Justin Augat

Private Cloud or Public Cloud - What’s best for Transforming Traditional IT?

Blog Post created by Justin Augat Employee on Mar 31, 2016

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If you asked me 5 years ago what I thought the future of IT would look like, I would have likely said “cloud” at some point in my response.

At the time, I wasn't a cloud expert or an analyst, but I knew like many others that this new way of delivering IT resources was different – and it was unlike traditional IT in almost every way possible. Cloud had the potential to be disruptive. Customers had IT challenges that they were failing to solve with traditional IT. Could cloud be exactly what they were looking for. How could traditional IT possibly compete? As it turns out, I was right about cloud and traditional IT, but for the wrong reason. More on that later.

A Short History Lesson

About 10 years ago, the world was introduced to mainstream “cloud”. Cloud became a simple way to describe commercially available, online access to IT resources. Storage, compute, backup, and archive resources were all available over the internet with just a few clicks of a web browser. It was easy to use, the resources were flexible (on-demand), and it was cost efficient (pay per use billing).

The expected benefits were perceived as potentially “game changing”. Cost reduction, operational efficiency, improved productivity, fastest application time to value – all experienced with a credit card and a laptop. Customers were getting excited. What could be better? This IS game changing!

As expected, customers came quickly, Some companies immediately went “all in” with cloud. They ripped out on-premise technology, reduced administrative staff, and “walked away” from existing investments. The predominant thinking was, cloud was more than just a new way to improve existing IT strategy. It was the new IT strategy.

Fast Forward to Cloud in 2016

Looking back, everything has changed since the introduction of cloud. Business models have changed, IT requirements have changed, even cloud terminology has changed (in today’s terms, we now refer to “commercially available, online access to IT resources” as “public cloud”). And of course, cloud has changed. It has expanded and evolved in capability, impact, and business reach. All great news for customers.

Public Cloud in Hindsight

Today, we know that public cloud has been a huge success. There is no question that it is the right strategy for many companies. But, more importantly we know that public cloud is NOT the IT panacea many expected it to be. It does have limitations. It isn’t right for all companies.

The fact is, public cloud strategies have now matured and their limitations have become visible. Today, we know that there are new dimensions of risk that need to be considered. Because of this, companies are taking a step back to evaluate their holistic IT strategies before adoption. As a result, many companies find they cannot go “all in”. And unfortunately, some companies have even had to back out of public cloud - in part or completely (see below).

Ok, public cloud isn’t for everyone. But, is it for me?

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Many of us once thought that public cloud was the magic IT elixir that everyone needed. But as it turns out, much like a new cure-all drug, public cloud requires a close examination of the potential “side effects”.

With public cloud, customers need to consider new dimensions of their business that may not have been previously on the radar – this needs to happen before, during, and after public cloud deployments. Business requirements change. IT requirements change. But, unfortunately, commonly accepted business practices and economic principles don’t change.

Sometimes companies see red flags early (and successfully avoid a painful dose of reality). Other times they hit a public cloud “inflection point” after deployment and need to adapt quickly by moving IT back on-premise. Here is a recent example: Dropbox quits Amazon cloud, takes back 500 PB of data.

Granted, as referenced above, most companies will never reach the Dropbox enormity of 500 PB. But, EVERY company has an effective cloud inflection point. This is a business specific threshold where it makes strategic business sense to change or modify strategies. This inflection point could be based on application requirements (performance), financial change (cost!) and business requirement changes (like security or risk management).

Completing the public cloud narrative, here are some real-world examples of why companies might “go private” with some or all of their public cloud portfolios (from Hitachi Data Systems experience):

  • Application Performance and Architectural Control
    • Many companies want to be able to control performance, reliability, and service levels. Even user experience. Introducing the internet into the equation reduces what the business can actually control. Cloud provider service levels don’t meet all business requirements.
    • Some companies need architectural control. They have specialized in house applications that need to be custom fit – they cannot effectively make use of a public cloud blueprint.

  • Security/Data Sovereignty Risk
    • While cloud outages are becoming less common, physical security and data location requirements are a moving target. It’s anybody’s guess where this ends. Many are preempting the potential for geo based compliance changes by moving some data back in house – especially those companies that need to provide the end-to-end compliance that is required for their industry.
    • Risk of multi-tenancy (or shared system by unknown people) – company is unable or unwilling to pay for workload isolation. They need a dedicated system.

  • Financial/Economics
    • Some companies that depend on EBIT or EBITDA realize that they don't want the OPEX costs. Instead, they want the IT capitalization to help their financial status. (Not a problem associated with cloud deployments, but moving to OPEX is not always a clean transition).
    • IT spending – as people use credit cards and expense statements to acquire IT services, cost discipline can be an issue.
    • And….total cost:
      • Actual total costs incurred with the Cloud Service Provider (not just subscription cost or $/GB price). Ironically, one of the most attractive features of public cloud for growing companies is “low price”. The irony is that as a company grows and benefits from the “low price” of public cloud, the total “cost” of that cloud can become a major problem at scale. This is a reference back to the business specific “inflection point”.
      • Many companies report unexpected fees or tariffs for migration, data protection, software upgrades, etc.
      • As it happens, Hitachi Data Systems knows a thing or two about this very topic


Private Cloud and the (big) On-Premise IT Comeback

We talked about public cloud limitations, but there is another reason why public cloud has not been universally adopted. Companies now have an alternative. New technologies are only as good as the next best option and the risk of change over business-as-usual.

So what has changed? Well, on-premise IT has evolved – significantly. On-premise IT capabilities have taken a huge leap forward from a technology, operational, and commercial perspective.

Many IT companies now offer an on-premise alternative to public cloud called “private cloud”. Private cloud provides most (if not all) of the benefits of public cloud, but in a secure, controlled environment. More importantly, companies with existing IT investments do not need to abandon these investments to go “all in”. They can transform their existing IT on a case by case basis. They can do it at the pace that is right for the business. They can avoid the risk, disruption, and potential future “inflection points” that some companies have experienced with public cloud alone.

The Hitachi Path to Private Cloud

Hitachi Data Systems has made important advances in enabling customers to realize the power of private cloud. Together with partners and other Hitachi companies, we are developing some of the most innovative solutions available in today’s marketplace. The goal? Meet our customers’ most demanding needs. Scale, performance, efficiency. Our solutions give customers a strong on-premise alternative to moving data offsite.

The Hitachi portfolio now brings customers many of the benefits of public cloud (and more) – on-premise. Customers can have the highest performance (flash), reduced administration requirements (automation), highest utilization (capacity efficiency technologies), and pay for it all like a public cloud (flexibility of cost structures, management, and elasticity of resources). You can have self-service, committed service levels. You can even do it “off-premise” with a  co-location provider (dedicated infrastructure, offsite).

The short of it is, private cloud capabilities have become so competitive with public cloud that the benefit lines are now blurred.

So, what’s best? Private or public?

While public cloud alone may not be right for every company, MOST companies would benefit from public cloud as part of their overall IT strategy. This is also true of “private cloud”. The answer to “which cloud?” is “it depends”. It is a very business specific decision – companies need to make this decision based on their individual size, growth, location, industry, and goals. The truth? There is no one cloud to “rule them all”

But more importantly, “which cloud” is the wrong question to ask. The right question to ask is “which benefits do I need?”. If your answer is “all of the above”, then there is good news for you. Most companies can now efficiently blend private cloud and public cloud strategies to create on-premise/off-premise “hybrid clouds”. Hitachi is no exception. Our portfolio gives customers flexibility and choice of cloud strategies to match specific business geography, financial, management, and technical requirements.

Putting it all together, there is no question that the introduction of cloud has transformed IT forever. It turns out I was right about cloud and traditional IT, but (admittedly) never expected the power of today’s private cloud. It represents customer choice. Cloud benefits are what customers need and there is no longer a reason to compromise on or off-premise.

Ultimately, all types of cloud (private, public, or hybrid) are enabling customers to do what they set out to do in the first place: Transform traditional IT.