Private Cloud vs Public Cloud vs Hybrid Cloud: Pros & Cons

Once an organization has chosen to pursue a cloud computing strategy, the next major decision will be whether to use a public cloud service or to set up a private cloud.

It’s important to note that the private vs. public cloud decision doesn’t have to be an either-or choice. Industry analysts say that most enterprises are pursuing a multi-cloud strategy; that is, they use more than cloud. In fact, the 2017 Rightscale State of the Cloud Survey found that, on average, enterprises are running applications in 1.8 public clouds and 2.3 private clouds, while experimenting with another 1.8 public clouds and 2.1 private clouds.

In addition, many organizations are pursuing a hybrid cloud approach, which means they use at least one public cloud and at least one private cloud that they manage as a single environment.

These hybrid and multi-cloud strategies allow organizations to choose the best type of cloud for particular workloads. Each deployment model — public, private, or hybrid cloud — has its own strengths and weaknesses, making it uniquely suited for particular use cases. For information that will help your business decide on which cloud providers to use, read our guide to cloud computing.

So what are those strengths and weaknesses? And when should enterprises use each type?

Public Cloud vs. Private Cloud: Main Differences

Before we delve into the pros and cons of the public cloud and the private cloud, we should first examine the characteristics that distinguish the two from each other.

Public Cloud Characteristics

• Hosted at the vendor’s facility. With a public cloud, enterprises do not need to purchase, deploy, manage or maintain the computing infrastructure or the physical building that houses the hardware.
• Billed based on usage. Depending on the service used, public cloud vendors will bill customers based on the minutes, hours, days or months that they have used computing equipment.
• Fast provisioning and scaling. When developers or other users need a new server, they can set one up in the public cloud within minutes.
• Shared hardware Within the public cloud, many different organizations may be using the same physical server or storage appliance.

On-Premise Private Cloud Characteristics

• Hosted on premises. With a traditional private cloud, the organization must purchase, deploy, manage and maintain their own hardware, as well as the data center where it resides.
• High capital expenses. When setting up a private cloud, organizations experience a lot of upfront costs associated with deploying the necessary hardware and software. Depending on the management software they use, they may be able to charge back different departments or business units for their usage of the cloud resources.
• Limited scalability. For end users, a private cloud offers scalability within limits. It’s possible that demand could exceed a private cloud’s supply of computing resources, and IT will have to buy new hardware in order to meet demand.
• Dedicated hardware Only the company that has set up the private cloud will have data and applications running in that cloud, which eliminates some security and privacy concerns.

Hosted Private Cloud Characteristics

• Hosted at the vendor’s facility. Like a public cloud, a hosted private cloud is set up and managed at the vendor’s data center.
• Variable billing options. Different hosted private cloud vendors have very different billing arrangements. Some are more like the public cloud with usage-based billing, while others are more like an on-premises private cloud with a lot of upfront fees.
• High scalability. Most vendors will allow users to add more servers or storage to their private cloud quickly as demand increases. However, the initial setup is a little more involved and time-consuming than when using a public cloud service.
• Dedicated hardware. As in the on-premise private cloud, organizations have their own servers and storage; they don’t have to share with other customers.

Public Cloud Computing

Like the name suggests, a public cloud is available to anyone in the general public. These cloud computing services are operated by vendors with extremely large data centers with computing and storage resources that are shared among all of the vendors’ customers.

Public Cloud Pros:

• Agility: When asked about their reasons for choosing public vs private clouds, many enterprises put agility at the top of the list. Public clouds enable users to provision and deploy new computing resources almost instantly, allowing organizations to achieve faster time-to-market with new products and services. In addition, it’s very easy to alter the mix of computing resources being used as an organization’s needs change over time.
• Scalability: Similarly, as application usage or data grows, it’s very easy to add more computing resources to meet demand. Many public cloud services include automated scaling so that organizations don’t even have to think about adding more compute instances or storage — it just happens automatically.
• Availability: While public cloud outages get a lot of press — usually because they affect a lot of organizations — in general, public clouds provide more uptime than traditional data centers or private clouds that organizations host in their own data centers. Many enterprises choose to incorporate public cloud services into their business continuity (BC) and disaster recovery (DR) plans because they can use a cloud-based service that is geographically distant from their own data centers, which provides an extra layer of protection in case of a natural disaster.
• Performance: If you need high-performance computing (HPC) resources for some of your workloads, the public cloud makes it easy to access HPC capabilities and only pay for what you use. By contrast, installing HPC systems in your own data center can be a very expensive proposition. In addition, large public cloud providers can afford to install the latest technology in their data centers, unlike smaller organizations that may have a longer refresh cycle.
• Low Costs: Because they are so large, public cloud data centers achieve economies of scale that most enterprises can only dream of. That allows public cloud vendors to drive prices incredibly low. The public cloud also saves users money by reducing or eliminating the need for IT staff to manage your own hardware and by charging based on usage, which gets rid of the need to overprovision servers to deal with surges in demand. Also, the public cloud converts some capital expenses (the one-time costs of purchasing hardware and software) to operational expenses (recurring subscription fees), which can look good on a company’s financial statements.
• Location Independence: Users can access public cloud services from any Internet-connected device. That allows enterprises to enable greater mobility within their workforce, to encourage collaboration among geographically dispersed teams and to increase productivity overall.

Public Cloud Cons:

• Security: The biggest disadvantages of the public cloud relate to cloud security. Because organizations are giving up control over the physical hardware that runs their applications and stores their data, it’s more difficult for them to know if their information is adequately protected. In addition, because they are so large and serve so many different organizations, public cloud services are very popular targets for hackers.

Some enterprises also have concerns about the shared nature of public cloud hardware. With the public cloud, workloads from many different organizations might be running on the same physical server. In fact, your workload could be running on the same physical hardware as workloads from your biggest competitor. Some organizations worry that this shared model will make it easier for outsiders to gain access to their sensitive data.

• Compliance: Some companies must comply with laws and regulations that make it impractical to use cloud services for some data or applications. For example, in the U.S., healthcare providers and financial services companies must meet very strict security requirements for their customer data, and some cloud providers may not fit the bill. And in Europe, some data cannot be stored outside the geographic area where it originates. For situations like these, the public cloud may not be the best option.
• Unpredictable Costs: The same pay-per-use model that keeps public cloud costs low can also be a disadvantage in some situations. If usage of a particular application skyrockets, organizations get hit with surprisingly large bills. In some cases, organizations may decide that predictability is so important that they simply cannot use the public cloud.

Public cloud computing differs from private cloud computing in how it leverages an external computing platform.

Private Cloud Computing

A private cloud is a cloud computing environment set aside for one particular organization’s use. In contrast to a public cloud, where many customers all use the same physical hardware, in a private cloud, each server or storage appliance can be used by only one organization.

The private cloud comes in two distinct versions. First, organizations can choose to build their own private clouds in their own data centers. The pros and cons below relate to this type of private cloud.

Second, some vendors offer hosted private clouds, where the vendor manages the physical infrastructure and hosts it in their data centers, but the servers are not shared among customers. The hosted private cloud section below will examine this type of private cloud in more detail.

Private Cloud Pros:

• Security: The biggest reason for organizations to choose private vs public clouds is security. With an in-house private cloud, organizations retain control over their infrastructure, which allows them to deploy any security measures that they deem appropriate. However, it should be noted that smaller organizations may not have as much expertise in cloud security as the large public cloud vendors, so it’s also possible that they may not do as a good of a job securing their networks as the public cloud vendors.
• Compliance: With an in-house private cloud, organizations can make sure that all of their data storage complies with any relevant regulations. Again, they have complete control over the security measures, and it’s much easier to make sure that data stays within a certain geographic area, if necessary.
• Predictable Costs: Because enterprises are purchasing their own hardware and software, they know exactly how much their cloud will cost from month to month. They don’t have to worry about increasing fees related to greater usage of services.
• Customization: An in-house private cloud also gives organizations the ability to select exactly which hardware will run their applications and store their data. However, they do have to purchase this hardware themselves.
• Location Independence: Just like a public cloud, a private cloud can be accessed from any Internet-connected device.
• Improved agility and scalability: Compared to a traditional data center, private clouds offer greater agility and scalability. However, they do not provide as much scalability and agility as a public cloud services does.

Private Cloud Cons

• Costs: Because organizations must purchase and manage their own infrastructure, a private cloud doesn’t have many of the cost benefits associated with the public cloud. The only real advantage is that the virtualized nature of the resources may reduce the need for overprovisioning. But staff costs and capital expenses remain high when deploying a private cloud. In fact, in some cases, it may actually be more expensive to run a data center as a private cloud.
• Management Complexity: With a private cloud, an organization has to handle in-house all the services that would normally be provided by a public cloud vendor. That means provisioning, deploying, monitoring, maintaining and securing their own hardware. In addition, they need the software necessary to manage, monitor and secure the cloud environment.
• Limited Agility, Scalability and Availability: If a particular project needs resources that aren’t already part of your private cloud, acquiring those resources and adding them to your cloud may take weeks or months, limiting your agility. Similarly, it will be very difficult to continue scaling if demand exceeds what is available in your private cloud. Availability will be determined by the quality of your infrastructure management and BC/DR efforts.
• Performance: Because they are so large, public cloud vendors have the ability to invest in the latest computer hardware, including HPC systems. With a private cloud, organizations usually face longer refresh cycles and may not be able to afford HPC systems.

Hosted Private Cloud

Some organizations find that a hosted private cloud provides a good balance between the relative strengths and weaknesses of private vs public clouds. These environments are managed and run by a third-party vendor, but the physical infrastructure is dedicated to the use of one particular organization.

Hosted Private Cloud Pros

• Improved Security: Because only one organization has access to the physical hardware, a hosted private cloud eliminates some of the security concerns associated with the public cloud. On the other hand, the organization still doesn’t have physical control of their servers, so it might not provide quite as much peace of mind as an in-house private cloud.
• Simplified Management: The biggest argument in favor of a hosted private cloud is probably that organizations don’t have to manage their own physical hardware. Just as in the public cloud, the vendor handles that for them, reducing the need for operations staff to deploy, monitor and maintain the physical infrastructure associated with the cloud environment.
• Customization: Depending on the vendor they select, organizations may have the ability to specify which hardware is used within their private cloud.
• Predictable Costs: Hosted private cloud pricing models vary, but in general, they require organizations to sign a contract that specifies a certain level of usage. That makes costs more predictable than with a public cloud. However, some hosted private clouds will also increase costs as usage rises, make costs slightly less predictable than with an in-house private cloud.
• Improved Agility, Scalability and Availability: The hosted private cloud generally provides somewhat better agility, scalability and availability than an in-house private cloud, but these characteristics may not be as good as the capabilities offered by public cloud services.
• Location Independence: As with all other types of cloud computing, hosted private cloud services can be accessed from anywhere.

Hosted Private Cloud Cons

• Costs: If you want to have cloud computing resources set aside for your company’s use, it’s going to cost more than a public cloud. And depending on your particular contract, your costs may not be as predictable as with an in-house private cloud. However, you may get the benefit of being able to transfer some CAPEX to OPEX.
• Limited Agility, Scalability and Availability: Similarly, while hosted private clouds are generally more agile, scalable and available than in-house private clouds, they often don’t match the public cloud where these capabilities are concerned. The tradeoffs may or may not be worth it depending on your needs.

Hybrid Cloud Computing

As already mentioned, a hybrid cloud is a combination of one or more public and private clouds that are managed as a single entity. This arrangement allows organizations to get around some of the drawbacks of public or private clouds. For example, they could store sensitive data in a more secure private cloud, but still access that data from an application that runs in a low-cost, high-performance public cloud. Or they could run their ecommerce site primarily from their private cloud, but scale up into a public cloud on days when they have a sale.

As a result, hybrid clouds have a combination of the benefits and drawbacks of both private and public clouds.

Hybrid Cloud Pros

• Flexibility: One of the biggest benefits of a hybrid cloud is its flexibility. It allows organizations to use the private cloud for workloads or data that would be best served by that environment and to use the public cloud where it makes the most sense. Instead of having to choose private vs public clouds, organizations can get the best of both worlds.
• Security and Compliance: Hybrid clouds can provide different types of data with appropriate levels of security. For example, customer credit card numbers could be stored in the more-secure private cloud while public-facing Web content is stored in the less-secure public cloud. This also makes it easier to meet compliance requirements.
• Improved Agility, Scalability and Availability:Because it connects a private cloud to a public cloud, the hybrid cloud offers the same sort of agility, scalability and availability usually associated with public clouds.
• Location Independence: As always, the end user’s location makes no difference when it comes to data and application access.

Hybrid Cloud Cons

• Management Complexity: By far, the biggest downside of a hybrid cloud is the management complexity. Organizations need to invest in special automation and other tools if they are going to manage different kinds of clouds as a single environment. In addition, enterprises need to make sure that their staff have appropriate training to set up, integrate, manage, monitor and secure a hybrid cloud environment. It’s a big challenge — and one that probably won’t go away as organizations increase the number of cloud services they are using.
• Unpredictable Costs: Because the hybrid cloud uses some public services, organizations do face the risk of surprisingly high cloud bills resulting from periods of high usage. In general, however, organizations say the unpredictability is outweighed by the lower costs associated with using public clouds for some of their needs.

Public vs. Private Cloud Comparison

So which cloud is right for your needs? The chart below offers an easy way to see the differences among the various options: