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Security - May 23, 2018

Private cloud vs. virtual private cloud: A primer for businesses

Trying to understand how private and virtual private clouds differ? This post explains it in plain English.

According to McKinsey, businesses of all sizes are in the midst of a fundamental IT shift. Where once enterprise IT was focused on building solutions to meet business needs, companies are fast becoming IT consumers instead, with more than 20% of workloads shifting to private cloud services by the end of 2018.

“Enterprises are shifting from IT builders to IT consumers, with more than 20% of workloads shifting to private cloud services by the end of 2018."

McKinsey

What is private cloud? Or cloud computing for that matter? Put simply, cloud computing allows businesses to access software and hardware functionalities as a service over the internet rather than hosting software on physical servers typically located on their premises somewhere. Think of it as ‘computing as a service’, shifting the customer away from procuring physical hardware and architecture, as well as deployment and management functions—not to mention all the capital expenditures associated with those elements—to a model where computing becomes simply an operational cost, typically a predictable subscription fee. And with so many maintenance and management tasks, including network management, being taken care of as part of the service, cloud computing is correlated with improved operational efficiency and network reliability, driving the trend towards cloud computing even further.

So what are private cloud and virtual private cloud?

Though the terms “private cloud” and “virtual private cloud (VPC)” are sometimes used interchangeably, there are key differences between the two. Private cloud refers to cloud infrastructure that is 100% dedicated to a single organization, meaning the entire environment is configured and managed according to that company’s specifications and no one else’s. This is in stark contrast to public cloud services, which are cloud resources made available from a third party via the public internet and paid for on a pay-as-you-go basis.

VPC actually takes a page from both books, offering isolated environments that businesses can reserve within a public cloud. Although this means multiple organizations’ clouds exist within the same infrastructure, they enjoy the same level of customization and security a regular private cloud offers.

Additionally, VPC billing is based on reserving computing resources, rather than consuming them. This model provides mid-market and enterprise customers cost predictability that aligns with traditional IT budget and planning functions. VPC also tends to be less expensive up front and, like a public cloud, is easier to scale up or down on demand, making it better suited for workloads that are difficult to predict.

Many businesses also require certainty in terms of exactly where their data is during computation at all times, be it at rest or in transit. With VPC, customers can formalize and manage their cloud-based workloads in adherence with existing and evolving data privacy, data sovereignty and data compliance requirements.

VPC does not render private cloud irrelevant, however. If your business has predictable, steady demand, a private cloud solution will likely prove more cost-effective in the long run, and it does allow for more control in terms of deployment and configuration. Furthermore, some industry regulations require the use of private cloud because they have yet to recognize how secure VPC can be despite its public cloud foundation.

And what about public cloud? If you don’t need to meet data sovereignty and personally identifiable data compliance requirements, wouldn’t public cloud obviously be the most cost-effective option? Not necessarily. One cost analysis found that 41% of users found cost savings in private cloud environments over public clouds due to capacity planning and automation. Additional savings are also likely realized through a reduction in worst-case scenarios such as downtime and data breaches.

Whether private cloud or VPC is right for your business will likely depend on your security and agility needs. But understanding how these two types of services differ is the first step to finding the best fit for your organization.