When it comes to hosting your business-critical infrastructure, the stakes in 2025 have never been higher.
Between growing digital demands, AI-driven workloads, and stricter compliance requirements, companies are re-evaluating how they manage their servers. Should you keep everything in-house with on-premises servers, or is it time to move to a smarter model like rack co-location?
For most businesses, rack co-location wins – and here’s why.
What Is Rack Co-Location?
Rack co-location means housing your physical servers in a third-party data center – like DataVault’s Tier 3 facility – while retaining ownership of your hardware. Instead of investing in your own server room, you lease secure, climate-controlled rack space from a provider.
You still manage your own equipment, but all the heavy lifting – power, cooling, security, and connectivity – is handled by infrastructure professionals.
The On-Premises Server Model
On-premises servers are what many businesses used to depend on. These are physical servers housed in your office or private facility. You buy the hardware, manage the maintenance, and carry the responsibility for everything – from cooling systems to physical access security.
While this model still suits some legacy environments and highly regulated industries, it’s increasingly becoming a resource-heavy, high-risk option in a hybrid and cloud-first world.
Let’s Compare in Plain Language
Here’s how rack co-location stacks up against on-premises servers across the things that matter most:
1. Cost and Investment
On-premises servers demand heavy upfront capital – server racks, backup power, cooling infrastructure, and secure spaces. Rack co-location eliminates those upfront costs. You only pay for the space and services you actually use. At DataVault, we make co-location cost-effective for businesses of all sizes.
2. Scalability
Scaling an on-premises server room means tearing down walls or building new ones. With co-location, you just rent additional racks as needed. No extra construction, no massive reinvestment. Scalability becomes instant and budget-friendly.
3. Security
Unless you have 24/7 guards, biometric access, surveillance, and intrusion detection, your in-house server is vulnerable. At DataVault, our co-location facility provides all of that – and more – as part of your plan.
Explore how we extend this with system hardening and incident response, designed to lock down and secure every layer of your infrastructure.
4. Power and Cooling
Running high-performance servers in-house? You’ll need industrial-grade cooling, backup generators, and redundant power feeds – or face shutdown during outages. Rack co-location shifts that burden to our facility, where it’s already in place and tested.
5. IT Burden
Maintaining your own server room means constant attention from your IT team – hardware checks, network management, fire suppression testing. With rack co-location, those day-to-day responsibilities are taken off your plate, so your team can focus on innovation.
6. Disaster Recovery
Most businesses with on-premises setups lack proper redundancy or offsite recovery. But with co-location, disaster recovery is built in. At DataVault, we offer 99.982% uptime through our Tier 3 infrastructure – making your business truly resilient.
Who Still Needs On-Premises Servers?
While rack co-location is the right fit for most businesses in 2025, on-premises hosting still makes sense for a few use cases:
- Organizations with strict, internal-only data handling policies
- Companies operating legacy software tied to local networks
- Enterprises with deep pockets and large, in-house IT teams
However, even these businesses are slowly shifting to hybrid models that include co-location or cloud-native solutions.
Why Rack Co-Location Is the Better Choice Today
Here’s the reality: most modern businesses need cloud-like scalability and on-premises control – without the headaches or capital investment.
Rack co-location gives you:
- Physical control over your equipment
- Enterprise-grade infrastructure without building it yourself
- Flexibility to grow fast, without growing overhead
- Localized compliance and data sovereignty with a trusted provider like DataVault
It’s no wonder that 90% of growing businesses in 2025 are choosing rack co-location over on-premises deployments.
The DataVault Advantage
Choosing co-location is one thing. Choosing the right provider is another.
At DataVault, we deliver more than just rack space. We offer:
- Local support teams who understand your regulatory landscape
- Flexible colocation options – from single racks to custom cages
- Solar-powered, sustainable infrastructure
- Real-time monitoring, alerting, and physical access controls
- Fully integrated solutions that pair with your cloud strategy or hybrid setup
In short, we make it easy to stop worrying about infrastructure – and start scaling with confidence.
Final Thoughts
On-premises infrastructure made sense a decade ago. But in 2025, the costs, risks, and limitations are too high for most businesses to bear alone.
Rack co-location offers the perfect middle ground. You stay in control of your equipment while benefiting from the security, uptime, and scale of a professional data center.
So if your business is still maintaining its own server room – maybe it’s time to ask:
“Is this the best use of our time, talent, and tech?”
At DataVault, we’re here to help you modernize without compromise – with smarter infrastructure that’s ready for what’s next.