What is a Private Cloud?

While public clouds like Amazon and Microsoft dominate the conversation around cloud infrastructure, private clouds have quietly grown in popularity as an alternative to traditional on-premises infrastructure. As a result, it’s becoming more important than ever to understand different cloud strategies including the qualifications of what is a private cloud vs. on-premises infrastructure, and how each strategy will impact your business’ objectives and, ultimately, bottom line.

What is a Private Cloud?

A private cloud is an exclusive collection of computing services that are offered over the internet or a private network. These services are only available to the company that owns the cloud infrastructure and users they provision to access it. OpenStack is one of the most common private clouds platforms, though many companies opt to build their own cloud from scratch.

Types of Cloud Hosting

There are two main archetypes for clouds:

Infrastructure as a Service (IaaS)

Many managed service companies opt to provide their services as IaaS, which is to say the vendor provides hosted self-service infrastructure for their clients to access and use. Typically, the vendor will include a number of services in addition to this hosted cloud environment including reporting, security, and data protection. IaaS allows organizations to reap the benefits of cloud scale without the upfront hardware costs. Public cloud vendors are best known as IaaS, though OpenStack is also often deployed via an IaaS mode.

Platform as a Service (PaaS)

By contrast, PaaS businesses provide only the core components of cloud infrastructure, allowing developers to build upon the platform to create a custom environment. This option is particularly attractive for application developers, and makes it considerably easier to create and deploy new applications. Unliked IaaS clouds, PaaS clouds do not include virtualized middleware and operating systems — they’re more “bare bones.” OpenShift is one of the most popular PaaS technologies.

Because PaaS clouds are also built atop virtualized infrastructure, they can be scaled up or down as easily as any other cloud environment, but relieve developers from the hassle of dealing with operating systems and updates.

What is a Private Cloud vs. Virtualized Infrastructure?

Although they are quite similar, private clouds are not the same as virtualized infrastructure. Private clouds are a type of virtualized infrastructure, though the broader term typically refers to resources abstracted from hardware using a hypervisor. Technologies like OpenStack run on top of hypervisors to extend the features and functionality available to users. For example, virtualization does not enable key capabilities like self-service capabilities, elasticity, automated management, scalability, and pay-as you go services. All of these capabilities are standard in cloud environments.

Benefits of Private Clouds

Higher levels of security

Private clouds often have higher levels of security than public clouds, but this is highly dependent upon the time and resources dedicated to maintaining it. Typically, private clouds automatically benefit from the protection of your company’s firewalls by being internally hosted. On the other hand, the burden of these security costs now falls on the company itself, rather than a third party vendor, which can increase costs as well as introduce burden for recruiting and retaining specialized talent.

Greater control

Having ownership of your own cloud means complete access to a cloud’s specifications and customizations. Many private cloud owners opt to create their own cloud or highly customize an open source platform like OpenStack, ensuring your cloud fulfills every critical business requirement. This also means your company isn’t subject to widespread server issues such as regional server downtime. These issues are prevalent among businesses who use shared public cloud services such as Amazon Web Services.


Tenant support is a core attribute of all cloud environments, including both public and private clouds. It makes it easy for administrators to monitor and maintain the health of their cloud while passing day-to-day management onto their internal users, who can manage their own environment and consume resources when they need them. By distributing the burden of managing your day-to-day cloud operations while maintaining a high level of control, your organization and team gain a high degree of efficiency and reduce unnecessary resource consumption.

Low cost of ownership

While private clouds often carry higher upfront costs (for hardware, typically), the long-term costs of private clouds are significantly lower. Companies with existing on-premises or off-site servers can mitigate these costs by repurposing existing hardware to build a private cloud. Regardless, private clouds are significantly more cost-effective over time via operational and technical efficiency gains: there is no need for ticketing with central IT, no expensive software licensing fees, compatibility with commodity hardware (it’s encouraged), and drastically reduced management costs.

Pros Cons
Private Cloud
  • Higher level of security
  • Greater control of server
  • Multi-tenancy
  • Old equipment (legacy data centers) can be repurposed into private clouds
  • Much higher initial costs (hardware, infrastructure, space, etc.)
Public Cloud
  • Ease of scalability  the cost of infrastructure and hardware is not on you
  • Pay-as-you-go, only need to pay for what you need
  • Very reliable because of multiple datacenters
  • Multi-tenancy
  • Limited to the customization of the cloud organization
  • Limited influence over physical hardware
  • Security and backup managed by a third party that may have different security standards or privacy regulations
  • Subject to latency issues associated with usage across the cloud

To better understand the trade-offs, read more about public cloud environments: “What is a Public Cloud?”