James Bourke

Private, Public or Hybrid Cloud

What's the difference?

October 25, 2010
by James Bourke, CPA.CITP


When it comes to the cloud, two primary platform areas and one combination are available: Private, Public and Hybrid. Before jumping into the cloud model, know the basics and have a general understanding of the pros and cons associated with each platform.

Most articles written about the cloud and cloud computing make references to the "cloud" without differentiating between private, public or hybrid cloud computing. Here's a high-level interpretation of the cloud computing:

Wikipedia defines Cloud Computing as Internet-based computing, whereby shared resources, software, and information are provided to computers and other devices on demand, like the electricity grid."

The "electricity grid" is a great way to explain cloud computing. Electricity is generally available anywhere/anytime. Although the means to connect to the grid may vary from continent to continent, the end result will be access to power. Another characteristic associated with the electricity grid relates to the concept of fee for service. In order to access the power of the grid, a user must do so via a provider that has built an infrastructure that allows for access to the grid.

Cloud computing utilizes the enormous infrastructure that supports the backbone of the Internet. Like the electricity grid, users have the ability to connect anywhere/anytime. The cloud computing model also brings with it a fee for service. That fee is generally paid to third parties that haHve built-out an infrastructure to allow access into the cloud. The technology associated with that infrastructure can vary significantly from continent to continent and from vendor to vendor.

Regardless of speed, the end result will be access to the cloud via a window (i.e. web-browser) and access to the endless number applications and data that may reside there.  

Public Cloud

Wikipedia defines the Public Cloud as "computing in the traditional mainstream sense, whereby resources are dynamically provisioned on a fine-grained, self-service basis over the Internet, via web applications/web services, from an offsite third-party provider who bills on a fine-grained utility computing basis."

Large vendors such as Salesforce, Google, Microsoft, Amazon, Yahoo, Rackspace and Zoho have been in this space for quite some time. These vendors have been offering their platforms, via the cloud computing model, directly to end-users, as well as collaborating with other vendors in this space to bring solution that are "right" for the end user.

The utilization of the public cloud brings with it the power to connect to a vast array of resources. Vendors providing storage facilities in this space have generally invested significantly in not only infrastructure and replication of that infrastructure, but also in ways to protect confidential and private information that may be housed in storage facilities under their control.

Private Cloud

The Private Cloud or internal cloud describes cloud computing without using third-parties or an infrastructure generally facilitated by multiple connections to a public cloud. The private cloud usually sits behind the firewall of an organization and is available to authorized users both inside and outside of that firewall.

From a security perspective, many companies have a greater comfort level using this platform. Using technology that is readily available and affordable today, such as virtualization, this platform is generally an easy platform to construct. Companies that choose this platform do so because of security and reliability concerns that are often associated with public cloud. The pitfall associated with this model is that it can significantly cost more to build and maintain than access to the public cloud.

Hybrid Cloud

A Hybrid Cloud is a popular cloud solution chosen by many companies that want a platform in this space, but also want to have control over some aspect of the platform. The hybrid cloud is generally best-of-breed and pulls together the comfort level of a private cloud, while combining it with the flexibility and versatility of the public cloud.

In a hybrid cloud environment, companies generally retain the confidential and private customer or vendor information in their private cloud, while having access to significantly larger applications. This platform allows them to use applications that would normally be out of financial reach, while putting them in a very competitive position in their marketplace.

So what is the single most deciding factor that drives the platform to select?

Hands down, that factor is size of the organization and with size generally comes financial resources.

In our profession of providing primary services such as accounting, tax and consulting, many firms choose the public platform of cloud computing. The public platform allows the smaller and medium-sized firm to access the same systems and resources as the larger and national firms, without giving them a competitive disadvantage in the marketplace. In addition, many of the vendors in our industry that have offerings on the public platform have invested significantly in infrastructure and security, given the private and confidential nature of the data generally associated with the nature of our business. This public platform is generally the platform of choice for the firm that is not in a position to invest significant dollars in internal hardware, security and labor.

Many of the largest firms in our industry have chosen the hybrid cloud as the platform of choice. Today, many firms use the wide array of readily available applications and resources on the public cloud, while still maintaining an internal, private cloud platform for their most sensitive and private client data.

The pure private cloud model is one that very few firms in our industry chose as their operational platform. The private cloud model brings with it a significantly larger cost and responsibility than either the hybrid or public platforms. Another factor contributing to the fall-off in utilization of the private cloud has been the speed at which new technologies have been brought to market in the public cloud and how such technologies can be accessed on a "pay as you go" basis. This pay as you go basis on the public cloud is financially more affordable that a significant up-front investment that is generally associated with the private cloud model.

There is a great three minute video available on YouTube from Cisco that describes the concept of public vs. private cloud more clearly.

As data security and protection technologies continue to advance and access speeds continue to expand, the public cloud model will inevitably continue to become the platform of choice for our profession.

Additional Resources

AICPA Trusted Business Advisor Solutions


AICPA Trusted Business Advisor Cloud Computing Blog

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James C. Bourke, CPA.CITP.CFF, is a partner at WithumSmith+Brown where he is director of Firm Technology. He is a past president of the New Jersey Society of CPAs and currently serves on AICPA Council and the Chair of the AICPA CITP Credential Committee. He has been continually named by Accounting Today as one of the Top 100 Most Influential People in the Profession.