exceed your needs. If you are interested in learning more about what Genesis Adaptive has to offer, feel free to explore our dedicated servers, cloud servers, managed services, and colocation offerings.


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