The strange thing about cloud computing is that business IT loves the idea of shareable and inexpensive resources delivered over the Internet, but in practice, many enterprises are opting to build their own cloud environments. I suspect that in many cases there are no core technical reasons behind this decision other than the need for control supported by a good list of excuses that are ready to go when IT is grilled by management about its cloud strategy. At the same time, many enterprises are using public clouds though perhaps they have no business doing so, at least in a few instances. How do you know which cloud approach is right for you?
The trade-off is clear. When using internal cloud computing, you don't benefit from the core value of cloud computing: sharing. You buy the hardware and lease the data center space, and you're in charge of the ongoing operations, just like before. Even with the technical benefits of cloud infrastructure (its high degree of standardization, for example), you end up with a diminished benefit.
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Having seen this trend, the vendors have been tossing cloud-in-a-box products into the market as quickly as they can get the new stickers on the existing servers. Take Oracle's ExaLogic cloud box as the latest entry into the "quick private cloud" offerings, joining Hewlett-Packard, IBM, and most other enterprise IT providers that are looking to remain relevant by slapping on the cloud label.
However, there are some solid core reasons for using a private rather than a public cloud. Here are a few:
Compliance compels you. You have a specific regulation that does not allow data to exist on servers outside your control. I've found this requirement to be rare, and in many instances the compliance issues are poorly understood.
Performance is paramount. If you're using applications that have to send and receive a great amount of data, and the latency of the Internet is not acceptable, then public clouds may not be for you. This does not excuse, however, poorly designed "chatty" applications.