Server housing, who benefits?
Who could benefit from server housing?

Outsourcing your business IT infrastructure to a third party service provider is naturally associated with risk. But does that mean you should stay away from server housing? We explain the risks of outsourcing where your servers are housed and explore potential alternative solutions.

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Server housing: how does it differ from colocation?

The terms ‘server housing’ and ‘colocation’ are often used interchangeably. This is misleading however, since despite the similarities server housing and colocation differ in an important way.


The aim of both approaches is to move your organisation’s IT infrastructure out to a third party ISP (internet service provider). The ISP not only provides space within their data centre, but will also offer server racks for rent. In addition, the server housing provider will offer services including power supply, cooling, physical security measures and connectivity.


Colocation providers lease strictly separate sections or even entire racks to individual customers. In contrast, those offering server housing services may not maintain such strict separation between their customers. It is quite common for several customers’ hardware to be accommodated in a single rack.

What are the risks?

The benefits of server housing are often seen as equivalent with those offered by colocation:

  • No need to operate your own data centre
  • Flexibility thanks to easy scalability
  • Redundant systems provide resilience to system failure
  • Leasing racks is less costly

Many SMEs in particular choose server housing products for the reasons above. Nevertheless, there are several risks that may not be apparent at first glance. These apply to all forms of outsourcing of IT systems to third parties.

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Risks of server housing

Loss of control
Loss of control over your own server hardware, and a dependency on a third party service provider, present a significant issue. They leave you helpless to respond when technical faults occur in the data centre, disrupting operations. In addition, restricted access to the hardware can mean it takes a long time to carry out maintenance tasks on your systems.
Contractual clauses and costs can appear without warning and limit the possibilities of your IT infrastructure. The geographical location of the data centre can also present a problem when it comes to complex calculations. Long distances for data in such instances can slow down processes hugely.
Data security
Data security can also be at risk with several customers using the same facility. This risk can be even greater with server housing than with colocation, as multiple customers are accommodated in a single rack. The servers and IT hardware used by these customers often share the same network ports as well, so their traffic is not clearly separated. This is another huge security risk.
Expert tip

If you choose to house your servers with a third party, you should always ensure that the provider offers a remote hands support service.Remote hands is a type of remote maintenance.It allows you to call on your service provider’s support team at short notice to quickly carry out IT tasks and apply updates.

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Who benefits from server housing?

Server housing is suitable for small organisations that cannot afford to build and operate their own data centres. Growing businesses and start-ups often seek to outsource their IT systems.

However, this solution does not help large and medium-sized organisations, which require stable connectivity, strong security standards and permanent availability of their IT infrastructure. The risks of a server housing solution are very high in this case. Even partnering with colocation providers should be subject to scrutiny, although this form of outsourcing does offer higher standards of security.

More now than ever, with the introduction of the new energy efficiency legislation aimed at protecting the environment, it can be expensive to upgrade an existing data centre or build a new one. It doesn’t matter what size the organisation is, the data centre needs to be based around modern systems that offer very good PUE.

The Energy Efficiency Act imposes a range of statutory obligations on anyone who decides to upgrade or build a new data centre. Cadolto’s range of data centres includes models that achieve a PUE of less than 1.05 This is well below the statutory threshold and can even help achieve significant cost savings to operate the data centre.

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Extra: What are the requirements of the Energy Efficiency Act?

The German Bundestag adopted the Energy Efficiency Act in September 2023. It stipulates that data centre operators must reuse waste heat and from 2027 must run their operations entirely on renewable power. From July 2026, new data centres will have to demonstrate a PUE of no more than 1.3. And this ceiling will be imposed on all data centres in Germany from 2030.

What are the alternatives to server housing?

Small businesses in particular can save costs by outsourcing their server housing, since it is a cheaper option to colocation. However, medium-sized and large companies should avoid both these options and run their own self-hosted data centres instead.

The biggest problems when operating your own data centre are construction and running costs. Conventional data centres frequently operate well below the capacity required to run your own IT infrastructure economically. There is lots of wasted space that continues to generate costs unnecessarily.

Modular construction as a suitable solution

Cadolto Datacenter has developed a modular construction approach that presents a neat solution to this problem. Our high-tech data centres can scale precisely in line with your self-hosting requirements. And if your IT infrastructure needs to increase? You simply add a new module to your own data centre to meet the growing demand.

Each module is equipped with the necessary professional infrastructure for an uninterruptible power supply and cooling, as well as being fitted with security features. Redundant networking connectivity is also assured. The extension can be installed easily, quickly and cost-effectively, without restricting the continued operation and high availability of your existing IT systems.

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