Colocation vs public cloud: which is right for your Swiss SME?

For a Swiss SME looking to host its infrastructure, two options always come up in conversation: datacenter colocation and public cloud. AWS, Azure and Google Cloud on one side. Swiss datacenters with your own servers on the other. Both approaches have their merits — but they do not suit the same needs, budgets or regulatory constraints. Here is an honest comparison to help you make the right choice.

What is colocation?

Colocation means hosting your own servers in a professional datacenter. You buy or lease the hardware, configure it to your needs and place it in a secure rack with a hosting provider. The provider supplies the space, redundant power, network connectivity and physical security. You retain full control over your hardware and software. The datacenter manages the physical infrastructure.

What is the public cloud?

The public cloud is renting computing resources on demand from a major provider — AWS, Microsoft Azure, Google Cloud or their Swiss equivalents. You own no hardware: you pay as you go for virtual servers, storage, databases and managed services. Billing is variable, resources are elastic and the provider manages all infrastructure.

Comparison: colocation vs public cloud

1. Total cost of ownership

Colocation: costs are predictable and fixed. You pay a monthly rack rental fee plus hardware amortisation. For stable, long-term infrastructure, colocation is generally cheaper over 3 to 5 years.

Public cloud: costs are variable and can be surprising. Elastic resources are ideal for fluctuating workloads, but a permanent cloud infrastructure often costs 2 to 4 times more than an equivalent colocated setup in the long run. Data egress fees add up quickly.

Advantage: colocation for stable, predictable infrastructures.

2. Data sovereignty and location

Colocation: your data stays physically in Switzerland, in a datacenter whose exact address you know. You know where your servers are, who has access and under which jurisdiction they operate.

Public cloud: even with European or Swiss regions, major US providers are subject to the CLOUD Act — a US law allowing US authorities to access data stored abroad by US companies. AWS, Azure and Google Cloud are all affected.

Advantage: colocation for data sovereignty.

3. nLPD compliance

The new Data Protection Act (nLPD), in force since September 2023, imposes strict requirements on the processing and location of personal data of Swiss residents.

Colocation: by hosting your servers in Switzerland with an independent Swiss operator, you have full visibility over the data processing chain. Compliance is easier to document and demonstrate.

Public cloud: compliance is possible but more complex. It requires thorough analysis of subcontractors, data processing agreements and ongoing monitoring of legal developments between Switzerland, the EU and the United States.

Advantage: colocation for simpler nLPD compliance.

4. Performance and latency

Colocation: deterministic, consistent performance. Your hardware is dedicated, bandwidth is guaranteed and latency to your Swiss users is minimal if the datacenter is well connected.

Public cloud: performance can vary depending on overall provider load. Latency depends on the chosen region. Shared burstable instances can be unpredictable under load.

Advantage: colocation for critical applications requiring stable performance.

5. Flexibility and scalability

Colocation: adding capacity requires purchasing or leasing additional hardware, which takes time. Scalability is less immediate.

Public cloud: you can deploy a new instance in minutes and shut it down just as quickly. This is the cloud's major advantage for variable workloads or fast-growing projects.

Advantage: public cloud for flexibility and rapid scalability.

6. Operational management

Colocation: you remain responsible for your hardware and software. Updates, backups, monitoring — everything rests with you or a managed services provider. It is more work, but also more control.

Public cloud: managed services reduce operational burden. Databases, backups, security updates — many tasks are automated or delegated to the provider.

Advantage: public cloud for teams without dedicated IT resources — or colocation with managed services to keep control.

Summary table

When to choose colocation

Colocation is the right choice if:

• Your infrastructure is stable and predictable over several years
• You handle sensitive data subject to the nLPD or sector-specific regulations
• You need consistent performance for critical applications
• You want to control costs over the long term
• Data sovereignty is an important selling point for your clients

When to choose public cloud

Public cloud makes sense if:

• Your workloads are highly variable or seasonal
• You are launching a project and do not yet have visibility on real needs
• You need complex managed services (AI, big data, global CDN)
• Your team is small and cannot manage physical infrastructure

What if you need both?

Many Swiss SMEs opt for a hybrid architecture: critical infrastructure in Swiss colocation, complementary services in the public cloud. Your customer data stays in Switzerland while your public website relies on a global CDN. This is often the best compromise between sovereignty, performance and flexibility.

In summary

There is no universal answer. But for a Swiss SME hosting sensitive data, wanting to control long-term costs and needing stable performance, colocation in a Swiss datacenter generally offers a better quality-price-sovereignty ratio than the public cloud. If you want to assess whether colocation suits your needs, contact us — together we define the right solution for your infrastructure.