Private Clouds? Business Execs Miss The Point

Business executives are more interested in building private clouds than taking advantage of the benefits of public clouds, according to an Avanade survey.

Charles Babcock, Editor at Large, Cloud

June 2, 2011

4 Min Read

But what kind of cloud, the one represented by Amazon's EC2 public cloud infrastructure as a service, the one represented by's software as a service, or the one represented by Google's App Engine platform as a service?

None of the above. The bulk of the IT spend on cloud computing was in establishing a private cloud behind the company's defensive perimeter.

From the comments picked up by the survey, "security concerns were the biggest drivers for moving back to on-premises applications" among that 20% that had discontinued a cloud service. The survey also showed CEOs, CFOs, and CIOs preferred a private cloud when "differentiating internal operations and customer services are at stake."

These of course are the transactions, the intellectual property and data, and unique processes that make the company competitive. Regulations and compliance requirements also force companies to keep data on site as they work with it, with financial services and healthcare services pre-eminent as examples.

Avanade's Beck chose to interpret this pursuit of private clouds as a sign that interest in the cloud is maturing, and implementers no longer think in terms of a test project in EC2. They're thinking of an elastic, flexible section of the data center running like a cloud and doing more work for them.

In the previous survey, respondents relied primarily on public cloud providers. In this survey, "43% report they utilize private clouds. Another 34% say they will begin to do so in the next 12 months," Beck said. That means in another year, 77% (or close to it) of those surveyed will be private cloud implementers. Sixty-three percent say they are ready for the private cloud. When responses are restricted to CIOs, CEOs, CFOs, and CTOs, that percentage climbs higher; 70% say the cloud will play a key role in their strategy. One in five believes the cloud is the key to generating new revenue.

This is a different perception of cloud computing than what we've seen in the past, when it was regarded as good for that occasional, demanding workload with brief spikes, like testing a new software application in a variety of environments. It's more mature in the sense that the cloud is no longer just an experiment but central to future initiatives and revenue growth.

I'm not sure the thinking of those choosing to go down this route toward private clouds has matured enough. Granted, the recent Sony game network hacks and the Amazon data center outage in northern Virginia may also be driving interest in the private cloud. Still, the promise of the cloud was to lift the burden of tending servers and patching software from IT managers, letting infrastructure specialists do it. Then IT managers would be free to bring IT services closer to the heart of the business.

While there remain regulatory concerns, a well-managed cloud can be proven as Payment Card Industry compliant as internal operations; it only takes PCI-compliant data handling by the cloud customer to complete the picture. Too much of what's motivating the private cloud build-out is defensive thinking about clouds. Defense will get you somewhere, but offensive thinking will get you further.

The enterprise private cloud simply can't achieve the broad mix of workloads that the public cloud can. A mix of workloads means different jobs spiking at different times, a kind of environmental load balancing that leads to greater efficiencies. The public cloud has a better chance of evening out the peaks and valleys of demand, one of the secrets of EC2's low hourly prices.

Instead of digging in behind the enterprise firewall, private cloud builders might better pour themselves into demanding standardized practices and defined service levels from the public cloud providers. With established terms and clear criteria for security, there might be less a need for big private clouds and a wider enjoyment of the benefits that public cloud computing is poised to bring.

Charles Babcock is an editor-at-large for InformationWeek.

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Security concerns give many companies pause as they consider migrating portions of their IT operations to cloud-based services. But you can stay safe in the cloud, as this Tech Center report explains. Download it now. (Free registration required.)

About the Author(s)

Charles Babcock

Editor at Large, Cloud

Charles Babcock is an editor-at-large for InformationWeek and author of Management Strategies for the Cloud Revolution, a McGraw-Hill book. He is the former editor-in-chief of Digital News, former software editor of Computerworld and former technology editor of Interactive Week. He is a graduate of Syracuse University where he obtained a bachelor's degree in journalism. He joined the publication in 2003.

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