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There was a time when servers were just called servers, before the marketing branches of tech companies rebranded their servers as the public cloud, and long before IT fought back by rebranding their servers as the private cloud. Way back when, most of a businesss data used to be stored on-premises in servers managed by company IT professionals. As a greater share of that data moves into the public cloud, it begs the question: When is it better to just manage your own cloud? To determine that, lets first look at what a private cloud actually is.

Although early public usages of the term cloud computing are often sourced to Googles Eric Schmidt, the National Institute of Standards and Technology (NIST) in 2011 defined a private cloud as cloud infrastructure provisioned for exclusive use by a single organization comprising multiple consumers (e.g. business units). In other words, a private cloud doesnt even have to be on company premises or managed by that company to be considered private, so long as it is exclusively used by members of that company. On a public cloud, your data is private and protected, but it is hosted in a shared location amongst other clients. In a private cloud, your data is hosted on hardware typically owned and operated by a cloud provider, but the infrastructure is exclusive to your company.

And who better to determine the companys needs than the company itself? By leveraging a private cloud, these companies can customize their servers, improve performance, and possibly reduce costsat least on paper anyway. But early private clouds struggled to meet these goals, and more mature market offerings pulled data away, whereas public cloud providers offered laser-focused experience, improved scalability and elasticity, and a rolling commitment to hardware upgrades.

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Private clouds are often employed in highly regulated fields where data is sensitive and security requirements are tight. U.S. government agencies, research institutions, and many financial organizations run private clouds to maintain compliance with data privacy requirements. This is particularly true for companies facing HIPAA compliance issues.

Costs are also a factor. The total cost of ownership of a private cloud may be found to be advantageous when weighed against a public cloud, particularly when factoring in for hidden charges such as network bandwidth usage. Research firm 451 Research found in a 2017 survey that more than 40% of respondents saved money by pursuing a private cloud versus a public one. These respondents identified automation, capacity-planning tools, and flexible licensing arrangements as the key drivers of those cost savings.

Private cloud allows a large number of users to share resources without any performance issues; thus, it contributes to the cost savings as users become more efficient in their work. This impact is the most valuable because it is a continuous saving, one IT director said in the study.

But costs were not the predominant decision-making factor for many of these enterprises. Data protection and asset ownership and integration with business processes were the highest-ranking decision points for companies that chose to operate a private cloud.

Owning a private cloud is a lot like owning a house. You keep the gutters clean, you mow the lawn, you fix a burst pipe in the freezing cold. You pay taxes, you pay the bank, you pay for replacement AC filters and fix broken windows and on and on and on. When you rent an apartment, you pay rent, and all your other problems are handled by someone else.

That peace of mind is why so many companies have chosen the public cloud route, where no matter how quickly their data usage grows, theyll never hit the ceiling of their providers capacity. Contrast that with a private cloud, where additional hardware needs must be meticulously planned to match the demands of data growth. This is a classic CapEx versus OpEx problem, where private clouds carry outsized capital expenditures to get up and running. Those costs are completely avoided on the public cloud side of the equation, where operating expenditures are incurred on an ongoing basis.

Private clouds can also put a higher demand on an enterprises IT department, as their skills are depended on to ensure smooth transitions between hardware, maintain uptimes, or properly configure security protocols.

Hybrid clouds attempt to mitigate many of these challenges by playing to the strengths of a private cloud and a public cloud at the same time. In a hybrid cloud model, large volumes of data are delivered to the public cloud, where economies of scale and the limitless storage ceiling provide a best-fit home for that information. Mission critical information, or data that must meet certain privacy requirements can be stored on a private cloud, under an added layer of security.

There is no one-size-fits-all solution here, and each method of cloud storage should be evaluated in the context of an enterprises needs and desires.

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The Benefits and Challenges of Setting Up a Private Cloud | ITBE - IT Business Edge