Private Cloud vs. Public Cloud – Which is Best for You?


Ensure your cloud agreement is not the same as your on-premise

Through a combination of market research and experience supporting our clients through similar transformational choices, I’ve identified some questions to help you decide whether a private or public cloud would be the best fit for your company.

For the purposes of this analysis and insight, “public cloud” refers to the three major hosting services: Microsoft Azure, Amazon Web Services (AWS), and Google Cloud Platform (GCP).  Often referred to as hyperscalers, these vendors typically offer low costs with high degrees of flexibility and additional capabilities.

While “private cloud” can refer to a privately-owned set of servers, for the purposes of this blog, I will be referencing the 3rd party hosting services offered by smaller vendors such as IBM, Deloitte, Hitachi, etc.  These vendors may not have the suite of functionality that the hyperscalers have developed over the past couple of decades, but they may be better suited to host unique environments which need high levels of configuration and customization.

Before we begin, here is a high-level overview of the differences between public and private cloud.  If you are already familiar with this topic, you can skip to the Private Cloud vs. Public Cloud: Decision Priority section.

Public Cloud

  • Pros:
    • Cheapest option in most scenarios (but not all)
      • Specific use cases may drive a different result
    • Widest range of global availability zones
    • Unlimited scalability
      • Ideal for seasonal businesses who only operate at max capacity for certain portions of the year
      • Necessary for any business that projects strong sustained growth over the next 5+ years
      • Absolutely imperative for any enterprise undertaking data-hungry projects such as Internet of Things (IoT)
    • Inexpensive capability offerings which drive efficiencies over time
      • Machine Learning
      • AI
    • Cons:
      • Customization of your environment is very limited and foundational; code-based modifications will be slow to implement
      • Will need to hire a 3rd party app support provider, or support your environment in-house
      • Little control over your data security
        • Enterprises that process classified data (such as healthcare companies) may operate under regulations which will not allow the use of public data storage (i.e., multi-tenant)
      • SLAs will often be fewer than with private cloud
        • If your enterprise requires the use of an older OS or application (which is common among government agencies), hyperscalers will not support it

Private Cloud

  • Pros:
    • Single tenant
    • Endless customization capabilities, with no lag time
    • Greater control over data security
    • App support is often bundled
      • No need for your internal team to manage it
    • Can run any OS/application you need
  • Cons:
    • Expenses can add up quickly
    • Reduced global availability, especially outside of the main hubs
    • System support will either be taking up many of your internal resources or must be outsourced to a 3rd party, which leaves you with another relationship to manage
    • Little to no “free add-ons”
    • Possible to outgrow your provider’s capabilities, and force you into a hasty, ill-prepared migration

Private Cloud vs. Public Cloud: Decision Priority

While the pros and cons are clear cut, how should you prioritize them to find the best match for your needs?  All hosted enterprise environments are unique and there will never be a one-size-fits-all solution.  We have seen clients in similar situations choose alternate paths for various reasons and both be satisfied with their decisions.  The ultimate question boils down to who is going to own your infrastructure and who is going to manage it?

In a recent example, a client did not want to handle app support in-house and was on the fence between private and public cloud.  In such a close race, the deciding factor was the private cloud provider’s commercial flexibility which allowed the client to terminate at will and transition to a public cloud if the services were not up to par.

Choosing between public or private is only the first step of a long contracting process.  Before entering those negotiations, ask yourself the following questions to determine the best fit for you:

Knockout Questions

Are you subject to data privacy regulations? If so, they may rule out public (multi-tenant) clouds.
Does your IT roadmap call for any ‘niche’ OS or applications? Public clouds often will not be able to support these.
How capable is your internal IT team?  Could you handle your own app support?  Are you capable of negotiating/maintaining an additional contractual relationship in order to outsource this work? If your answer is no to one or more of these questions, a private cloud solution with included support should be your first choice.
Do you have any “data-hungry” projects on your roadmap (such as IoT) or do your data needs simply outstrip that of a typical enterprise? If yes, public cloud is likely your only option.
How customized will your environment need to be? Extensive customizations or atypical operating systems will likely rule out public cloud.

Deciding Factors

What are your short-term vs. long-term capacity needs?  As an example, if you are in the midst of a major ERP software implementation, you may not have rock-solid estimates of your future volumes. In this case, it is easiest to leverage the scalable public cloud options to buffer your assumptions (at least until the full environment goes live) to avoid buying capacity well in advance of demonstrated need.
Do you project significant sustained growth for your business over the next 3-5 years?   If so, ensure any private cloud provider could scale up with your most aggressive projections before considering it.
Are you a seasonal business or will your cloud usage scale up and down throughout the year for any reason? If so, the flexibility of public cloud is your best option.
Will your project run for only a couple of years or less? If yes, ‘renting’ some short-term space with a public cloud provider is the simplest option.
Are you looking to acquire an entire new suite of business applications? Public cloud providers will offer both discounts and a higher level of functionality with their SaaS offerings.
How quickly will you need access to your system to make changes? On a private cloud, customizations will be quick and painless but on a public cloud with other tenants, your updates will experience some limitations and lag time.
Critical SLA’s – Do you have strict system availability requirements or will a brief lapse in system availability or response time cripple your environment? As the sole tenant of a private cloud, you have the option to negotiate custom SLA’s and often achieve superior SLA’s than what is offered by the hyperscalers.

Tiebreakers

  • Total cost — Don’t fall into the trap of just choosing the lowest cost option since system bottlenecks or forced migrations will cost you much more in the long run. Furthermore, just because public cloud options are typically cheaper for most, that does not mean the same will be true for you.  Understand your current and future-state requirements, and then solicit proposals from a variety of vendor types, if possible.  Run your own financial models to determine your best path forward.
  • Hyperscaler ‘add-ons’ — Could your enterprise benefit from Machine Learning or AI enhancements offered by public cloud providers now or in the near future? The public cloud has inexpensive capability offerings that will drive efficiencies over time.

Hybrid Cloud Environments

While many have transitioned to the public cloud hyperscalers, the answer for you could end up being somewhere in between public and private cloud.  Hybrid cloud environments are a combination of private and public cloud hosting where an environment is partitioned with some data on each.

Hybrid environments have become especially common among enterprises which have data security regulations governing a portion of their data.  In this example, the confidential data can be maintained in a private cloud while the rest of the environment can be hosted with a hyperscaler.  This hybrid scenario takes advantage of the cost efficiencies and scalability of the public cloud while still maintaining compliance.  But before choosing such an option, it is important to understand the additional work you will be taking on to manage two vendor relationships instead of one.

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Brian Undlin

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