Discussions about IT infrastructure often feel like a medical consultation in a foreign language. We hear terms such as colocation, IaaS, PaaS, public cloud, hybrid cloud. We nod along, even though we don’t fully understand what they mean. And yet these decisions determine whether a company will operate smoothly—or drown in costs and technical issues. Let’s take a closer look.

Colocation: you rent space and basic operating conditions

Colocation is the simplest model. A company purchases its own servers and network equipment and places them in a professional data center. The data center provides the fundamentals: stable power supply, cooling, physical security, and high-speed internet connectivity.

It’s like renting a warehouse. The warehouse owner takes care of the building, security, lighting, and heating. You bring in your own shelves, forklifts, and management systems—and you operate them yourself.

Colocation gives you full control over the hardware. The company decides which servers to buy, how to configure them, and which systems to install. This works well if the organization has an IT team ready to manage everything day-to-day—installing patches, monitoring performance, and responding to failures.

However, colocation does not eliminate the challenges of owning hardware. When the company grows and needs more computing power, it must purchase new servers—which can take weeks. When technology becomes outdated, someone has to replace it. When a server fails at 3 a.m., someone has to physically go to the data center to fix it.

IaaS: you rent ready-made infrastructure, but manage it yourself

IaaS (Infrastructure as a Service) is the next step. Instead of buying servers, the company rents computing power, memory, and storage from a provider. The provider manages the physical hardware—replacing it when it breaks, updating it, and scaling it.

It’s like renting a car with a driver on standby. You don’t buy the car, you don’t worry about maintenance, and you don’t deal with breakdowns. But you still have to tell the driver where to go and which route to take.

In the IaaS model, the company still manages operating systems, databases, applications, and software-level security. The IT team must install updates, configure backups, and monitor application performance.

IaaS removes the need to buy hardware and wait for deliveries. Need more computing power? You click in a management panel and have it within minutes. Don’t need it anymore? You scale down and stop paying for unused resources.

But IaaS is not “set it and forget it.” Someone in the company must know how to manage virtual servers, databases, and networks. That requires technical skills and time—resources most organizations don’t have in excess.

PaaS: you rent a complete environment and focus on applications

PaaS (Platform as a Service) goes even further. The provider manages not only the hardware (as in IaaS), but also operating systems, databases, and development tools. The company gets a ready-to-use environment for running applications.

It’s like renting a fully equipped restaurant kitchen. You don’t install ovens, repair gas lines, or replace ventilation filters. You walk in and cook.

In the PaaS model, developers upload application code and configure it—but they don’t deal with installing operating systems, patching infrastructure-level security vulnerabilities, or low-level database management. That’s handled by the provider.

PaaS works particularly well for organizations that have developers but lack large IT operations teams. Developers can focus on building business functionality instead of fighting server configurations and infrastructure issues.

The trade-off is reduced control. The company cannot freely modify the operating system or install custom infrastructure components. If an application requires very specific configurations, PaaS may be too restrictive.

Public, private, and hybrid cloud: where all of this runs

When discussing IaaS and PaaS, it’s also important to understand where these services operate—public, private, or hybrid cloud.

Public cloud services are available to anyone over the internet—such as AWS, Azure, or Google Cloud. Infrastructure is shared among many customers, which lowers costs. However, some organizations cannot place sensitive data there due to regulations (e.g., medical or financial data) or internal security policies.

Private cloud is infrastructure dedicated to a single organization. It can run in the company’s own data center or at a specialized provider. It offers greater control and helps meet strict security and compliance requirements—but it is more expensive, as all costs are borne by one organization.

Hybrid cloud combines both approaches. Some systems run in the public cloud (e.g., less critical applications or test environments), while others run in a private environment (sensitive data, mission-critical systems). This provides flexibility—each system can be placed where it makes the most business and regulatory sense.

The choice depends on many factors: data sensitivity, regulatory requirements, budget, internal IT capabilities, and the company’s growth dynamics.

The key difference: who is responsible for what

The easiest way to remember the differences is to look at the division of responsibility:

• Colocation: the company is responsible for everything—hardware, operating systems, applications, security, backups. The data center provides only the physical environment. 
• IaaS: the provider manages hardware; the company manages operating systems, applications, and data. This reduces workload but still requires technical expertise. 
• PaaS: the provider manages hardware and the entire platform layer (operating systems, databases, tools). The company focuses only on applications and data. This requires the least effort—but offers the least control. 

The decision doesn’t have to be binary. Many companies start with colocation, move to IaaS, and later adopt PaaS for new projects. Another common strategy is to keep legacy systems in colocation while deploying new applications directly in PaaS.

Practical questions to ask when choosing a model

Instead of asking “which model is best?”, it’s better to ask a few concrete questions:

• Do we have an IT team ready to manage infrastructure daily? If not, colocation and IaaS may be too demanding. 
• How quickly do we need to respond to changes in computing demand? If the business grows dynamically or has seasonal peaks, IaaS and PaaS flexibility is valuable. 
• What regulatory and security constraints do we face? Some industries (banking, healthcare, public sector) may require private cloud or in-country colocation. 
• Are our applications standard or highly customized? Standard applications work well in PaaS; atypical systems may require IaaS or colocation. 
• How much time and money are we willing to spend on IT management? Colocation requires the most internal resources; PaaS the least. 

There is no one-size-fits-all solution

Most importantly: there is no single “best” model. There are only models that are better or worse suited to a specific organization—its stage of growth, team capabilities, business requirements, and regulatory environment.

Colocation makes sense for companies with strong IT teams, specific hardware needs, and a desire for full control. IaaS works well when flexibility is needed without buying hardware, but operational skills are available. PaaS is optimal when the company wants to focus on building applications rather than managing infrastructure.

And none of these decisions are irreversible. Many organizations move gradually from one model to another as their IT maturity and business needs evolve.