The Outsourcing Continuum, Part III – Co-location Managed

You’ll also want to know that those communication lines come into the data center from different directions (just in case a backhoe breaks a line). The data center won’t commit to a response time minimum between your office and the data center since they can’t control all the active elements of the network. However, once the data has reached the data center you should have a committed minimum latency within the data center to ensure that slow response is not the data center’s fault.

Service Level Agreement

The scope of services covered by under the SLA should include the following:

Bandwidth Availability Commitment:

  • At least 99.99% of the time the contracted bandwidth should be available.

  • A service charge credit if that level of availability is not met.

    Network Availability Commitment including:
  • At least 99.99% availability of the service provider network
  • A service charge credit if that level of availability is not met.

Latency Commitment:

  • Service provider network will have an average round trip packet transit time within the data center backbone network of a defined amount. Typically this will be 70ms or less.

  • A service charge credit if that level of latency is not met.

  • A commitment to maintaining a communications infrastructure capable of complying with this scope of services.

What You Won’t Get

You’ll have to buy the hardware and pay for the installation and maintenance. You have to buy the operating system software and any applications you want to use. You’ll have to make sure that you have someone on staff that has responsibility for managing the relationship with your service provider and making sure that you get what you’re paying for. You will also have to have someone managing and maintaining the systems. This could be your own staff or you could combine this model with the in-house managed model to have a third party manage the servers.

You’ll be responsible for making sure that the backups of your data and systems are done regularly. Somebody will have to put the tapes in the tape drive and rotate them to off-site storage. You will have to develop, maintain and test a Business Continuity Plan.


The costs for this kind of outsourcing are usually based on physical space that you occupy in the data center and the communications bandwidth you need plus any extras you might want. For example, if you have six servers running general applications and moderate bandwidth needs, your costs might look like those in the following table:

This is probably less than the annual cost for a rack, power and the air conditioner and communications costs from a local carrier. You get more value for your dollars because you can be assured that your systems are sitting in an environment that is better protected than in your office.

With co-location outsourcing, there is still the issue of managing the applications. You can have your IT staff do that or you could outsource that, as well. One thing they won’t be doing is maintaining the power plant.

In the next article, we’ll examine more of the details of the fully managed outsourcing model.

Mike Scheuerman is an independent consultant with more than 26 years experience in strategic business planning and implementation. His experience from the computer room to the boardroom provides a broad spectrum view of how technology can be integrated with and contributes significantly to business strategy. Mike can be reached at [email protected].