A private cloud is a network of servers owned and operated by a business solely for its own use. While the services can be the same and appear identical to their end users, the primary difference is that the organization has control over the physical hardware as well.
A public cloud deployment typically works in one of two ways: either the subscriber creates virtual machines on the provider’s servers and uses them to install and run specific applications, or the subscriber contracts with the provider for access to services running on the provider’s virtual machines.
A private cloud deployment usually works in much the same way. In most cases, the organization still creates and utilizes virtual machines to run its applications, but it creates those virtual machines on its physical host servers.
Another variation on the private cloud is the hosted private cloud, in which hardware owned or leased by an organization is housed and managed by a third-party provider.
The organization has exclusive use of the hardware and avoids the expenses of building and managing a datacenter. They do have to pay ongoing housing fees to the provider, and this arrangement might not satisfy all data storage stipulations, but the overall cost is likely to be less than an on-premises private cloud.
Note Private clouds and Internet traffic
The term private cloud can be something of an oxymoron. Typically, the definition of the cloud includes access to services over the Internet. In a public cloud, both administrative and user access to the cloud resources is through the Internet. While a private cloud can provide users and administrators with access to services via the Internet, it typically does not use the Internet when the administrators and users are located at the same site as the datacenter housing the cloud.
When a large enterprise maintains facilities at multiple locations, users at all those facilities can access the company’s private cloud using the Internet. However, a small- or medium-sized organization running Microsoft 365 at a single location can conceivably run what is technically called a private cloud without the need for user and administrator traffic to ever leave the facility.
The private cloud architecture can provide a level of security and privacy that a public cloud provider might not be able to meet.
An organization might have government contract stipulations or legal requirements that compel them to maintain their own hardware and store sensitive data on-site rather than use third-party hardware not subject to the same stipulations or requirements.
For example, the Health Insurance Portability and Accountability Act (HIPAA) dictates how medical data must be secured and protected in the United States.
Regardless of whether a third-party cloud provider is involved, a company is legally responsible for all the data stored on its servers. Another example is that an organization might also need to run a legacy application requiring a specific hardware or software configuration that a third-party provider cannot supply.
A private cloud can also provide a greater degree of customization than public cloud resources. Public cloud providers are successful because of the scale of their businesses; their services are configurable, using the options most desired by most of their clients.
They are not likely to provide access to obscure software options that only a few of their clients will need. In the case of a private cloud, an organization has access to any and all of the customization options provided by the software they choose to install.
Exam Tip
The difference between private and dedicated public clouds is who owns and operates the hardware. Exam candidates should be aware that some documentation uses the term private cloud instead of dedicated public cloud to describe hardware owned and operated by a third-party provider for the exclusive use of one subscriber.
The advantages of a private cloud are its disadvantages as well. The hardware owner is responsible for purchasing, housing, deploying, maintaining, and ultimately retiring that hardware, which can add greatly to the overall expense, as described earlier in this chapter.
There are no ongoing subscriber fees for a private cloud, as there are with a public cloud provider, but there are ongoing fees for operating a datacenter, including floor space, power, insurance, and personnel.
The organization is also responsible for purchasing and maintaining licenses for all the software products needed to provide the necessary services. This can include operating system licenses, application server licenses, and user licenses, as well as the cost of additional software utilities.
Typically, the overall costs of a private cloud infrastructure are higher than that of a public cloud and can be enormously higher. It is up to the organization to determine whether the advantages of the private cloud are worth the additional expense.