Choosing between public and private cloud calls for solid financial analysis, taking into account a variety of important factors.
Enterprise datacenters have evolved tremendously over the years. They began as rooms primarily designed to house the mainframe before transitioning to smaller, distributed servers. Next came virtualization, which allowed for a consolidation of servers on shared hardware resources. For many enterprise IT groups, the first step into virtual environments was really a re-creation of the distributed model using many virtual servers rather than dedicated hardware.
In the middle of this transition to virtual environments, the cloud evolved. I say "evolved" because hosted services offered via the Internet have been around for a long time. However, service providers have reduced costs, added significant capabilities to their offerings, and leveraged virtualization to create products such as IaaS, PaaS, and SaaS. These cloud solutions are all the buzz, right now, because they have the potential to significantly reduce costs, improve the efficiency of IT departments, and be highly profitable for service providers.
Enterprise IT departments are starting to take notice and learn from these public clouds. Rather than simply duplicate the distributed environment on virtual servers, they are now using the power of the virtual environment's resource schedulers and other features to deploy private clouds. Instead of manually provisioning a new server for every need, they are implementing tools that enable internal clients to easily provision or decommission needed services on top of existing servers, and ensure that hardware resources are allocated or freed up as needed to accommodate these services.
So which is better -- public or private cloud? The simple answer from Microeconomics 101 is whichever one is economically more efficient. Gauging efficiency, though, means considering not just cash outlay, but also factors such as administration costs, maintenance, uptime, performance, security, and disaster recovery. Public clouds will prove more efficient for some organizations (and some applications) and private clouds more efficient for others. A good way to appreciate this is to consider an analogy based in logistics.
Consider a company called Ship-it, specializing in logistics and very good at it, too. By utilizing Ship-it's services, many retailers are able to eliminate completely the need to acquire expensive warehouses and trucking fleets and to hire employees to manage the flow of products from suppliers to far-flung retail stores. These retailers are able to benefit from Ship-it's economies of scale and pay for only the portion of that firm's warehouses and trucks that they use. For many companies, in other words, it is more efficient to use Ship-it's services than trying to duplicate those logistics operations in-house.
Megamart, meanwhile, is in the business of retail sales. It is not a logistics firm, but its superior skill in logistics is much of the reason that it is able to keep prices low and compete well in the marketplace. Were Megamart to use Ship-it's services rather than handle logistics itself, the retailer would likely see merchandise take longer to show up on its retail shelves, and this delay would effectively increase its costs, reduce cashflow, and depress margins.
As in this logistics example, which cloud solution is most efficient for a particular IT department will likely depend on that department's current capabilities and maturity. For one company, it may be best to move as many services as possible to the public cloud. At another enterprise, where the IT department is at a high maturity level, implementing a private, in-house cloud may prove more efficient. And many companies, of course, will likely benefit from a hybrid solution, for even the company with a strong IT department may find areas where using public cloud services enables it to free up resources that then can be devoted to more-profitable activities.
Ultimately, IT groups need to be open to both solutions, public and private. They should perform a proper, full analysis, and use the solution that looks most efficient for their business.