What is Private Cloud?

The private cloud makes efficient use of storage, compute, and memory resources, can provide faster response times for enterprise applications, and help comply with regulations about where data is stored.

What is a Private Cloud?

A private cloud is a cloud computing environment that is exclusively dedicated to a single entity or a service. It runs on the organization’s premises or in an external data center. It is managed by the organization’s operations team or a managed service provider.

It proves to be more cost-effective than public clouds when running workloads in the long term and at scale. They are a building block in hybrid cloud and multi-cloud architectures, enabling bare metal, virtualization, storage, container, and serverless services.

private cloud

How does it work?

A private cloud is a single-tenant environment, meaning the organization using it (the tenant) does not share resources with other users. Those resources can be hosted and managed in a variety of ways. It might be based on resources and infrastructure already present in an organization’s on-premises data center or on a new, separate infrastructure, which is provided by a third-party organization. In some cases, the single-tenant environment is enabled solely using virtualization software. In any case, it and its resources are dedicated to a single user or tenant.

It is one of three general models for cloud deployment in an organization: public, private, and hybrid (there is also multi-cloud, which is any combination of the three). All three models share common basic elements of cloud infrastructure. For example, all clouds need an operating system to function. However, the various types of software – including virtualization and container software – stacked on top of the operating system is what determines how the cloud will function, and distinguishes the three main models.


Private cloud solutions bring value to an enterprise by abstracting cloud computing processes in a much more efficient way compared with traditional virtualization. A few of the primary advantages include:

  • Security and compliance: For businesses operating in heavily regulated industries, compliance is paramount. Private cloud infrastructure gives organizations the ability to comply with strict regulations because sensitive data is held on hardware that cannot be accessed by anyone else. This advantage is available through on-site hardware installations as well as in hosted services.
  • Customization: Private clouds are fully configurable by the organizations using the solution. A fully private cloud is constructed by an on-site cloud architect, which means stakeholders can specify the exact environment needed to run proprietary applications. Hosted private clouds offer the same advantages but require no on-site setup. In that case, the business works with a vendor to set up and manage a cloud for its exclusive use.
  • Hybrid integration: When an application needs additional computing resources, hybridization extends the resources of the private cloud into a public cloud to maintain uptime without needing to install additional physical servers. This can be a cost-effective solution for organizations that need the security of a private cloud but still want other functions to operate with the power of a public cloud service.

Why use it?

It is the ideal solution for IT leaders who want to make enterprise resources available on-demand, but can’t (or don’t want to) move to the public cloud. This can be due to security policies, budgets, compliance requirements, or regulations, like those that define the healthcare and financial service industries.

Companies in these industries use encryption protocols and firewalls to secure their IT systems, but private clouds add an extra level of security – compared to public clouds – because access is limited.

Whether or not you invest in private cloud infrastructure also depends on the workloads that need to be supported. Traditional, stateful workloads are well supported by enterprise virtualization products. But stateless, loosely coupled workloads – typically found in development, research, and telecommunications (particularly network functions virtualization) – are better supported by private clouds.

private cloud


It can introduce challenges if an organization does not have consistent computing needs. When resource demand is in flux, a private cloud may not be able to scale effectively, costing the organization more money in the long run. Here are key considerations IT stakeholders should review:

  • Up-front costs: Fully private clouds hosted on-site require a substantial outlay of capital before they can bring value to the organization. The hardware required to run it can be very expensive and will require an expert cloud architect to set up, maintain, and manage. Hosted private clouds, however, can mitigate these costs substantially.
  • Capacity utilization: Under the private cloud computing model, the organization is wholly responsible for maximizing capacity utilization. Under-utilized cloud deployment can cost the business significantly.
  • Scalability: If the business needs additional computing power from it, it may take extra time and money to scale up the private cloud’s available resources. Typically, this process will take longer than scaling a virtual machine or requesting additional resources from a public cloud provider.

Is the private cloud right for you?

The decision whether to host cloud workloads in a public or in a private cloud is usually driven by economics. While public clouds provide immediate access to the infrastructure-as-a-service (IaaS) offering with no upfront costs, their TCO can grow very fast depending on the number of workloads and the timeframe.

On the other hand, private clouds prove to be more cost-effective when running workloads long term and at scale, but they require significant upfront investments. Therefore, using a hybrid cloud architecture is usually the way to achieve infrastructure cost optimization.


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