What is traditional data center vs virtual data center?

Data centers are critical facilities that house computer systems, servers, networking equipment, and other IT infrastructure. They provide the power, cooling, security and connections needed to operate technology and store data. There are two main types of data centers: traditional and virtual.

What is a traditional data center?

A traditional data center is a physical facility that enterprises use to house their critical IT systems and infrastructure. The servers, storage, networks and equipment are all located on-premises and managed by the organization’s IT staff. Traditional data centers require a dedicated space with power, cooling, fire suppression, physical security and network connectivity.

Here are some key characteristics of traditional data centers:

  • Physical servers, storage, networking equipment located on-premises
  • Owned and operated by the enterprise
  • Requires dedicated building space and infrastructure
  • IT staff responsible for managing hardware and infrastructure
  • Significant upfront investment in equipment and facilities
  • Dedicated power, cooling, fire suppression, physical security

Traditional data centers allow organizations the most control over their IT environments. However, they also come with high costs associated with real estate, equipment, maintenance, upgrades and in-house staff. Scaling capacity can be challenging and require considerable lead time.

What is a virtual data center?

A virtual data center enables enterprises to access shared IT infrastructure, services and resources over the internet. Rather than hosting physical servers on-premises, resources are provisioned from a service provider’s data centers in a virtualized environment.

Here are some key characteristics of virtual data centers:

  • Resources such as storage, servers, networking delivered as a service
  • Equipment located in provider’s shared data centers
  • Resources accessed securely over the internet
  • Pay-as-you-go pricing model rather than upfront investment
  • Provides agility and easy scalability of resources
  • Managed by service provider staff

Virtual data centers allow organizations to leverage shared IT infrastructure without having to invest in and manage their own facilities and equipment. Resources can be provisioned and scaled on-demand through a self-service portal. This provides more agility while shifting costs from capital expenditures to operating expenses.

Differences between traditional and virtual data centers

Here is a comparison of some key differences between traditional and virtual data centers:

Characteristic Traditional Data Center Virtual Data Center
Location On-premises dedicated facility Provider’s shared facility
Hardware Enterprise owned Provider owned
Staffing Enterprise IT staff Provider’s IT staff
Upfront costs High – dedicated infrastructure Low – pay-as-you-go
Scaling Difficult, requires capacity planning On-demand, self-service
Management Maintained by enterprise IT staff Managed by service provider

As shown, traditional data centers require significant upfront investment and ongoing management from enterprise IT staff. Virtual data centers offer more flexibility, scalability and shift the burden of infrastructure maintenance to the provider.

Use cases for traditional data centers

Traditional data centers still make sense for some enterprise use cases:

  • Highly customized environments – For organizations that need complete control and customization of IT infrastructure, traditional data centers allow this level of optimization.
  • Latency-sensitive applications – Applications where even slight latency is unacceptable may require being hosted in an on-premises data center for optimal performance.
  • Security requirements – In some cases, security policies may dictate that data and systems must be kept within a private facility not accessible via the public internet.
  • Existing investment – Organizations that have recently built or upgraded data centers may want to maximize their ROI on that investment before shifting strategies.

While infrastructure located on-premises does increase control and customization, this often comes at a high cost. Traditional data centers require extensive personnel, real estate, equipment, maintenance, electricity and cooling.

Benefits of virtual data centers

Some key benefits that virtualized data centers offer compared to traditional facilities:

  • Lower upfront costs – Avoid large fixed costs for building and equipment by leveraging shared provider infrastructure.
  • Scalability – Easily scale resources up or down on-demand to meet changing needs.
  • Agility – Quickly provision and decommission resources using self-service portals.
  • Flexibility – Access resources on-demand without lead times for procurement and provisioning.
  • Predictable expenses – Convert heavy fixed costs into more controllable variable costs that scale based on usage.
  • Increased resilience – Provider infrastructure offers redundancy, failover capabilities and geographic diversity.

Virtualized solutions allow enterprises to easily scale resources based on needs. The public cloud and outsourced IT have made pay-as-you-go infrastructure readily accessible.

Challenges with virtual data centers

Despite their benefits, some challenges exist with virtual data centers:

  • Vendor lock-in – Transitioning between providers is not always easy and may result in lock-in.
  • Internet dependence – Relying on internet connectivity makes solutions vulnerable to outages.
  • Security risks – Public cloud resources can introduce new threat vectors.
  • Compliance concerns – Some regulated industries have strict data controls that public clouds may not meet.
  • Management challenges – Lacking full control and visibility into infrastructure can complicate management.

Organizations considering virtual data centers should evaluate providers carefully, review service level agreements, and plan for security, compliance, backups and redundancy.

Cloud-based vs colocation data centers

Within virtualized data centers, there are two main delivery models to consider:

  • Cloud-based – Resources delivered through public clouds like AWS, Azure and Google Cloud.
  • Colocation – Housing enterprise-owned hardware within rented space in a provider’s facility.

Cloud infrastructure gives the greatest flexibility, agility and OpEx benefits. With colocation, companies still own the hardware but outsource physical space, power, cooling and network connectivity.

Comparison of cloud-based vs colocation

Characteristic Cloud-based Colocation
Hardware ownership Cloud provider Enterprise
Provisioning Self-service, near instantaneous Order lead time for new servers
Scaling Automated, on-demand Manual, limited
Management Minimal enterprise effort Still requires enterprise IT staff
Upfront costs None Purchasing own hardware
Ongoing costs Pay-as-you-go operational expenses Hardware assets depreciate over time

As shown above, public clouds offer the most flexibility and the purest OpEx pay-as-you model. Colocation offers fewer advantages compared to a traditional data center, other than lower connectivity costs and efficient infrastructure sharing.

Hybrid data center strategies

Rather than treating them as an all-or-nothing decision, many modern enterprises take a hybrid approach:

  • Core legacy systems remain in existing data centers
  • Newer applications deployed to the public cloud
  • Data and backups replicated across platforms

This allows organizations to maintain tight control over certain workloads in traditional data centers, while still gaining cloud advantages like scalability and Capex reductions.

A hybrid infrastructure requires strong integration to connect on-premises and cloud environments securely and reliably. Approaches like hybrid cloud networking and hybrid cloud storage can help bridge resources across the two. The goal is to enhance legacy data centers with cloud benefits.


Traditional data centers provide greater control and customization with dedicated on-premises infrastructure. However, this comes at a high price driven by equipment, facilities, staffing and maintenance.

Virtual data centers delivered via public cloud and colocation provide more flexible OpEx solutions. With easier scalability, reduced upfront costs and no physical infrastructure to manage, virtual data centers offer a streamlined modern platform.

The optimal strategy often involves a hybrid of traditional and virtual resources. Legacy systems remain in existing data centers, while new initiatives shift to the public cloud. This balances the control of private infrastructure with the agility of cloud computing.