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Not Gone and Definitely Not Forgotten

Has the Death of Private Cloud Been Exaggerated?

It seems nobody is faster to predict imminent death than the IT industry. Tape, mainframes, disks, PCs, smartphones, and the Internet have all survived their obituaries—and now we can add private cloud to the list of technologies buried before their time.

“Private cloud is a concept propped up by legacy vendors desperate to provide enterprise IT groups a reason to keep buying their servers, storage, and network products—and that’s where the problem lies. It’s a solution in search of a problem. And not a very effective solution at that.”

Bernard Golden, VP of Strategy, ActiveState Software.

To paraphrase Mark Twain, the reports of the death of private cloud are greatly exaggerated. But here’s why some are still readying the eulogies:

  • Public clouds enable users to consume IT resources on demand and pay for that use—not the hardware, software, and services required to deliver that service. Public cloud is seeing strong growth, with revenues predicted to reach more than $195 billion in 2020 (more than double the $96.5 billion in revenues forecast for 2016) and a Compound Annual Growth Rate of 20.4% over the 2015-2020 forecast period.

  • The fastest growing of the three cloud architectures, hybrid clouds—the combination of public and private clouds—is estimated to grow from $33.28 billion in 2016 to $91.74 billion by 2021, at a CAGR of 22.5%. Over 70% of heavy cloud users are thinking in terms of a "hybrid" cloud strategy.

  • But private clouds are not experiencing the growth rates of their brethren—just a 10.3% CAGR to $13.8 billion in 2016. Growth aside, it still plays a critical role in the cloud arena. By 2020, public cloud service providers (CSPs) will spend $38.4 billion on IT infrastructure for delivering services, while spending on private cloud IT infrastructure will reach $21.1 billion. That’s more than triple the CAGR of global spending on IT products and services during that period.

With private cloud, you own and operate—perhaps together with a service provider—everything. And while you have to pay for it all, you also control every aspect. That includes data, access, and security—all of which are put at greater risk, typically, in public and hybrid cloud environments. That’s where a third party, like Connection, can play a critical role. We provide the expertise and experience to ensure a cloud computing solution meets you current needs and budgets while allowing for growth on an as-needed basis.

Regardless of your approach—public, private or hybrid—cloud will play an increasingly significant part in your overall IT and business strategy. While they represent just 3% of the 68% of businesses using cloud, those who have optimized their cloud use are reporting impressive results including a 77% IT cost reduction, 11% revenue growth, 72% ability to meet SLAs, and 87% time to provision for IT services. That translates into an annual average benefit per cloud-based application of $3 million in additional revenues and $1 million in cost savings. Economics alone make a compelling case and when you couple that with the real and practical enhancements to IT service delivery the case is overwhelmingly in favor of ensuring that you have a cloud strategy and model in place.

Private cloud is being tabbed as the least popular approach to consume cloud services. But with a growth that’s more than three times faster than overall IT spending for the foreseeable future, it is still a viable part of the huge movement to a cloud world. In terms of control and security, it offers a compelling value proposition that compares well with public and hybrid clouds. Could it be that organizations aren’t reporting the conversion of traditional infrastructure to private cloud models properly and that private cloud is more prevalent than the market numbers indicate?

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