4 Reasons Private Clouds Often Cost Less than Public Clouds

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When choosing between public and private cloud deployments, the cost of each option will inevitably play a huge role in a business owner’s decision. Usually, the first solution many small businesses turn to is the public cloud.

The public cloud environment is, initially, a good way to cut IT spending because it offers on-demand computing services for small-to-medium sized businesses that need the flexibility to scale their IT operations up or down at a moment’s notice. Public cloud services providers (CSPs) are also responsible for the management and maintenance of data centres, which is a great feature for companies that lack the resources to run their own infrastructure.

Despite the upfront cost-savings of public clouds, enterprise-level companies are finding economic opportunities in the private cloud. For instance, Dropbox replaced its Amazon cloud service with a private, in-house cloud. In an interview with Wired magazine, Dropbox COO Dennis Woodside said the move to private adds “substantial economic value,” especially since it grants the company more control over its data centre and optimises server performance.

But even if you’re not a big-name company, evidence suggests that private cloud solutions may make more financial sense.

When is it cheaper?

According to a cloud study, private cloud options are generally more cost-effective once they reach a certain scale. The report found Amazon’s public cloud offerings were cheaper in smaller operations; but as computing demands increased, self-hosted solutions became a better option. After deploying just 17 virtual machines, AWS costs were $7,466 (USD) per month while private cloud solutions were only $7,219 per month.

Furthermore, studies have shown that with long-term use, the large upfront cost of setting up your private cloud eventually evens out. Although experiences may vary for different-sized businesses, private clouds pay off after a little over 13 months, as companies better utilise their server resources and contract costs start to level off. In a number of cases, long-term investment in private clouds usually produces greater returns than public clouds.

Steady billing models

Public clouds employ a pay-as-you-go subscription model designed primarily for volatile workloads. Startups, for example, have unpredictable computing demands; in one month they might experience a huge influx of new cloud users; and in another they might be forced to scale down to avoid going over budget.

Meanwhile, privately hosted clouds are usually less expensive if your company has steady server demands and predictable workloads. In other words, if you’re certain about how many virtual machines you’ll need and how many people you’ll have on staff over a long period of time, then there’s little point in paying for computing resources on a pay-as-you-go basis.

More control

Because private cloud services are dedicated to a single organisation, the hardware, data, and network can be designed to assure high levels of performance. For example, you can upgrade your server’s processing power, increase network speed and throughput, change server operating systems, and choose the amount of data storage available to each user.

Public cloud services, however, are standardised, meaning you’re at the mercy of your hosting company’s hardware. If their servers don’t have solid state drives (SSDs); for instance, then the quality of your service could be limited to the slower speed of their hard disk drives. Any storage, computing power, or availability upgrades going forward will incur extra costs; and even that could be more expensive than private cloud upgrades.

Better security

A private cloud deployment is also a more attractive option when you factor in the benefits of comprehensive security that they are known for. With self-managed data centres; you will know exactly where data is located and who has physical access to your servers. More importantly, your data centre is protected by your company’s firewalls and security systems.

This level of security is not as easy to achieve in a public cloud environment. Firstly, you don’t get as much control over your security and you’re mostly dependent on your cloud provider. And secondly, public cloud servers are shared with other companies (or tenants) whose security practices may jeopardise yours.

Considering that data breaches can cost upwards of $142 per stolen record, plus additional penalty fees for noncompliance, you save your company a lot of money by investing in more secure private cloud environments.

Private Cloud “as-a-service”

One of the biggest arguments against the private cloud is the need to hire expert technicians to manage your servers. Fortunately, those reluctant to make the huge leap to a self-hosted private cloud; can still opt for the managed private cloud option. This deployment model provides the same, hands-off approach as a public cloud solution provides; including all the benefits of a private cloud (i.e., greater security and control).

This means your on-premises IT staff can focus on creating systems that will grow your business; while a private cloud services provider handles the deployment, workload optimisation, and day-to-day maintenance of your data centre.

Consider your options carefully

At the end of the day, the best cloud solution depends on your company’s needs. Companies that tend to have unpredictable computing requirements and need to offload non-critical data; can benefit from public clouds. However, if your organisation values security, control, and long-term cost savings, you’ll be better off in a private cloud environment.

Private clouds can offer a host of benefits to your business; but you’ll need to engage with IT partners who have the expertise to design, install, and manage them. At Empower IT; we pride ourselves on knowing all the benefits and technical nuances of public, private, and hybrid cloud models. So if you think private clouds are the perfect fit for your organisation; contact us today. Our consultants will help you make the right decision.