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Private Cloud and Public Compared

In a recent Cloud Computing Market Size, Share & Trends Analysis for 2022-2030, according to Business Wire (a Berkshire Hathaway Company), roughly 70% of firms have shifted to cloud-based computing for at least a portion of their services. And while many may think large corporations are the primary beneficiaries of cloud computing, small- and medium-sized businesses are emerging as the fastest-growing segment in this space. However, to take advantage of what cloud computing has to offer, businesses must not only understand what the differences are between a private and public cloud but also answer the question “Is a private cloud better than a public cloud?” to choose the right solution for their needs.

The differences between private and public clouds are best described through control and access. Private cloud environments are typically controlled by one entity and provide exclusive services to an exclusive user group. Public cloud environments offer nonexclusive services to any user who wants them. However, there is greater complexity in the question, “Is a private cloud better than a public cloud?” since a private cloud offers greater security and control while a public cloud offers greater scalability.

Read on to gain a thorough understanding of cloud computing, the benefits of private clouds vs public clouds, and review private cloud vs public cloud examples to help you make the best decision for your business.

What is cloud computing?

Cloud computing is simply the provision of computer-based services on a virtual basis (e.g., over the internet). These services may reduce the need for on-premise IT infrastructure, provide a way to monetize software, or provide organizations with expertise in fields they are lacking.

Some of the key attributes of a cloud environment include:

  • Data storage: Large data centers to house both active and cold user data.

  • Servers: This includes web servers, email servers, and file servers.

  • Networks: Networking infrastructure (e.g., load balancers, routers, and switches).

  • Virtualization: A hardware abstraction layer that enables resource virtualization, meaning users are able to access their data and cloud computing services through a graphical user interface (GUI) from any location.

Some of the more popular cloud computing services include:

  • Infrastructure as a service (IaaS): In IaaS, IT infrastructure (e.g., data storage, local area networks, and servers) is supported virtually by the selected cloud services provider, allowing the client to avoid the cost and effort of maintaining their own IT infrastructure.

  • Platform as a service (PaaS): PaaS provides businesses with what is considered a complete cloud platform. This means that, in addition to IaaS services, the client has access to the cloud-hosted resources needed to develop, run, and maintain applications.

  • Software as a service (SaaS): SaaS is probably the most familiar service to most as we use on-demand access to cloud-hosted applications every day (e.g., word processing, GPS, and video games). The user doesn’t own the software version, but rather pays for access to it on a periodic basis.

  • Desktop as a service (DaaS): Usually offered on a subscription basis, DaaS provides users with the ability to access their workplace PC environment from anywhere without the accompanying IT support and security responsibilities. Specifically, they can access their preferred operating system (Windows, Linux), associated software suites (MS Office, Google Suite), and more.

  • Backup as a service (BaaS): Data backup is nothing new. However, BaaS transitioned this process into a real-time virtual backup process every time a file changes, along with enhanced security and simplified file restoration.

  • Disaster recovery as a service (DRaaS or RaaS): DRaaS allows businesses to duplicate some or all of their business environments and digital resources in the cloud. In the event of a natural disaster or cybersecurity attack, the business can simply “fail over” to its DRaaS environment and maintain business continuity until the physical environment is restored.

  • Security as a service (SECaaS): Given the proliferation of cyber attacks, ransomware, and other security risks, businesses are turning to SECaaS for everything from email security and user authentication to firewalls and security information and event management (SIEM) to protect their data assets. As many businesses lack the requisite internal skill sets to manage their own cybersecurity, and cyber threats are constantly evolving, it makes sense for them to work with dedicated experts for this service.

  • Function as a service (FaaS): FaaS is a subset of “serverless” cloud computing where code can be executed in response to an event or prompt without the complex infrastructure usually required in an event-based architecture.

  • AI as a service (AIaaS): AIaaS allows companies to virtually access artificial intelligence functionality without employing AI developers or possessing the significant technical infrastructure required to enter the AI space. In addition, though it’s relatively new, AIaaS fees are usually based on usage, not computing power, so it can be an economical option for those with AI or machine learning (ML) expertise who don’t have the budget to purchase their own equipment.


Interested in learning more about cloud computing? Take a moment to review these resources:

What is a public cloud?

A public cloud is a virtualized environment where a third-party service provider offers all users non-exclusive access to their cloud computing services. This means that many users have access to the same cloud services and their data is stored within the third party’s data center. Think of the public cloud as a hotel — all users have access to the amenities, but they each have a specific room that is theirs alone. And, while using the grounds and pool is covered by a resort fee, guests must pay per service in the spa and for meals in the restaurant.

Most public cloud services require payment, either on a subscription or usage basis, with some offering certain services for free. These fees are often driven by associated “sunk costs” to create and support that particular cloud computing functionality, as well as the complexity of that functionality. For example, a cloud services provider may offer discounted IaaS services when users also purchase SECaaS, FaaS, or AIaaS as their IaaS infrastructure is required to support other services. Meanwhile, such newer services as AIaaS are still actively being developed and additional resources are required to keep pace with innovation in that field.

Advantages of a public cloud

Many advantages come to mind when considering public cloud usage, including:

  • Cost savings: When considering private cloud vs public cloud cost comparison, the costs associated with purchasing the necessary IT infrastructure and hiring in-demand technical experts to build needed cloud computing services, the up-front costs of a private cloud are substantial. However, in a public cloud, users are able to access functionality that was once beyond their budget through pay-per-use or subscription fees that are much lower in the short term.

  • Reliability: Cloud service providers have broad networks of servers and layers of redundancy to ensure that any system failures can be immediately addressed while user services are maintained seamlessly.

  • Scalability: By its very nature and infrastructure, public cloud environments are easily scalable (up or down) with very little notice. This is a significant benefit for businesses experiencing strong growth periods, acquiring or divesting business units, or launching new products and services.

  • Maintenance: All systems maintenance is the obligation of the cloud service provider, allowing users to access cloud computing functionality without maintenance responsibility.

  • Analytics: Data is one of the most valuable assets many businesses possess, so it’s critical that its status be constantly monitored. For many businesses, their analytics budgets are focused on the market, competition, and sales forecasting, so the provision of cloud analytics as a service in monitoring the five Vs of data assets is a strong advantage.

  • Quick access to new technology: For many businesses, there is a significant lag time between the emergence of new technology and their ability to adopt it in-house. This may be due to start-up costs, lack of internal expertise, or availability of necessary resources in the marketplace. However, those with the budgets and focus on emerging tech (such as public cloud service providers) are often among the first to become proficient at scale, which allows their user base to quickly adopt these technologies while the competition is left behind (e.g., AIaaS).

  • Intellectual capital: This advantage is often overlooked, meaning that in addition to services, users have access to sales representatives and resources to help them get the most out of their cloud computing. As these professionals focus on not only cloud computing but also their particular area of expertise (e.g., DaaS, DRaaS, and AIaaS), their advice can be invaluable in helping achieve user goals.

Public cloud examples

  • Alibaba Cloud
  • Amazon Web Services (AWS)
  • Google Cloud Platform (GCP)
  • IBM Blue Cloud
  • Microsoft Azure

What is a private cloud?

A private cloud is a cloud computing environment dedicated to an exclusive user, operating behind that user’s firewall in complete segregation. It’s important to note that this doesn’t mean all private cloud environments are on-premise. There are three general types of private cloud environments to consider.

  • Traditional private cloud: This environment’s infrastructure is on-premise and is owned and managed by the dedicated user.

  • Managed private cloud: Third-party vendors offer clients the opportunity to have a dedicated cloud computing environment for their exclusive use behind their own firewall. However, infrastructure may not necessarily reside on client premises, and/or vendor personnel may provide additional types of support, such as initial launch or maintenance.

  • Dedicated private cloud: It is possible for a private cloud to reside within another private cloud or even a public one. For example, when corporations or governments wish to utilize cloud computing in association with classified or clearance-required data, a private cloud can be instantiated within another cloud, restricting access to an exclusive user base behind a firewall. The necessary infrastructure may reside where another cloud infrastructure is located. However, it is physically and systemically isolated, which results in a single-tenant private cloud environment.

Advantages of a private cloud

Private cloud environments offer significant advantages, including:

  • Security: Without a doubt, one of the greatest advantages of private cloud environments is the level of security available. Since these environments are isolated both physically and systemically, their security posture is high and this makes them desirable for users who must meet security compliance standards. In addition, the protection of sensitive data (e.g., financial, consumer) is a top concern given the devastating impacts brands can experience due to cyberattacks and data breaches.

  • System efficiency: Since private clouds do not share resources with other tenants, they often run more efficiently and can be optimized to the anticipated needs of the single-tenant user base.

  • Customization: The architecture supporting cloud computing, as well as many aspects of the overall environment, can be customized to meet the specific requirements of its exclusive user base.

  • Financial benefits: Due to a change in generally accepted accounting principles (GAAP), businesses can now capitalize on the implementation costs of setting up cloud computing systems. By capitalizing these initial expenses, a company's asset balance will be increased without affecting its liability balance. In addition, this asset can then be amortized over time which may have additional tax benefits.

  • Institutional knowledge development: In implementing, managing, and customizing a private cloud, an organization is able to foster a variety of cloud computing skill sets in-house. This institutional knowledge is not only valuable from an operational perspective but also when applied to further enhance business insights and data-driven decision-making.

Private cloud examples

  • Cisco
  • Dell
  • Hewlett-Packard Enterprises (HPE)
  • IBM
  • Amazon VPC*
  • Google VPC*
  • Microsoft Azure Stack*

Note: Many of the larger public cloud providers also offer virtual private cloud (VPC) services as well.

A comparison of private cloud vs public cloud attributes

When considering cloud computing options, it’s often helpful for organizations to compare the difference between private cloud and public cloud in tabular form. This type of comparison can highlight key differences in addressing business requirements while surfacing commonalities between cloud types.



AttributesPrivate cloudPublic cloud
OwnershipUser-base organization or corporationService provider
Typical user baseLarge corporations, governmental bodiesStart-ups, SME individuals, boutique consultancies
InfrastructureSingle-tenant network, hardware, and data storageMulti-tenant network and hardware with data storage
LocationOn-premise or dedicated location in third-party vendor's infrastructureService provider's shared data center location
SecuritySingle-tenant, isolated environment with authenticated, exclusive user base, resulting in high levels of security assuming cybersecurity best practices in placeMulti-tenant, shared environment with broad user base where standard security levels are governed by cloud service provider
ScalabilityDepending on architecture, some scalability available but overall changes tend to be slowerInstantly scalable (up or down) in most cases
CustomizationHighly customizable to business requirements and optimization to support efficiency and usageCloud service providers tend to offer standard infrastructure with minimal customization
Speed to new technology adoptionLonger implementation and learning curve to instantiate new technology into infrastructure and environment — may require hiring of external consultancy or personnel to enhance institutional knowledge and skill setsService providers keep pace with emerging technology, enabling fast instantiation that may not require enhanced knowledge on the part of user base
MaintenanceInstitutional knowledge and personnel required to maintain, upgrade, and troubleshoot private cloud infrastructure and cloud computing servicesService provider is responsible for infrastructure and cloud computing services maintenance, upgrades, and troubleshooting
CostHigh upfront cost with lower overall cost long-termLow upfront cost with higher overall cost over time

Key considerations for businesses when choosing private cloud vs public cloud

The choice between private cloud vs public cloud requires careful analysis of individual business needs, budgets, and priorities. Here are some key questions to ask when considering the options.

Ownership

  • Is ownership of the cloud infrastructure necessary for compliance (e.g., HIPAA, SOX, PCI) or for proprietary intellectual capital reasons?
  • Is data ownership the only ownership requirement (e.g., available in both private or public cloud)?

Infrastructure

  • Is your organization's value and differentiation primarily based on infrastructure architecture, compliance, and security or the intellectual capital generated from data analysis?
  • Will sales or reputation be materially impacted by infrastructure ownership and customization?

Location

  • What are the reasons to require an on-premise location, if any?
  • Do the benefits of an on-premise location outweigh the financial and opportunity costs?
  • Could on-premise benefits (e.g., isolated infrastructure, security) be realized in a more cost-effective way (e.g., managed cloud, dedicated cloud)?

Security

  • Does infrastructure and data security need to meet specific guidelines or standards for certification or compliance purposes?
  • Are the organization's cloud security requirements materially different from the standard security posture of most cloud service providers?

Scalability

  • Do you anticipate significant changes in business operations, product offerings, or ownership in the near term?
  • How important is scalability speed to the organization?

Customization

  • How experienced is the anticipated user base with cloud computing functionality?
  • How unique are the organization's needs in terms of cloud computing?

Speed to new technology adoption

  • Is speed to emerging technology adoption or proprietary infrastructure ownership more important to the organization?
  • What is the opportunity cost of being in the top-right quadrant in innovation? Of not being in the top-right quadrant?

Maintenance

  • Does the organization have the requisite institutional knowledge to maintain a private cloud?
  • How readily available/hirable/retainable are the necessary professionals to maintain a private cloud and what is the associated cost?

Cost

  • Is speed to implementation more important than ownership?
  • Is lower upfront cost more important than lower overall cost across useful life?

For further information, be sure to read MongoDB’s Public Cloud vs Private Cloud vs Hybrid Cloud.

FAQs

Is Google Drive a public or private cloud?

Google Drive is a public cloud. Specifically, it is a cloud-based storage solution where a variety of file types can be saved in the cloud, regardless of software vendor (e.g., Microsoft, Google). This includes standard files such as word processing, presentations, spreadsheets and media (e.g., videos, music, photos), just to name a few.

Is Amazon a public or private cloud?

Amazon offers both public and private cloud services. The Amazon Web Services (AWS) that most people are familiar with often falls into the public cloud realm, as AWS owns the cloud infrastructure and offers all interested users IaaS, PaaS, and SaaS. However, through Amazon VPC (virtual public cloud), a type of private cloud is available.

Which companies use a private cloud?

While there is no standard rule regarding which companies use a private cloud, most organizations that are highly regulated, must meet data compliance guidelines, deal in classified information, or possess highly sensitive data use a private cloud. For this reason, companies of any size may require a private cloud due data security requirements.

Is Gmail a public cloud?

Yes, Gmail is a public cloud because it is open to anyone who wants to utilize the service and all infrastructure, storage, and software belongs to Google and is shared among all users. Specifically, Gmail is categorized as SaaS.

Is Azure a public or private cloud?

The Microsoft Azure product that most people are familiar with is a multi-tenant, public cloud with shared infrastructure, storage, and software that Microsoft owns. However, the lesser-known Microsoft Azure Stack product is a VPC and should be considered a private cloud.

Is SaaS a public or private cloud?

Software as a service (SaaS) is not a type of cloud, but rather a service offered in a cloud environment. Specifically, in a public or private cloud setting, SaaS is offered so that users can access cloud computing software (e.g., Gmail, Microsoft Teams) from any location via the internet.

What are 3 examples of a public cloud?

Three examples of a public cloud include Google Cloud Platform, Amazon Web Services (AWS), and Microsoft Azure.

What is another name for private clouds?

There are different types of private clouds, with names like “managed cloud” or “dedicated cloud.” These names simply indicate that the cloud is not a “traditional cloud” in the sense that it may not be on-premise or the exclusive user base may not own the infrastructure. However, the cloud is a one-tenant environment.