What Is a Private Cloud? Definition, Types and How It Works

One private cloud boundary with compute, storage and network layers serving three panels, with shared clouds fading outside: what is a private cloud

A private cloud is cloud computing infrastructure provisioned for exclusive use by a single organisation. It gives that organisation self-service, pooled resources and elastic capacity, as a public cloud does, but the organisation, a third party or both can own and run it, and it can sit on or off premises. This follows the NIST definition of cloud computing.

What is a private cloud?

A private cloud is a cloud that one organisation uses exclusively, even when a provider builds or runs it.

A private cloud is a cloud infrastructure provisioned for exclusive use by a single organisation made up of multiple consumers, such as business units. NIST SP 800-145, published in September 2011, adds that the organisation, a third party or a combination of them may own, manage and operate it, and that it may exist on or off premises.

AWS puts the same idea in plainer words: an environment reserved for one organisation, with resources that the organisation alone isolates and controls. Three points about the word “private” are easy to get wrong.

  • A private cloud does not have to be on-premises. NIST allows it to sit off premises, so a third party’s facility can host one.
  • It is not for a single user. “Exclusive use” applies to the organisation, and many teams and business units inside it can draw on the same pool.
  • It is not the same as a virtual private cloud, which runs inside a public cloud provider’s infrastructure. The types section below covers the difference.

The words also turn up in product names such as SAP’s private cloud edition and Apple’s Private Cloud Compute, which are separate products. This guide is about the cloud computing deployment model.

How does a private cloud work?

Hardware is virtualised and pooled, central software manages it, and automation hands out capacity on request. A private cloud does the same for one organisation only.

AWS names three working parts. Virtualisation separates IT resources from the physical hardware, so teams can run virtual machines much like physical ones. Management software lets administrators oversee the infrastructure centrally and allocate resources. Automation speeds up repetitive tasks such as provisioning servers.

The NIST definition lists five essential characteristics of any cloud. A private cloud shows each of them inside one organisation:

  • On-demand self-service: a consumer provisions capacity such as server time and network storage as needed, without waiting for a person at the provider.
  • Broad network access: capabilities are available over the network and reachable from laptops, tablets and mobile phones.
  • Resource pooling: computing resources are pooled and assigned to consumers according to demand. In a private cloud, those consumers are the organisation’s own business units and teams.
  • Rapid elasticity: capacity can be provisioned and released, sometimes automatically, to scale out and in with demand.
  • Measured service: the cloud meters resource use at some level, such as storage, processing or bandwidth, so use can be monitored, controlled and reported.

For the layers and components behind these characteristics, see our private cloud architecture diagram.

Types of private cloud

Private clouds are usually grouped by who runs the hardware and where it sits: on-premises, hosted and managed, with virtual private cloud listed alongside by some vendors.

There is no single standard list. AWS names three types and treats managed and hosted as one. IBM names four: on-premises, virtual private, hosted and managed.

TypeWhere it runsWho operates itWhat the vendors say
On-premisesThe organisation’s own data centreThe organisationAWS and IBM both note significant upfront and ongoing spending
HostedOff site, on dedicated bare-metal servers (IBM)The provider owns and controls the assets (IBM)IBM lists it separately from managed; AWS counts the two together
ManagedUsually the provider’s data centre; IBM adds that it can also be hardware on the customer’s siteA third party runs the infrastructureAWS calls it convenient but still expensive; IBM says it costs more than public cloud or a virtual private cloud
Virtual private cloudInside a public cloud provider’s infrastructureThe public cloud provider manages the underlying infrastructure (AWS)IBM describes a logically isolated space on shared infrastructure, usually cheaper and simpler to run than an on-premises build

A virtual private cloud (VPC) is a private, logically isolated environment inside a public cloud provider’s infrastructure. We treat it as a neighbour of private cloud, not the same thing, because the infrastructure underneath is still shared.

How a hosted private cloud works, and what to check when you pick a provider, is covered in our guide to private cloud hosting.

Private cloud, public cloud and hybrid cloud compared

The three models differ in who may use the infrastructure and where it sits.

A private cloud serves one organisation, as described above.

NIST defines a public cloud as infrastructure provisioned for open use by the general public. A business, an academic body or a government organisation, or a mix of them, can own and operate it, and it sits on the provider’s premises.

A hybrid cloud, in NIST’s words, is a composition of two or more distinct cloud infrastructures (private, community or public) that stay separate but are bound together by technology that allows data and application portability.

IBM sums up the trade-off as more control and customisation in a private cloud, against more elasticity and a lower cost of entry in a public one. Our private cloud vs public cloud comparison shows how to decide between them.

Benefits and trade-offs of a private cloud

The price of control is a higher cost of entry.

IBM lists these benefits:

  • Control: you choose your own hardware and software instead of working from the provider’s catalogue.
  • Customisation: you configure servers to your preferences and adapt software through add-ons or custom development.
  • Visibility: IBM notes that workloads running behind your own firewall let you see security and access controls directly.
  • Regulatory fit: you can shape the environment to your own obligations instead of relying only on a provider’s compliance measures.

Security claims need more care. AWS notes that some organisations believe a private cloud is more secure, and that the benefit depends on how the cloud is implemented.

IBM names two drawbacks:

  • Cost: buying, installing and managing hardware and software can be expensive and may call for more IT staff.
  • Limited flexibility: extra capacity or new capabilities mean further purchases. IBM says a virtual private cloud or a managed service can ease this.

When a private cloud fits, and when it does not

Fit comes down to two questions: do you need infrastructure that only your organisation uses, and can you run it or pay someone to?

It fits when:

  • the organisation needs exclusive use of the infrastructure
  • you want to choose or control the hardware, software and configuration
  • you have in-house skills to run the platform, or a provider to run it for you

It fits less well when:

  • demand is hard to predict and you want elastic capacity at a low cost of entry
  • you cannot absorb the upfront hardware spend or extra IT staff, and no provider would carry them
  • your workloads run well on shared public cloud services and gain little from exclusivity

We design, build and run managed private clouds, including OpenStack-based environments, in carrier-neutral data centres. We start from the architecture rather than a package and stay vendor-agnostic, so the platform follows your requirements. If OpenStack is on your shortlist, our OpenStack private cloud guide covers fit and architecture.

Where to go next

Private cloud

Weighing a private cloud for your own workloads?

If the questions above sound like your shortlist, our team can talk through which model fits your requirements, from a managed private cloud to a different route.

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Frequently Asked Question About What Is a Private Cloud? Definition, Types and How It Works

Is AWS a public or private cloud?

AWS is a public cloud provider. Its virtual private cloud is a private, isolated environment inside that public cloud, which AWS counts as a type of private cloud even though it is not a private cloud in the NIST sense. Our private cloud vs public cloud guide has the longer answer.

Is a virtual private cloud the same as a private cloud?

No. A virtual private cloud is an isolated environment on a public cloud provider’s shared infrastructure, while NIST describes a private cloud as provisioned for exclusive use by one organisation. AWS and IBM both list the virtual private cloud as a type of private cloud, which is why the terms get mixed up.

What does single-tenant mean in a private cloud?

It means the environment serves one organisation instead of many unrelated customers. NIST describes a private cloud as provisioned for exclusive use by a single organisation, which can still include several consumers such as business units.

Does a private cloud have to be on-premises?

No. NIST says a private cloud may exist on or off premises, and that the organisation, a third party or both may own and operate it. Hosted and managed private clouds typically run in a provider’s data centre.

What is the difference between private cloud and public cloud?

A private cloud is provisioned for the exclusive use of one organisation, while a public cloud is open to the general public and sits on the provider’s premises. Our private cloud vs public cloud guide covers how to choose.

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