Public, Private and Enterprise Cloud: Economy of Scale versus Efficiency of Scale

What distinguishes these three models of cloud computing are the business and operational goals for which they were implemented and the benefits derived.

A brief Twitter conversation recently asked the question how one would distinguish between the three emerging dominant cloud computing models: public, private and enterprise. Interestingly, if you were to take a "public cloud" implementation and transplant it into the enterprise, it is unlikely to deliver the value IT was expecting.

Conversely, transplanting a private cloud implementation to a public provider would also similarly fail to achieve the desired goals. When you dig into it, the focus of the implementation – the operational and business goals – play a much larger role in distinguishing these models than any technical architecture could.

Public cloud computing is also often referred to as "utility" computing.

That's because its purpose is to reduce the costs associated with deployment and subsequent scalability of an application. It's about economy of scale – for the customer, yes, but even more so for the provider. The provider is able to offer commoditized resources at a highly affordable rate because of the scale of its operations. The infrastructure – from the network to the server to the storage – is commoditized. It's all shared resources that combine to form the basis for a economically viable business model in which resources are scaled out on-demand with very little associated effort. There is very little or no customization (read: alignment of process with business/operational goals) available because economy of scale is achieved by standardizing as much as possible and limiting interaction.

Enterprise cloud computing is not overly concerned with scalability of resources but is rather more focused on the efficiency of resources, both technological and human.

An enterprise cloud computing implementation has the operational and business goal of enabling a more agile IT that serves its customers (business and IT) more efficiently and with greater alacrity. Enterprise cloud computing focuses on efficient provisioning of resources and automating operational processes such that deployment of applications is repeatable and consistent. IT wants to lay the foundation for IT as a Service. Public cloud computing wants to lay the foundation for resources as a service. No where is that difference more apparent than when viewed within the scope of the data center as a whole.

Private cloud computing, if we're going to differentiate, is the hybrid model; the model wherein IT incorporates public cloud computing as an extension of its data center and, one hopes, its own enterprise cloud computing initiative.

It's the use of economy of scale to offset costs associated with new initiatives and scalability of existing applications without sacrificing the efficiency of scale afforded by process automation and integration efforts. It's the best of both worlds: utility computing resources that can be incorporated and managed as though they are enterprise resources.

Public and enterprise cloud computing have different goals and therefore different benefits. Public cloud computing is about economy of scale of resources and commoditized operational processes. Forklifting a model such as AWS into the data center would be unlikely to succeed. The model assumes no integration or management of resources via traditional or emerging means and in fact the model as implemented by most public cloud providers would inhibit such efforts. Public cloud computing assumes that scale of resources is king and at that it excels. Enterprise cloud computing, on the other hand, assumes that efficiency is king and at that, public cloud computing is fair to middling at best. Enterprise cloud computing implementations recognize that enterprise applications are holistic units comprising all of the resources necessary to deploy, deliver and secure that application. Infrastructure services from the network to the application delivery network to storage and security are not adjunct to the application but are a part of the application. Integration with identity and access management services is not an afterthought, but an architectural design. Monitoring and management is not a "green is good, red is bad" icon on a web application, but an integral part of the overall data center strategy.

Enterprise cloud computing is about efficiency of scale; a means of managing growth in ways that reduces the burden placed on people and leverages technology through process automation and devops to improve the operational posture of IT in such a way as to enable repeatable, rapid deployment of applications within the enterprise context. That means integration, management, and governance is considered part and parcel of any application deployment. These processes and automation that enable repeatable deployments and dynamic, run-time management that includes the proper integration and assignment of operational and business policies to newly provisioned resources are unique, because the infrastructure and services comprising the architectural foundation of the data center are unique.

These are two very different sets of goals and benefits and, as such, cannot easily be substituted. They can, however, be conjoined into a broader architectural strategy that is known as private (hybrid) cloud computing.

PRIVATE CLOUD: EFFICIENT ECONOMY of SCALE There are, for every organization, a number of applications that are in fact drivers of the need for economy of scale, i.e. a public cloud computing environment. Private (hybrid) cloud computing is a model that allows enterprise organizations to leverage the power of utility computing while addressing the very real organizational need for at a minimum architectural control over those resources for integration, management and cost containment governance.

It is the compromise of cheap resources coupled with control that affords organizations the flexibility and choice required to architect a data center solution that can meet the increasing demand for self-service of its internal customers while addressing ever higher volumes of demand on external-facing applications without substantially increasing costs.

Private (hybrid) cloud computing is not a panacea; it's not the holy grail of cloud computing but it is the compromise many require to simultaneously address both a need for economy and efficiency of scale. Both goals are of interest to enterprise organizations – as long as their basic needs are met. Chirag Mehta summed it up well in a recent post on CloudAve: "It turns out that IT doesn’t mind at all if business can perform certain functions in a self-service way, as long as the IT is ensured that they have underlying control over data and (on-premise) infrastructure." See: Cloud Control Does Not Always Mean ‘Do it yourself’.

Control over infrastructure. It may be that these three simple words are the best way to distinguish between public and enterprise cloud computing after all, because that's ultimately what it comes down to. Without control over infrastructure organizations cannot integrate and manage effectively its application deployments. Without control over infrastructure organizations cannot achieve the agility necessary to leverage a dynamic, services-based governance strategy over performance, security and availability of applications. Public cloud computing requires that control be sacrificed on the altar of cheap resources. Enterprise and private (hybrid) cloud computing do not. Which means the latter is more likely able to empower IT to realize the operational and business goals for which it undertook a cloud computing initiative in the first place.