Why You Really, Truly Don't Want a Private Cloud

The more you focus on the business benefits of Cloud, the more likely you'll be leaning toward public over private deployment models. Moreover, this mind shift isn't all about security risks. Once you work through the issues, you'll likely come to the same conclusion: there's usually little or no solid business reason to build a private Cloud.

I had the pleasure of speaking at two quite different Cloud Computing conferences last week: Opal's Business of Cloud Computing in Dallas and UBM's CloudConnect in Bangalore. As the conference names and locations might suggest, the former was the more business-oriented during the latter was chock full of techies. What I didn't expect, but, was that the business Cloud crowd had a more mature, advanced conception of Cloud than the technical audience. During the techies were for all that struggling with essential characteristics like elasticity, trying to free themselves from the vendor nonsense that drives such conferences, the business folks as a rule had a so then-developed understanding of what Cloud is in effect all about, and as a result, focused their discussions on how best to leverage the approach to meet both tactical and strategic business goals.

Perhaps the most interesting contrast between the perspectives of these two audiences was their respective opinions about private Clouds. The techies at the Bangalore conference, having drunk too much of the vendor Kool-Aid, were usually of the opinion that public Clouds were too risky, and that their organizations should in this way focus their efforts on the private deployment model. The Dallas business crowd, opposite, as a rule held that the public approach was the way to go, with some folks even going so far as to claim that public Cloud was the only true approach to Cloud Computing.

This distinction is remarkable, and aligns with ZapThink's thinking on this matter as so then: the more you focus on the business benefits of Cloud, the more likely you'll be leaning toward public over private deployment models. Moreover, this mind shift isn't all about security risks. We recently debunked the notion that public Clouds are inherently less secure than private ones, and many people at the Dallas conference agreed. Nevertheless there's more to this story. Once you work through the issues, you'll likely come to the same conclusion: there's usually little or no solid business reason to build a private Cloud.

The Problems with Private CloudsThe best way to understand the limitations of the private deployment model is to take the business perspective. What are the business benefits behind the move to the Cloud, and how can you achieve them?

Significant investment in our existing data center

We already have a significant investment in our existing data center, so converting it to a private Cloud will save us money during enabling us to obtain the benefits of the Cloud - in your dreams. One essential requirement for building an effective private Cloud is rigorous homogeneity. You want all your physical servers, network equipment, virtualization innovation, storage, etc. to be completely identical across every rack. Look at your existing, pre-Cloud data center. Homogeneity isn't even on your radar.

We don't want to be in the data center business. That's why we're moving to the Cloud - guess what? Building a private Cloud puts you in the data center business!

Whatever cost efficiencies the public Cloud providers can achieve we can as well achieve in our private Cloud - this argument doesn't hold water either. Not only to the leading public Clouds-Amazon, Microsoft Azure, Rackspace, etc.-have enormous economies of scale, however they're as well operating on razor-thin margins. Moreover, if they can wring more efficiencies out of the model, they'll lower their prices. They're taking this "price war" approach to their margins for all the regular business school reasons: to keep smaller players from being competitive, and to push their larger competitors out of the business. It doesn't matter how big your private Cloud is, it simply cannot compete on price.

Not so fast. During it's true that regulatory compliance business drivers and limitations are becoming an increasingly important part of the Cloud story, any regulatory drawbacks to using public Clouds are in essence temporary, as the market responds to this demand. A new class of public Cloud provider, what is shaping up to be the "Enterprise Public Cloud Provider" marketplace, is on the rise. The players in this space are putting at the same time offerings that include rigorous auditing, more transparent and stringent service-level agreements, and overall better visibility for corporate clients with regulatory concerns.

The ZapThink TakeSo

The ZapThink TakeSo, should any organization build a private Cloud? Maybe, nevertheless only the very largest enterprises, and only when those organizations can figure out how to get most or all of their divisions to share those private Clouds. If your enterprise is large enough to achieve similar economies of scale to the public providers, at the time-and only next-will a private option be a viable business alternative.

Virtual Private Clouds as well give many organizations the best of both worlds, as they leverage the public Cloud however run logically on your private network. Many hybrid Clouds follow the VPC approach, as hybrid on premise/Cloud models typically leverage private networks. ZapThink predicts this hybrid VPC model will become the predominant deployment model in the enterprise.

Still not convinced? So then, ask yourself why, and the answer is likely to be a question of control. Many executives will nevertheless be uncomfortable about public Clouds, even when we address the security and compliance issues that currently face public Cloud providers, simply because they don't control the public Cloud. Our answer? Distribution of IT control is essential to the ZapThink 2020 vision, and is at the heart of the Agile Architecture Revolution. The Web doesn't have centralized control, when all is said and done, and it works just fine. The app store model for enterprise IT, the rise of bring your own device, and the fundamentally mobility-driven architecture of the Internet of Things are all examples of the broader shift to the notion decentralized control over IT. Fighting to maintain control is a losing proposition, and as a result, by 2020, private Clouds will be a in the main-forgotten bump on the road to the straightway big thing.

Mr. Bloomberg has a diverse background in eBusiness innovation management and industry analysis, including serving as a senior analyst in IDC's eBusiness Advisory group, as then as holding eBusiness management positions at USWeb/CKS and WaveBend Solutions. He as well co-authored the books XML and Web Services Unleashed, and Web Page Scripting Techniques.