Public vs. Private Cloud

Superficially, private cloud appears to carry a number of advantages over public cloud in terms of security of data, location, jurisdiction and guarantees. It also enables organisations to avoid paying for service providers’ profit margin as well as the cost of having another party involved. But this is not necessarily always the case.

GigaOM research shows that among 277 companies moving some work to the public cloud, 59 percent cited cost savings as their primary motivation. These economic drivers arise because public clouds offer companies the opportunity to share in the cloud provider’s massive economies of scale and through flexible and efficient purchasing. The public cloud provider offers pay-as-you-go billing, backed by appropriate metering and rating, allowing IT end users to buy as much or as little as required, consuming cloud resources the same way they would electricity, gas or water.

The fact of the matter is, most of the barriers to adoption of public cloud are organisational, rather than technical. Whilst sometimes private cloud is appropriate, often its advantages are a mirage. Thus service providers need to position their public cloud offerings against these objections and articulate them in a way that answers why customers should adopt public cloud solutions. To achieve this, the following assumptions need to be dispelled:

1. Public cloud has inadequate SLAs

It is true that some high volume public cloud services do not provide adequate service levels for enterprise applications. But that does not mean that no service provider can ever provide an adequate SLA. Indeed, this is a way in which some service providers could differentiate from “pile ‘em-high, sell ‘em cheap” operators.

Service providers seeking to provide cloud solutions to critical functions need to be prepared to offer meaningful SLAs; not only in terms of financial compensation, but also in terms of setting parameters for the relationship. The SLA, for instance, should outline how service reviews will be performed and faults handled. This is a key area of differentiation for those service providers who cannot compete with some of larger public clouds on scale alone.

2. Public cloud has inadequate security

Most security problems in public cloud are not down to technical failings, but are instead due to poor organisational practice. For example, the number of security breaches originating in cloud software bugs are much lower than those from configuration errors. Whilst cloud does present security challenges, many of these are also common to private clouds. Service providers tend to have in-house cloud-focused security expertise, whereas enterprises in general do not. Some models of hybrid cloud provide the worst of both worlds as it can throw up the security problems of both public and private cloud.

3. For regulatory reasons we cannot use public cloud

Regulatory restrictions do not in general prohibit the use of service provider clouds. Rather, they restrict or mandate specific behaviour and these restrictions are not, in general, technology dependent. For instance, in a financial environment, regulations might mandate that data from one part of the business cannot be stored or processed in the same place as data from another. In such cases it is necessary for service providers to gain a deep understanding of what the regulatory restrictions actually are, rather than accept the statement that regulation bans them at face value.

4. Applications need to run in-house for technical reasons

Technical reasons not to use external clouds tend to fall into two categories. The first category is concerned with migration costs. These costs do indeed exist, particularly with legacy applications. However if a private cloud truly is a cloud (as opposed to hosted servers), migration costs would be much the same. Service providers can address this objection by providing a combination of cloud and non-cloud services, or simply agreeing that some legacy IT is unlikely to be outsourced until the next technology refresh. The second category concerns technical properties of public cloud that make its use inappropriate. For instance, latency sensitive applications such as high frequency trading are never likely to be placed on a public cloud. However, such applications are often inherently unsuitable for any form of cloud technology; in this instance the extra few microseconds added by virtualisation are a reason not to use any form of cloud technology, whether public, private or hybrid.

5. Public cloud is just hype

Homogenous high-volume public cloud is sometimes presented as a solution applicable to every problem, rather than presenting a more nuanced argument. In some cases this has alienated CIOs, or at least provided them with a valid line of objection. The CIO that states “we can’t put our whole IT function on Amazon Web Services,” clearly has a fair point. But just as public cloud in not a cure-all, neither is a private cloud solution.

Objections to using public cloud technology are at best overplayed or at worst spurious. Private cloud is in essence an attempt to use cloud’s technology without gaining any of the efficiencies. It is for service providers to educate their customers and prospects, and the audience will often be financial or strategic as opposed to technical. As the CIO’s empire is affected, these objections often represent examples of the principal/agent problem, where the buyer (or his reports) may have a personal incentive at odds with that of the enterprise as a whole.