Private Cloud: Outsource or In-source?

In my last blog post, I wrote about some of the trade offs between a public cloud or private cloud.

Once a decision is made to go with a private cloud computing solution, the next decision is whether to outsource with private cloud hosting, or to develop and manage the private cloud internally.

So what are the trade-offs between private cloud hosting and building an internal private cloud?  Here’s a couple of though starters:

The private cloud hosting decision is much like any managed server hosting decision.  The benefits of private cloud hosting include:

  • No Capital Expenditures Required – The hosting provider makes all of the capital and staffing investments and the private cloud is delivered at a fixed monthly price.
  • Fully Managed – No need to hire the staff to manage the server hardware, storage, offsite backup, virtual servers or data center infrastructure.  A new server can be spun up with a simple phone call.
  • Compliance – If the hosting provider has SAS-70 compliance, or has built PCI or HIPAA compliant solutions, you can piggy-back on their compliance work rather than start fresh with your own audits.
  • Offsite Disaster Recovery – Some private cloud hosting providers can provide offsite warm disaster recovery for a fraction of the cost of building it internally – since they can share the disaster recovery hardware across multiple clients.

Internal private clouds give up the advantages of a cap-ex free, staff free solution, but provide a higher level of flexibility in several key areas:

  • Hardware selection – Private cloud hosting providers tend to standardize on the hardware platforms that they deliver their private cloud solution on.  As a hosting provider, I would argue that the hardware platform used for the cloud doesn’t really matter. However, if you want a higher degree of control over the hardware components, an internal (or hosted colocation) private cloud provides a higher degree of hardware flexibility.
  • Capital Expense – In some industries (such as the insurance market), access to capital is not an issue and upfront purchases are preferred over monthly fees.
  • Self Managed – If you or your technical team grooves on managing the day-to-day infrastructure, or need fine-grain control over all of the computing resources, then outsourcing private cloud computing may be difficult to achieve within the organization’s culture.

While private clouds are generally preferred by mid-size and large enterprises because they meet the security and compliance requirements of these larger organizations and their customers, different organizations will look differently on whether to build their private cloud internally, or to host their private cloud with a trusted managed data center partner.


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