When to Consider Building a Private Cloud: A Pragmatic Perspective

Throughout my career, I’ve taken an adversarial position toward private clouds. While some see them as a cornerstone of modern IT strategy, I’ve often viewed them as a costly and complex undertaking for enterprises attempting to replicate public cloud capabilities. My position hasn’t changed: private cloud is not a universal solution.

However, it is vital to acknowledge the limited scope in which private clouds can deliver real value. Enterprises can make informed decisions that align with their strategic objectives by focusing on specific use cases and understanding the trade-offs involved.

The Limited Scope of Private Cloud

Private clouds are most effective when deployed in scenarios where their strengths align directly with business requirements. Here’s where they can make sense:

1. Security and Compliance Requirements

Private clouds excel in industries with stringent regulations that demand data—and its processing—remain on-premises. It’s not just about storing data securely; the processing of that data must also stay local. While some hybrid approaches allow for public cloud processing with on-premises data, private clouds are indispensable when full local control is required.

2. Cost Efficiency for Predictable Workloads

Enterprises with stable workloads and defined performance needs can achieve cost savings with private clouds. Without the need for the elasticity of public cloud services, on-premises infrastructure can provide predictable performance and stable costs.

3. Minimal Need for Innovation

Private clouds provide a reliable solution for companies running services that don’t require frequent updates or new features. If an application can remain largely unchanged for two or three years, private cloud offers stability without the overhead of keeping pace with public cloud innovation cycles.

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Avoiding Misconceptions

One of the biggest misconceptions about private clouds is that they can compete directly with public cloud platforms like AWS or Azure. Broadcom CEO Hock Tan made a provocative claim at VMware Explorer, stating that VMware Cloud Foundation (VCF) is essentially “AWS on-premises.” While this statement grabbed headlines, it was far from accurate.

Private clouds are not designed to match the pace of innovation or the breadth of services offered by public cloud providers. The financial incentives don’t exist. However, Tan’s comment contains a kernel of truth: private clouds can shift workloads back to on-premises data centers when companies don’t need the advanced abstractions or rapid innovation that hyperscalers provide.

Lessons from Successful Implementations

From my experience, private clouds succeed only when companies operate within a limited scope and accept the operational and technical burdens that come with them. Here’s what successful implementations look like:

1. Narrow Focus on Specific Use Cases

Companies that succeed with private clouds focus on delivering targeted capabilities rather than trying to replicate public cloud ecosystems. For example, HPE GreenLake has been effective by centering on containers and VMs while leaving higher-level services like databases and message buses to public cloud providers.

2. Acknowledgment of Technical Debt

Private clouds inherently come with technical debt. Companies that acknowledge and accept this reality upfront are better prepared to succeed. A private cloud requires ongoing maintenance, operational expertise, and investment—it’s not a “set it and forget it” solution.

3. Alignment with Business Objectives

Private cloud strategies are most effective when they directly align with business needs such as compliance, cost control, or static service delivery. Organizations that clearly define their objectives and build their private cloud strategy around those goals can avoid unnecessary complexity and wasted resources.

Conclusion

My stance on private clouds remains unchanged: they are not a universal solution and should not be considered a default choice for enterprise IT. However, they can be valuable when applied within a limited scope of well-defined use cases.

Enterprises should focus narrowly, acknowledge the trade-offs involved, and align their efforts with specific business goals. By doing so, they can harness the benefits of private cloud without overextending themselves in an attempt to compete with hyperscalers.

Private cloud is not about keeping pace with public cloud innovation—it’s about delivering value and stability in areas where the enterprise needs them most. When organizations recognize this and act accordingly, private cloud can become a powerful, albeit niche, tool in their IT arsenal.