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Why the world needs private clouds

Amar Kapadia - June 15, 2021
Lois Lane won a Pulitzer in Superman Returns for her article “Why the World Doesn’t Need Superman” [spoiler alert] only to reverse her views, in a rather emotional moment, with the article “Why the World Needs Superman”.
Many industry pundits and analysts hold negative sentiments about private clouds. (In other words, “The World Doesn’t Need Private Clouds”.) In my opinion, these detractors will ultimately change their view, just like Lois Lane did.
Right off the bat I can think of 10 solid reasons why private clouds are here to stay. The $130B+ datacenter and virtualization infrastructure market is simply too large to jump onto one single bandwagon. This means the world will be a combination of public and private clouds, and here's why.

Reason #1: Cost

Marketing 101, don’t lead with cost. Customer reality 101, it’s all about the cost. In private clouds with over 2,000 virtual machines, our customers are seeing a cost reduction of 40-60% as compared to public clouds (see example of a credit card company, media giant, enterprise CRM SaaS vendor). Another successful OpenStack user, Tubemogul, publicly claims a 30% savings and a reduction in server footprint by using OpenStack instead of AWS. These types of savings are also validated by the 451 Cloud Price Index. We are talking about real dollars saved that you can use for something else.
We recently launched a brand new AWS vs. OpenStack calculator. Check it out and see how much you could save.

AWS vs OpenStack TCO Calculator

Reason #2: Integration with On-prem Data

Unless you are a brand new startup, you probably have legacy systems that your new applications need to integrate with. Perhaps it’s a customer database, perhaps it’s an inventory system. Of course, it doesn’t have to be legacy data. It could be new IoT, analytics or other digital data you will be generating. Unless you plan to host all of this data on the public cloud, you probably need to consider a private cloud. Sure, you could purchase a direct link to a public cloud and host your apps there, but all this data transfer is likely to get very expensive if there is a lot of data going back and forth. One of our media customers chose a private cloud because one set of their apps needed access to an on-prem image database. They continue to use the public cloud for other apps.

Reason #3: Geographic Availability

Public clouds are not available everywhere in the world. If you operate in geographies without a public cloud and need to meet specific data residency laws, a private cloud may be the only option. One of the reasons why the Volkswagen group chose a private cloud is because they operate in 167 locations around the world with varying data residency policies.

Reason #4: Government Access

In a public cloud, governments can issue subpoenas and get access to your data (see AWS or Azure agreements). Further, see the recent fight between the government and Microsoft over secret demands for customer data where the government can make blind subpoena requests, and the owner of the data will never even know that their data was relinquished.
The plot thickens.
Even if your data is not subpoenaed, it could get turned over if you and the subpoenaed tenant are sharing the same hardware - a distinct possibility in a multitenant public cloud. Not to make your head hurt, but the status of metadata is not specified in the above agreements. For example, is the pattern of how many VMs you start and stop, rate of I/Os  to your storage volumes or buckets, and traffic in and out of your workload protected by public cloud providers’ privacy policy? Or is the public cloud vendor and their partners able to see that metadata? So, unless you are 100% comfortable with your data being turned over to the government and other gray areas in terms of privacy, private clouds might be something to consider.
A large SaaS customer of ours providing security related services felt there was no way they would move their company secrets and proprietary technology to the public cloud and instead chose a private cloud.

Reason #5: Compliance

If you are in highly regulated industries with strict compliance requirements, you might have to stick with a private cloud. Take the gaming industry for instance. In the US, a casino cannot host any of their games on a public cloud and that is why one of our customers is using a private cloud. Even without hard government restrictions, if you need things like detailed security logs in an event of a breach, you might not be able to get them from a public cloud provider. A large telco customer chose an OpenStack private cloud since since AWS was unwilling to provide access to all the information they needed to meet their compliance needs.

Reason #6: Long Term Business Continuity

Businesses come and go. High flying technology companies like DEC, Sun Microsystems, Palm, Blackberry, AOL were once infallible. Over a 5, 10, 15 year period, there is no guarantee that your public cloud provider will still be in business. The problem with technology is that a new innovation can literally blow incumbents out of the water. You are probably thinking, not my problem. I’ll be long gone and my successor can migrate all those workloads to another cloud. Easier said than done. If your organization puts petabytes (or zettabytes by then) of data into a public cloud, moving your workloads is not going to be fun. It will be a race against time as the end-of-life letter will have a finite timeframe at the end at which the cloud will be turned off. See Nirvanix’s cloud demise where customers were given just a couple of weeks. This is why research labs, governments and public institutions are adopting private clouds.

Reason #7: Vendor Lock-in

Even if you are not worried about long-term issues, you might want flexibility in moving your workloads between public clouds and possibly a private cloud. In this case, you don’t want to be locked into one particular cloud vendor’s APIs. By using a private cloud with open APIs or an open CMP (cloud management platform) you avoid vendor lock-in and can seamlessly move workloads to virtually any public cloud. OpenStack is yet to fully meet the promise of cloud portability, although it is on the roadmap.

Reason #8: Unique Technical or Business Requirements

If your team requires specific features not available in a public cloud, you will need to consider a private cloud. This factor might be obvious, but is worth stating anyway, because your requirements may be more "unique" than you think.
For example, if your team needs a specific FPGA adapter for deep learning, a server with specific network function virtualization (NFV) acceleration features, VM flavors not available on the public cloud, specific network traversal requirements or integration with a specific PaaS vendor you will need to create a private cloud.
Additionally, public cloud SLAs are anemic. They typically only provide availability SLAs, and the partial refunds for failing to meet them are not exactly thrilling. If your team needs better availability, data durability, I/O latency, performance or other SLAs; again you may have to run a private cloud.
Imagine you are an automobile company running apps to power autonomous cars. I can’t imagine risking the cars’ autonomous operation SLAs by running your apps on a public cloud. See a recent example of several businesses affected by public cloud failures. Similarly putting the primary copy of medical images or golden image of your blockbuster movie in a public cloud that lacks data durability SLAs, might raise concerns. In addition to performance SLAs, there may be unique requirements on support SLAs as well that could drive the need for a private cloud.

Reason #9: Being Measured on EBITDA

Most people love the fact that public clouds are accounted for as an operational expense rather than capital expense. However, if your are being measured on EBITDA (i.e. depreciation is not considered), a private cloud where you can capitalize hardware might be more attractive. Similarly, if you have a strict budgeting process the variable expense of a public cloud might be troublesome.

Reason #10: Bare Metal Workloads

Last but not least are bare metal workloads. Public clouds are very secure when it comes to virtual machines -- arguably more secure than private clouds, though they also have a bigger target painted on their backs. But I would not risk putting bare metal workloads on a public cloud since that would be a hacker’s dream come true! If you want to run Docker containers, HPC, analytics or machine learning workloads directly on bare metal servers you probably want to consider a private cloud using something like OpenStack’s Ironic project.
What it boils down to is if Agile IT is strategic to your business, and you have cloud use cases that are both deep and narrow, there are plenty of reasons why you need to consider private cloud.

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