Cloud Computing: Public Versus Private Options

By Dennis McCafferty  |  Posted 2010-04-08

If you’ve decided to take your organization’s enterprise “into the cloud,” you’re hardly alone. And if you’re weighing whether to go with a public cloud versus a private one, well, you have lots of company there, too.

Take United Seating and Mobility, which sells specialized wheelchairs at 30 locations in 12 states. The company initially tried to stay on top of matters such as vendor contracts by using phones and e-mail. Then it monitored these developments with off-the-shelf applications on its own servers. Today, however, it manages its business via a public cloud.

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“The off-the-shelf applications didn’t collaborate,” recalls Michael DeHart, director of operations at the St. Louis-based company. “You’d log on to all of the apps and try to remember which one needed which password.” Thanks to the enhanced tools available via the public cloud, staffers throughout the country now share the latest information in a more seamless manner.

For the Cleveland Cavaliers, using a private cloud to run its arena’s Website made sense. Going private has enabled more one-on-one interaction with the cloud-provider partner, while giving the sports franchise greater resources to handle traffic.

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As with many sports and entertainment venues, traffic on the arena site can spike—when the team makes the playoffs or a big concert is announced, for instance. “When you’ve booked Miley Cyrus,” says Jeff Lillibridge, director of Web services for the Cavs, “you’d better be ready.”

Demand Is Increasing

As both these organizations have discovered, few enterprise managers will be able to avoid the topic of private versus public clouds. Worldwide cloud services revenue will reach $44.2 billion in 2013, up from $17.4 billion last year, according to research firm IDC.

Though that demand is increasing, many business and technology professionals are still a bit confused about what public and private clouds actually are. A public cloud—such as Amazon’s Elastic Compute Cloud (EC2), Google AppEngine, IBM’s Blue Cloud and LotusLive Engage, and Microsoft’s Windows Azure Services Platform—is a shared technology resource that’s available via the Internet and can be used on an as-needed basis. In contrast, a private cloud is created specifically for one organization’s use.

Both concepts, greatly enhanced by virtualization technologies, are paving the way for an “evergreen” approach to IT. Enterprises can obtain the technologies they need when they need them, without having to purchase and maintain an array of in-house systems.

“It all stems from the legacy model of ‘build it and forget about it,’” says Bob Zukis, national leader of IT strategy for PricewaterhouseCoopers (PwC). “Changes taking place in the industry are making it much more efficient and effective to provision what IT needs. So ‘build it and forget about it’ no longer meets the needs of the business. Whether you’re going with a public or private cloud, you’re pursuing a way to increase your technological resources in a more efficient, flexible way.”

Appropriately enough, this evergreen movement is also green-friendly. “Cloud computing allows for reduced power consumption because enterprises are maximizing their resources and paying only for what they use,” says Vanessa Alvarez at Frost and Sullivan. “When an application is not utilizing resources, those resources can be moved to another application that needs them, enabling maximum resource efficiencies. If additional capacity or resources are no longer needed, virtual servers can be powered down or shut off.”

Many organizations struggle with the decision of private versus public clouds. Private clouds offer security and greater flexibility than traditional legacy systems, but they have a higher barrier of entry than public clouds, PwC’s Zukis says. Private cloud services require an enterprise IT manager to handle technology standardization, virtualization and operations automation, as well as operations support and business support systems.

Public clouds don’t require this kind of organizational shift. “With public clouds, you provision your organization very quickly, by increasing service, storage and other computing needs, Zukis says. “A private cloud takes a lot more time because you’re essentially rearchitecting your legacy environment.”

However, though public clouds are faster and more convenient, they don’t provide the same transparency as private clouds afford. “It’s not always clear what you’re buying off the shelf with public clouds,” Zukis points out.

Weighing the Value of Security

Security is another big issue in the cloud debate. IT and business departments will often weigh the need for balance between cost and convenience on one hand and data security on the other. Of course, all organizations value security, but some have a higher threshold for potential violations than others and require a need-for-speed strategy to survive.

An enterprise that handles high-transaction/low-security or low data value is well-suited for the public cloud, says Aninda Bose, who has analyzed both cloud structures as head of strategic sales and marketing at NIIT Technologies and as a member of the Project Management Institute, a nonprofit research organization. For example, if a local government office wants to tell you that your car registration is up for renewal and just needs to give you a renewal date, that would be perfect for public cloud hosting, he explains.

In contrast, a financial institution, health care provider or federal agency might choose the private cloud model, given the sensitivity of their data. “Accounting treatments and taxation applications are not yet fully tested for public cloud services,” says Mark White, principal with Deloitte Consulting. “So enterprises with significant risk from information exposure may want to focus on the private cloud approach.

“This caution is most relevant for systems that process, manage and report key customer, financial or intelligence information. It’s less important for ‘edge’ systems, such as salesforce automation and Web order-entry applications.”

The Orthopedic Institute, a Sioux Falls, S.D.-based medical-practice company that’s very data-dependent, concluded that the private cloud structure best suited its needs, especially since it must comply with strict Health Insurance Portability and Accountability Act (HIPAA) rules for protecting patient information.

Originally, the Orthopedic Institute was just looking to change its domain name from, explains IT Director David Vrooman. But when it explored possibilities with MaxMD, the exclusive provider of .md domains, it found that MaxMD could also provide private cloud services for highly secured, encrypted e-mail transmissions—and the cost of entry was less than doing it in-house.

“We didn’t want to use one of our servers for this because it would have amounted to a $20,000 startup cost,” Vrooman recalls. “By going with a private cloud option, we launched this at one-fifth of that expense—and it only took an afternoon to get started.

“It would have taken at least a week for my staff and me to get this done. And because MaxMD has taken over the e-mail encryption, I’m not getting up at 3 a.m. to find out what’s wrong with the server.”

But some industry experts say the traditional views about cloud computing and security may be shifting—even within organizations that are dependent on highly secured data. For its business resources-providing subsidiary, CPA2Biz, the New York-based American Institute of Certified Public Accountants wanted to provide its 350,000 members with access to the latest software tools.

Working with Intacct, CPA2Biz created a public cloud model for its CPA members. Since the program was launched in April, concerns about security have been addressed, and hundreds of firms are supporting an estimated 2,000 clients through the public cloud services offered through CPA2Biz.

“Only those in the largest of member organizations would be able to consider a private cloud system,” says Michael Cerami, vice president of corporate alliances at CPA2Biz. “Plus, we don’t believe there are security advantages to a private cloud system.

“We’ve selected partners who operate highly secure public cloud environments. This allows us to provide our members with great collaborative tools that enable them to work proactively with their clients in real time.”

Making a Choice

The public cloud structure is also appealing to organizations that aren’t dependent on high-volume, automated sales. That describes United Seating and Mobility, which uses IBM’s LotusLive Engage for online meetings, file-sharing and project-management tasks.

If the company had done this in-house, it would have taken up a server and a half, DeHart estimates. “Being on the public cloud allows us to avoid this entirely,” he says. “It’s a leasing-versus-owning concept—an operational expense versus a capital one. And the software-as-a-service offerings are better than what we could get off the shelf.

“We certainly can’t use this cloud to work with any sensitive health data. But we can run much of our business operations on it, freeing up our IT people to focus on e-mail, uptime and cell phone services.”

The Cavs took a different approach, opting for private cloud services to support the Website for its venue, Quicken Loans Arena, affectionately known as “The Q.” Fans can go to and search for information about upcoming events. If they want to buy tickets, they are directed to a business called Veritix.

Because the arena site acts mainly as a traffic conduit for Veritix, setting up a private cloud made the most sense. Consequently, the team partnered with Hosted Solutions for this service.

Since the basketball season started last fall, the arena site’s page views and visits have increased more than

60 percent, and the number of unique visitors has increased by 55 percent. By working with Hosted Solutions on the private cloud, the team avoids that “Who’s minding the data?” uncertainty that a public cloud can present.

In addition, the private cloud enables the team to handle site traffic that can make a sudden, significant leap with the swish of a last-second, playoff-deciding shot.

“The need to scale was significant,” Lillibridge says, “but we didn’t want to oversee our own dedicated hosting. It would have been more expensive, and we would have had the headache of managing our own servers. We needed dedicated services that would avoid this, while allowing our capacity to increase during peak times and decrease when we don’t have a lot of traffic.”

So, which is better: public or private clouds? The answer, it seems, depends on your company’s requirements for speed, security, scalability and resources.