What the hell is Private Cloud?

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I was on a LinkedIn thread titled ‘How cloud computing is different from SaaS‘ where Rick Chapman who runs SoftLetter and SaaS University went on beating on this question ‘What is a private cloud’? It is definitely worth it given the tremendous amount of confusion in the term ‘Cloud’ in general and ‘Private Cloud’ in particular. The motivation for this post is Rick and supported by a tweet I read around the same time from ‘Carl Brooks‘ who is a technology writer on Cloud at TechTarget.  Let me give it a shot.

Private Cloud Tweet Post by Carl Brooks

Private Cloud Tweet Post by Carl Brooks

First, Cloud is about leveraging economies of scale whether it is public or private. Large companies like Citi Bank, P&G, Unilever, Pfizer have the economies of scale to create an equivalent of ‘Amazon EC2’ within the corporate network.When most people refer to ‘Private Cloud’ they are thinking about Virtualization.

Private Cloud != Virtualization.
To me,

Cloud = Virtualization + Automated & Managed Provisioning + Integrated Billing

If you have this type of infrastructure inside your corporate network then you can proudly call you have a ‘Private Cloud’. However, most companies are using Virtualization – at least all the large ones – and I see some of them say they are already in Cloud during the networking sessions @ conferences. Just doing Virtualiztion alone does not qualify to be called as Private Cloud!

If and when the ‘Data Centre’ in enterprise IT, starts offering services to various internal departments and divisions (IT and/or Business), the same way Amazon EC2 does for public customers, with a fully managed provisioning, integrated billing leading to pay for what you use then they can call themselves ‘Private Cloud’. If you are small company running 25 servers, all you can do is Virtualization – not ‘Private Cloud’

I know this is not going to end here. Preparing myself to tackle the attacks…. 🙂 !
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13 Responses to What the hell is Private Cloud?

  1. Pingback: A Case for ‘Virtual Private Cloud’ | OrangeScape Official Blog

  2. Pingback: What the hell is Private Cloud? | OrangeScape Official Blog

  3. Pingback: What the hell is Private Cloud? | OrangeScape Blog

  4. Pingback: A Case for ‘Virtual Private Cloud’ | OrangeScape Blog

  5. Tiju says:

    Was going through http://www.infoq.com/presentations/Your-Own-Private-Cloud
    Look like anything which can be automatically scaled at-least a little bit is named as Private Cloud.

  6. sreekanth says:

    Hi Suresh,
    I would add ‘Standardization’ to the RHS of above equation. Without Standardization the cloud becomes unmanageable with too many different types of images. I agree with the other users who said, volumes are important to achieve the economies of scale. Large companies benefit from cloud computing with the kind of volumes they have, number of internal BU’s whereas a small organization can benefit from just virtualization (by maximizing the compute power utilization).


  7. Amit says:


    Cloud = Virtualization + Automated & Managed Provisioning + Integrated Billing

    is the correct definition for IaaS part of cloud. Private cloud does exists by having certain benefits over public cloud like, allocated storage, secure connectivity and its more manageable.

    As rightly pointed out by James everyone is carving out his/her new definition for cloud. I feel we all should form a strong group arrive at one good definition, educate people on myths, concerns pros and cons that cloud has today. This will really help us in taking cloud to next level.

    • Amit,

      Thanks for the response. I really appreciate. And, yes I am with you. this is true for any new paradigm. Lot of jargon’s bubble up during the hype curve and during the maturity phase the real terms stick in. We are still in the peak of hype curve – possibly it will be like that for another 18months.

      BTW, do you have a ‘Cloud Camp’ in Pune. If not, why don’t you start one?


  8. Carl says:

    Nice post, Suresh! I am mentioned in it, so I may be biased, of course:)

    The original source for your tweet above is here: http://j.mp/cnczI3 as part of a post on new products VMware is trying to bring to market to help virtualization users deliver cloud computing.

    Some people are grumpy about the term private cloud, saying it’s just a data center modernized and automated to the hilt – let’s get that out of the way by noting that “private cloud” is a lot easier to say than “highly automated and fully managed self-provisioning server infrastructure data center system with integrated billing”.

    Your points are well taken. It is crucial to clear the air and differentiate between normal IT operations and cloud. Part of it is automation, part of it is self-service (users can get their own servers/desktops/services) and part of it is billing. The key is that all of this automation has to happen not just for the end user, but ALSO in the IT operation; otherwise, you’ve got IT running around like a bunch of bunnies to deliver services to the end user that LOOKS like Amazon or something, but hasn’t actually made operations any more efficient.

    Billing and chargeback- lets clear that up a bit. In a large organization, every department is delivered a budget, and is expected to account for it. Dev gets a budget, IT gets a budget. ‘Integrated billing’ in this context does not mean credit cards- it means that IT and Dev can account for all the resources consumed in Q1, e.g., in an automatic fashion.

    Dev requested 10,563 hours of virtual machine time. IT was able to deliver that at $X per compute hour. Dev requested 9,000 GB, and only used 7,236–IT was able to deliver at $Y/GB/month and will chargeback the 1,764GB unused and so on.

    All neat, tidy, and in black and white on an interdepartmental billing statement. Large organizational departments often bill and charge each other just like they would an outside vendor; this is the same.

    It means you cannot have a private cloud until you can a)deliver infrastructure and services that users can get for themselves b)not have to work at it (everything is policy-based, pre-configured, etc) and c) all of it is AUTOMATICALLY accounted for in standard, CPA-friendly terms and practices.

    That’s all. No, it’s not trivial. No, virtualized infrastructure is not cloud. Yes, it’s coming. 😉

  9. James,

    Thanks for posting your comment. I all felt – ‘Private Clouds’ may be a bit of an oxymoron. Over time I have changed my mind. I am still open to inputs.

    For all we know, it would be that,’Private Cloud’ are only meaningful to the ‘Fortune 500’ companies who have the scale. As Rick Chapman, said on the LinkedIn forum, it is a new term for the ‘data centre’ that already exists in the enterprise today. But one, that is transformed with the characteristics for a public cloud and consumed primarily by a closed group – i.e. 1 company.


  10. Krishnan’s Article on ‘Private Cloud’ CloudAve.

    Bingo! Scale is the key factor for ‘Private Cloud’

  11. IMHO, your definition is a bit confusing!

    +++ If and when the ‘Data Centre’ in enterprise IT, starts offering services to various internal departments and divisions (IT and/or Business), the same way Amazon EC2 does for public customers, with a fully managed provisioning, integrated billing leading to pay for what you use then they can call themselves ‘Private Cloud’. +++

    First, let me point out that companies such as OpSource have been offering these types of services to SaaS companies for years before the word “Cloud” became popular.

    Second, I’m not sure what “integrated billing services” have to do with a “private cloud.” Are you saying that private companies are going to kick over 3% to 5% to MasterCard or Amex when accounting or HR wants to expand the amount of disks space they occupy on the company’s servers?

    That would be interesting!

    rick chapman


    a ) If OpSource is already offering like that on THEIR data centre for SaaS companies then it is not different from AWS EC2.

    b) If OpSource is offering something like that within an enterprise network (not OpSoruce Datacentre) then OpSource is a Private Cloud provider just like any vendor to enterprise IT

    I don’t know all the details on ‘OpSource’ – I am just doing a scenario run down. Both of us did a great promotion for OpSource and the guys out there should be happy. 🙂 !

    Your comment on Billing could have beeb worded better. By referring to ‘credit card’ style purchase we are trying to trivialize the matter.

    Citi, Pfizer, Unilever, are customers of our company (www.OrangeScape.com). In the interactions with the folks, I know even before the cloud paradigm they were apportioning the costs to respective projects to compute TCO. In one of the projects when I looked at the costs for hardware and hosting it was quite exorbitant. It didn’t make sense at all to me. I can clearly see a great value in metered private cloud.

    Also, you seem to be so against ‘Cloud’. What is your problem? I don’t understand that it is not crystal clear as yet. But we will get there. By going against it – you are riding against a huge wave.

    To me, ‘Cloud’ is the new way of saying Hardware which is not physical and SaaS is the new way of saying ‘Software’ which is not licensed but rented.


  12. James Colgan says:

    Completely understand the frustration Suresh. There are a lot of definitions flying around out there in the clouds. I like to think of Cloud as a stack – Infrastructure on the bottom (IaaS), Platform in the middle (PaaS), and Software Applications at the top (SaaS). What you define as Cloud is to me just infrastructure. I’m very behind on the subsequent parts of my blog post, but please take a look at this and let me know what you think: http://ht.ly/1Vssj WRT Private Cloud, I think it’s a bit of a misnomer in that it usually is not freely accessible and is likely not as automatically scalable as an “EC2” to the point where it is effectively infinite in its resource availability.

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