Is a “private cloud” an oxymoron?


What on earth's an "oxymoron"?

You’ve undoubtedly heard the terms “public” and “private” cloud being bandied around quite loosely by every IT services provider trying to hitch themselves to the new trend towards the use of computing resources that reside outside of the enterprise and are delivered to multiple customers by a cloud services provider (read Bruce McCracken’s new article).

A very old friend and former analyst colleague of mine, Andy Milroy, who leads the Australasian IT and Communications practice for research and consulting giant Frost and Sullivan, poses an excellent question to those service providers today who may be confusing hosting services with cloud:

“To me, the term private cloud is a misleading way of describing hosted services.  In fact, it is an oxymoron. It is a term that is used by providers of hosted services in order to hold onto lucrative contracts and prevent the loss of customers to companies that provide public cloud services.”

So we dragged Andy away from his didgeridoo class to explain further…

Is a Private Cloud an Oxymoron?

The IT community is now strongly focusing on the impact of cloud computing on their businesses.  This can largely be explained by the fact that the rapid growth in the use of cloud services in recent years, massively disrupts traditional IT delivery models.  But, there remains much confusion regarding the nature, scope and definition of cloud computing. The situation is becoming cloudier (excuse the pun) as major IT suppliers start to re-brand existing offerings as ‘private clouds’.

Attributes of cloud computing typically include, scalability, elasticity, multi-tenancy, payment models that are linked to usage, resources delivered from virtualized environments and the provision of all support and management tasks by a cloud services provider.

However, the emergence of the marketing term, ‘private cloud’ challenges common definitions of cloud computing and creates confusion. It is a term that is commonly used by those with vested interests in existing computing paradigms.

In my view, the use of private clouds is not cloud computing since key attributes of cloud computing include, the use of computing resources that reside outside of the enterprise and that are delivered to multiple customers (multi-tenancy) by a third party (cloud services provider). Private clouds deliver IT resources from within the corporate firewall and to one customer. To me, the term private cloud is a misleading way of describing hosted services.  In fact, it is an oxymoron. It is a term that is used by providers of hosted services in order to hold onto lucrative contracts and prevent the loss of customers to companies that provide public cloud services.

Companies that offer services from the public cloud such as are undermining traditional on-premise business models. The business case for sourcing resources from public clouds will soon be indisputable. In the next few years, business unit and IT managers will need to provide business cases for not using public clouds and for keeping resources on-premise.

Services that share the attributes of public cloud computing, have, of course been with us for many years. For example, the Application Service Provider (ASP) model of computing was expected to deliver services from the Internet to multiple clients. The ASP model did not mature for a variety of reasons. However, the planets are now aligned for an explosion of public cloud activity. Today’s virtualization technology, application acceleration technology, the widespread use of OpenSource and faster average broadband speeds are enabling the rapid adoption of public cloud based services.

In many ways, the use of public cloud services is creeping up on us by stealth. Although, the use of platforms, infrastructure or/and applications delivered from public clouds may seem to be comparatively immature, most people are using public cloud services. Each time we use Google’s search engine or a social networking tool such as Facebook or LinkedIn, we are using public cloud services.  From an enterprise perspective, payroll processing services offered by companies such as ADP, are also a form of cloud computing. Now, if companies can send the personal details of their employees, their salary details, their tax details and their identification details to a datacenter that is operated by a third party such as ADP, are privacy and security concerns legitimate reasons for not wishing to use public cloud services?

Andy Milroy

I believe that a mix of groupthink and blind conservatism is at play in many cases when objections to the use of cloud services are raised. These objections tend to be centered around security and privacy. It is argued that private clouds address these concerns. In my view, private clouds simply re-inforce the conservatism of many in business today by giving them an excuse not to use the public cloud. In a few years time, those that simply revamp their existing datacenters to provide private cloud services and those that refuse to use cloud services for security and privacy reasons, will give the impression that they simply cannot grasp their very straightforward and obvious business benefits of using public cloud services.

Andy Milroy (pictured) leads Frost and Sullivan’s Australasian ICT Practice.  He has previously held senior analyst positions at both IDC, where he led its European IT services research organization, and at NelsonHall, where he started its US business. 



Posted in : Cloud Computing, IT Outsourcing / IT Services, Outsourcing Advisors, Outsourcing Heros, SaaS, PaaS, IaaS and BPaaS



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  1. Private cloud = hosted ASP for a a single client = vintage 2001 software offering = a business model without economies of scale (except data centers, but isn’t that commoditized/outsourced? – meaning is there really any incremental value except dodging the client’s IT team?)

    Waaaaait, maybe that’s what we should be talking about…the role of hosted applications given the need for business to be flexible and the questionable business value that some clients’ IT organizations provide. What does the 21st century IT organization need to look like, how should it rely on application providers, and how does government privacy regulation curtail cloud computing?

    Or is there a linkage between taking didgeridoo classes and our whip-smart Australian colleagues? Or is that due to Fosters?

  2. Anthony

    Thanks for the comment.

    For some strange reason, Fosters beer is not sold in Australia but seems to be available everywhere else. Given that it tastes like dishwater, not too many Aussies seem to be bothered. Mind you, the local beer is not much better.

    Regarding your hosting statement, I think you are right. I think that we do need to talk about the role of hosted applications in offering businesses greater flexibility and value for money. So, there is a very strong argument for avoiding the use of the term cloud altogether.

    One of my points is that the term ‘cloud’ is used by many large IT vendors to describe something that they have already been offering for years. Effectively it is being
    used to re-brand their hosting services or data center outsourcing services. This is creating a lot of confusion in the market place.

    Rapid adoption of public cloud services for enterprise IT is something new and this threatens the business models of many large IT vendors – you probably know the ones that I’m talking about. By using the term cloud for existing offerings, perhaps these firms are creating so much confusion that they are slowing the adoption of something for which there is an indisputably strong business case.

  3. “Private Cloud” is not such an empty term. It takes out multi-tenancy from the mix but retains the other cloud characteristics such as (to quote your piece selectively) “scalability, elasticity, payment models that are linked to usage and the provision of all support and management tasks by a cloud services provider”.

    Which means, a private cloud customer can demand a sudden spike in hardware power during the holiday season and the private cloud provider needs to provide that somehow. This is really a virtualization challenge, how does one provide elasticity and still retain the “privacy”.

  4. Private Cloud is a concept for businesses unable to make the leap to a total cloud (outsourced) solution.

    But to be honest, moving forward, if there’s a gap to cross, I prefer leaping to baby steps…

    MSFT is pushing hard for virtualization and private cloud concepts, the problem is that private cloud fundamentally undermines the idea of SaaS (hint: service).

    The more a company keeps these problems in-house, the more it takes away from the core business value of that company. BUT, of course, trusting in a service provider is crucial. At this stage in the game, do I really want to put my fortune 500 company’s faith in Salesforce? Some companies are taking that risk.

    A lot of this “risky” behavior is just accepting the inevitable, but the chance of getting burned is real. For those afraid of the risk, the better question is “does a private cloud actually lower the chance of getting burned?”

    In my experience. No.

  5. Andy says “Attributes of cloud computing typically include, scalability, elasticity, multi-tenancy, payment models that are linked to usage, resources delivered from virtualized environments and the provision of all support and management tasks by a cloud services provider.” The concept of a “Private Cloud” can have all of the same properties defined by Andy. In most larger enterprises, there is an Internal IT Infrastructure “service provider”, that is typically intended to be a service provider to the enterprises various business units. Some even have to compete for that business with external providers. Some even take on a profit model. The only difference is that this entity sits INSIDE the corporate firewalls.

    In fact, I see the “private cloud” concept being far ahead of public cloud implementations within the enteprise marketplace, at least for the next 3-5 years. Eventually, enterprises will evolve to hybrid clouds that link external resources to their internal private clouds. As we all get smarter, they will also set up secure links to outside public services (like And, yes, some will go with quickly, but it will be isolated from the rest of the enterprise applications.

    If you look at the track record of external service providers in 2009, not many enterprises are going to risk their business critical infrastructure to external cloud providers. The rash of “inexplicable” outages was unacceptable for enterprise-class environments. I saw one provider who claims to have a Tier 4 data center, present their Root Cause Analysis on Youtube and right there in his whiteboard drawing were several single-points-of-failure in his data center. Obviously, it was not a Tier-4 data center with a certification from the Up-Time institute. Another major vendor had a six-hour, mid-day outage caused by a mid-day, mid-week “maintenance” change that did not have a backout plan. People are fired for that in an enterprise-class environment.

    Public cloud computing has a ways to go before they can seriously propose taking over enterprise-class computing environments. In the meantime, enterprises should see the benefits available from the cloud concept and migrate their own internal shops towards that vision. As I said in a comment to another of Phil’s posts, the premier outsourcing vendors (who, for the most part, know how to run an enterprise-class environment) will implement various flavors of cloud and that may be of more interest to the enterprise clients.

  6. In the absence of a definition of “private cloud”, this discussion can get very diffuse.

    My vision of a private cloud is as follows:

    Definition 1:
    “A data center operator upgrades his capabilities to provide virtualization, elasticity (i.e. scale-up / scale-down) and pay-as-you-go, which are at the heart of the cloud computing model. Then, he sells hardware capacity to a customer, with elasticity and pay-as-you-go, guaranteeing a high degree of security”.

    Now, the gotcha is clearly the “high degree of security”.

    By definition, in a cloud model, the underlying hardware is shared between multiple customers (by means of virtualization). This is how the data center operator (i.e. cloud provider) achieves economies of scale and utilization. How does one introduce “privacy” in an inherently shared model? Can you share and still be private?

    This is what makes the term “private cloud” seem like an oxymorn. To cease being an oxymoron, the provider needs to offerer a compelling security solution for the cloud model. Thus, a cloud security breakthrough is required.

    Now, consider an alternate vision of private cloud:

    Definition 2:
    “An internal IT infrastructure service provider in a large enterprise upgrades his capability by introducing virtualization, elasticity and pay-as-you-go which are at the heart of the cloud computing model. His customers, i.e. various business units of the enterprise, now get the benefits of elasticity and pay-as-you-go.”

    This definition is clearly very “private”, but is it cloud?

    Trouble with this definition is, since the provider is internal, the complete cost (i.e. budget) comes from the enterprise’s funds.

    Hence, though the individual business units like the pay-as-you-go model, the enterprise as a whole pays a fixed cost. There is some cost reduction derived by virtualization and the resultants capacity-sharing across business units, but at the end of the day this is not really “pay-as-you-go” for the enterprise.

    Similar problem on the elasticity side: the budget has to account for the max scale-up that is anticipated, i.e. the internal provider has to model the max demand (all business units put together), and acquire the hardware to service that demand. Hence, though individual business units feel they get elasticity (they can scale-up / scale-down at will), at the enterprise level there is a fixed hardware capacity.

    Due to these reasons, I feel a cloud provider cannot be “internal”. An “internal cloud provider” is an oxymoron.

  7. […] And when it comes to nonsense, we like to give you some answers. So, when a term like Private Cloud comes across our screens, we have to ask: Is it the new Jumbo Shrimp? You know, is a “private cloud” an oxymoron? […]

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