A colocation facility, or colo, is a data center facility in which a business can rent space for servers and other computing hardware.
Typically, a colo provides the building, cooling, power, bandwidth and physical security, while the customer provides servers and storage. Space in the facility is often leased by the rack, cabinet, cage or room. Many colos have extended their offerings to include managed services that support their customers' business initiatives.
Often, colocation providers lease space to various tenants looking for colocation services – including network providers, cloud providers, and enterprises. These tenants can then interconnect to one another within the colocation data center and do business together. This allows businesses to centralize their IT operations and create an efficient architecture that can reduce costs.