From Commodity to Critical: Why Interconnection Is Becoming a Boardroom Topic

Digital transformation has already fractured corporate data infrastructure. Enterprise workflows live on-prem, in the cloud, at the edge, and in colocation facilities. With AI, IoT, and growing decentralization, today’s top business drivers rely on more than just workflow location — they require seamless connectivity across data centers, cloud platforms, and end-user environments. 

Is your data infrastructure ready for digital growth in this new environment — and wherever that growth takes you next?   

That’s not just a conversation for the IT department. It’s a mission-critical topic that belongs in executive suites and boardrooms — and interconnected colocation should be at the center of the conversation. 

Here’s what top decision-makers need to know about colocation, interconnection, and the right way to future-proof digital infrastructure.

Rethinking Colocation 

PC Magazine defines colocation as “locating customer equipment in a third-party data center.” But colocation, as we understand it today, serves a much more strategic purpose.

Certainly, some colocation providers simply rent power and space, treating colocation as a mere commodity. But those partners can’t help you mitigate risk or maintain agility in today’s digital world. 

Innovative colocation providers, like core interconnection facilities or carrier hotels, prioritize interconnection. That’s what you need to support hybrid cloud, AI/ML, SaaS ecosystems, and the next competitive necessity. In short, colocation isn’t just real estate anymore. It’s a strategic partnership. And your IT department shouldn’t pick a colocation partner alone. Why? 

Because all business is digital business. Strategic risk management and infrastructure procurement are one and the same. A good colocation partner provides agility, speed, and ecosystem access. The wrong one can leave you dead in the water. 

How do you tell which is which? The difference between a simple commodity broker and a strategic colocation partner boils down to one thing: interconnectivity.

The Evolution of Interconnectivity in Colocation

Digital infrastructure is at the center of operational risk mitigation, uptime reliability, and disaster recovery — all items off a board meeting agenda. Not all colocation, however, supports developing IT architectures. 

Here’s a snapshot of interconnection’s journey from the fringes of “nice-to-have” services to the very core of enterprise infrastructure.

• In the 1990s, colocation facilities were essentially data centers with meet me rooms (MMRs) that linked networks together. They made the internet possible but didn’t provide robust interconnectivity.  
• Over the next few decades, enterprise tech advanced rapidly. Businesses swarmed to SaaS applications in the 2000s and never stopped–Gartner predicts by the end of 2025 the SaaS market could approach the $300 billion mark. 
• Hybrid cloud services and real-time apps hastened IT decentralization throughout the 2010s and ‘20s. Businesses responded with ad hoc additions, locating compute nodes in central offices, branch locations, cloud platforms, and distributed colocation sites. 
• By 2023, edge computing pushed data decentralization into overdrive. Colocation facilities became indispensable as the broker between the cloud and the edge.  

As compute nodes have proliferated, so has the need to connect those nodes. Proximity affects speed and uptime.  By positioning infrastructure near both the network core and end-user environments — where data is generated, processed, and consumed — strategic colocation enables real-time performance at the edge.

Different colocation partners, however, have different interconnectivity densities. Poor interconnectivity can increase latency, leading to network bottlenecks and cloud backhaul. These issues impact your customer’s experience, but also revenue and compliance. The wrong colocation partner can erode revenues — and even market share — simply by introducing an ill-timed network routing issue. 

In other words, decisions around a colocation provider’s interconnection capabilities are direct drivers of business outcomes. This is especially true for heavily regulated industries, such as fintech and healthcare, which rely on both compliance and interconnection. 
And that’s why execs and board members need to know the difference between commodity colocation and strategic colocation.

The Trouble With Commodity Colo

Commodity colocation facilities operate more like landlords than partners. They provide the basics — space, power, and perhaps a meet-me room — but offer little flexibility or ecosystem value. You’re a tenant, not a collaborator.

Common signs of a commodity colo include:

• Low interconnection density
• Relatively slow provisioning
• Limited cloud access
• Unpredictable or slow-to-respond support
• Rigid service options
• Competing on price alone

This model may be suitable for static workloads, but it limits the agility, speed, and scalability required by modern enterprise infrastructure. The alternative? A colocation partner that treats interconnection, direct ecosystem access, and service quality as core components — not afterthoughts.

The Rise of the Interconnection Fabric

Traditional colocation facilities often rely solely on physical cross-connects — fiber links manually provisioned between endpoints. While these remain essential for mission-critical connections, they can be slow to deploy and inflexible to scale.

To meet growing demands for agility and automation, many data center leaders now augment physical connectivity with Software-Defined Networks (SDNs) or Network as a Service (NaaS). These virtual fabrics allow customers to provision connections between cloud providers, carriers, and partners through a self-service portal — often in seconds, not days.

SDNs/NaaS enable:

• On-demand provisioning between hybrid environments
• Lower operational overhead for multi-cloud strategies
• Greater flexibility in building regional and global networks

Early solutions like Equinix Fabric and CoreSite’s Open Cloud Exchange popularized this model. But these are often tightly integrated with broader platform ecosystems — which may not align with every customer’s architecture, procurement model, or preferred partners.

That’s why Netrality offers a differentiated approach. We leverage our market presence — 18 strategically located properties with over 3.3 million square feet and 100 megawatts of capacity. Our unique position allowed us to build a solution with dense regional ecosystems. We combine local connectivity with national reach. And we introduce new fabric capabilities built around flexibility, neutrality, and service breadth.

This sort of strategic colocation offers lots of new options for IT architecture. If you crafted your colocation strategy based on commodity colos alone, it’s time to revisit the topic. 

Rethinking Colo/Interconnection Strategy: A C-Suite Conversation

Here are some of the IT concerns we’ve witnessed in our conversations with C-suite executives.

• Chief technology officers (CTO) prize operational agility. They want a digital transformation timeline they can trust. 
• Chief financial officers (CFO) need predictable costs and a great ROI on cloud services. They’d like to avoid lock-in.
• Chief executive officers (CEO) answer to the board — and the board wants to know if IT infrastructure is reliable, compliant, and future-ready.  

Colocation addresses all of these concerns, but only when tethered to the right interconnection strategy. With strong interconnections — like Netrality’s 250+ on-net carriers, cloud providers, and peering ecosystems — colocation supports hybrid cloud, AI/ML, and SaaS ecosystems. 

Dense interconnectivity helps you expand infrastructure quickly. It’s essential for navigating growth, especially through mergers, acquisitions, expansion, and new market penetration. Following any of these steps, a connected ecosystem leads to quick integration. That all adds up to agility, pleasing not only your CTO but also your customers. 

An interconnected IT architecture provides flexibility. It maintains access to the widest range of carriers and network partners, which helps you manage cloud ROI and escape lock-in. This keeps your CFO happy. 

Flexible footprints reduce risk, in the short-term and over time. Colocation supports geographic redundancy, further managing hazards. In short, interconnected colocation minimizes downtime.

Reliability prevents revenue loss, reputational damage, and compliance risks. Strongly interconnected colo also pleases CEOs and boards. 

However, as you craft your new colocation strategy, it can be helpful to consider concrete capabilities. Here are a few real-world examples of how strategic colocation can function today.

2 Use Cases for Strategic Colocation/Interconnection

Better interconnection improves performance in many of today’s most crucial corporate technologies. Here are just two examples:

1. AI/ML Inference at the Edge

Some of the strongest use cases for AI and ML are inherently time-sensitive. Think fraud detection, algorithmic training, and user personalization. 

Engineers tend to locate AI training workflows at distant, hyperscale data centers. But inference — the process by which AI models apply what they’ve learned — must happen at the edge near end users to approach real-time performance. 

A time-sensitive AI model needs quick, direct access to data feeds and clouds — ideally without using the public internet at all. That’s exactly what interconnection-rich colocation provides.

2. Compliant Healthcare Interoperability

In healthcare, time is of the essence. Doctors need instant access to diagnostic images or electronic health records. We’ve already covered the speed advantages of interconnection-rich colocation. In healthcare, however, compliance is also a challenge. 

Healthcare providers need a data center that complies with the Health Insurance Portability and Accountability Act (HIPAA). They need compliance with Centers for Medicare and Medicaid Services’ Interoperability and Patient Access Final Rule. In short, they need especially secure interconnections. 

Interconnection-rich colocation providers like Netrality fill this role. Commodity colos do not. Remember: Strategic colocation goes beyond space and power. So what does an interconnection-rich colocation partner look like?  

How to Recognize a Strategic Interconnection Partner

Earlier, we provided a list of traits that identify a commodity colo. Now we’ll examine the features that define the interconnection-rich colocation partner that will thrill the board. These include: 

• Measurable interconnection richness. You can put a number on interconnection strength. Many colos may top out at a dozen carriers. Some of Netrality’s data centers have ten times that. Choose a partner with a dense ecosystem in your markets to get the greatest benefits in flexibility and speed.  
• Large-scale carrier neutrality. The denser the ecosystem, the better. Within this context, however, connection choice must remain in your hands. Netrality offers a rich selection of cloud partners, SaaS providers, and carriers while retaining neutrality on our end. 
• Transparent service level agreements (SLA). Your colocation partner should be upfront about the service you can expect. That requires specificity and transparency. Look for an SLA that covers electricity capacity, cooling statistics, uptime percentage, certifications, standards — and predictable pricing.    
• Local support combined with national reach. Partner with a colocation provider with widespread market reach — literal buildings in cities across your geographic operating area, with interconnected ecosystems that work together to deliver seamless performance and resilience. But don’t let a national footprint deprive you of local support. Netrality offers both.

Finally, get a feel for potential colocation partners by asking questions. Will they be able to pivot if your needs change? Do they have a proactive plan for natural disasters? How are they meeting or exceeding industry standards? If a potential colocation partner can answer these questions, they’re probably ready to go beyond “space and power.” They’re probably ready to support your evolving digital strategy. 

Get Strategic Interconnection With Netrality Colocation

Your core IT infrastructure depends on interconnection, which finds its greatest expression in strategic colocation. Remember: Businesses that don’t prioritize interconnection risk falling behind in agility, resilience, and digital readiness. If that’s not an executive-level agenda item, we don’t know what is.   

Whether you’re just beginning the conversation or already know interconnection needs to be a priority, the next step is the same: putting in a call to Netrality Data Centers. Start planning your future-proof IT infrastructure by reaching out to our sales team today. 

Amber Caramella