The Danger of IT Providers' "Private Clouds"

A frequent topic of conversation with firms is hosting their data in an IT provider’s “private cloud” - servers owned and managed by the IT provider, versus a public cloud such as Amazon Web Services (AWS) or Microsoft Azure. While on the surface, many firms think that a server is a server, that is not the case.

For the purposes of this discussion, we are defining a private cloud as one that uses off the shelf technologies, such as buying Dell servers, VMware licenses, then segregating the network/servers for each firm and reselling that service. A public cloud provider has their own technology and is operating at large scale, and frequently is very self service - a firm’s IT department could deploy a server same day with no human interaction or additional agreements to quote and sign.

Clear Guidance previously offered a private cloud service to small and mid-size firms but discontinued it for the reasons outlined in this article.

Private clouds include a very large amount of risk, and also have hidden costs. While public cloud is not a perfect solution, it eliminates and minimizes many of these.

Security

While no solution is perfect, the major public cloud providers (Amazon, Google, Microsoft) have an excellent security track record. On the other hand, there have been a large amount of successful attacks on private clouds. One famous example is Rackspace, a $300mm cloud provider, which resulted in 30,000 businesses losing their email, and Rackspace being unable to restore the services. Our sister company Beltex Insurance has identified private clouds as one of the hardest to insure business because of repeated security failures which result in these types of attacks.

Flexibility

Even the largest businesses such as Rackspace require quotes, purchase orders, and contracts to make changes to your firm’s environment. That is a stark contrast to a public cloud where additional storage or a new server can be deployed in just a few clicks. What about when your firm downsizes, such as moving to a native web app, or a practice group leaving? In most cases, public cloud allows reductions with just a few clicks, while a private cloud typically locks you into a long term contract.

Portability

No relationship lasts forever. When you are ready to move to a new IT provider because of support issues, private cloud becomes prohibitively expensive to leave. It is common to see costs of $1000+ per employee just for the migration process. One of the biggest advantages of AWS and Microsoft is that you are able to transfer your subscription with just a few clicks, and there are 1000s of partner companies who can support you.

But what about the costs?

Public cloud is typically more expensive due to a variety of factors. But in exchange, you are gaining a substantially higher level of security, flexibility, and portability. If you are seeing a price difference of 2x or more, there is likely a flaw in either the design of the public cloud (such as improper sizing of servers, or not utilizing Microsoft’s latest features) or the private cloud may be running on outdated hardware, or be oversubscribed. A public cloud price premium of <50% is very typical.

CGP has extensive expertise migrating firms from private clouds to Microsoft Azure. Chat with an expert today.