The hosted private cloud powers high-load workloads without the capital strain. It’s for businesses that have outgrown hyperscalers and want their own infrastructure.
Companies move from hyperscalers to private clouds for many reasons. Some are strategic. Some are operational. Most are financial. As a business grows, it leans toward custom infrastructure – built for its needs and pace. Often, it’s also pushed by vague pricing and huge checks from the public provider.
The shift to private brings clear advantages: tighter control, smarter spending, and steady performance. However, getting it set up is a formidable challenge. It involves extensive R&D efforts, a hefty capital investment, and the critical need to either develop or acquire the necessary deep know-how.
There is a shortcut, however: a hosted private cloud. This article will explain its benefits – technical, operational and, of course, financial.
Flexibility
Hyperscalers provide different instance types. You can have VMs configured to suit various workloads. But it’ll still be on uniform and basic data center hardware.
For hyperscalers, this makes management, maintenance, and scaling faster. For clients, it means leasing slices of shared machines.
If you build a private cloud (or hire a vendor to do it), you can deploy components – servers, storage, and networking gear – tailored exactly to your needs. And this can translate to:
- High availability. The system is explicitly designed to prevent downtime. This is achieved by having resilient network, storage, and compute components, often configured so that these capabilities reside within several nodes – at least 3. With multiple independent units or paths, if one component or even an entire node fails, others will seamlessly take over, ensuring that services remain accessible.
- Redundancy. With a private cloud, you’re able to get two types of redundancy:
- At the data center level. Critical infrastructure components like power feeds are designed with redundancy to ensure continuous operation. This means there are backup systems in place for the overall power supply coming into the facility.
- At the cluster level. Data and critical components are also protected through duplication. Important data is stored in multiple places, often distributed across the local storage of different nodes. If a section or storage unit fails, there’s an accessible copy to use instead, which, again, results in no service interruption.
- High-density. With a private setup, organizations can achieve optimal utilization of the environment space by packing more powerful, enterprise-grade servers and equipment into each physical site. Because the hardware is specifically selected and optimized for your environment, and often designed to integrate multiple capabilities tightly within each unit, it can perform more work per square foot. This allows companies to run more servers and handle more demanding workloads within their allocated data center footprint, in contrast to commodity hardware, which is not meant for intense consolidation.
- Exact workload fit. You can request a specific CPU generation, preferred GPU models, or have the firmware configured to suit niche performance needs. For demanding tasks – AI, big data analytics, video streaming, complex operations in iGaming, Adtech, Martech, and blockchain, etc. – this can mean dramatic savings. Not only can you choose the most cost-efficient resources but you can also get specific and rare hardware that the public clouds don’t offer
Unified Control
In a hyperscaler environment, organizations often deploy resources across multiple services – compute instances, databases, storage buckets, serverless functions, and networking components. Potentially even across multiple regions or availability zones. Each service might have its specific configuration, permission structure, and API. Furthermore, if a company uses multiple hyperscalers, the complexity multiplies. Different vendor-specific tools, APIs, and security models can lead to a sprawling, fragmented landscape, which is hard to consistently govern and get a cohesive view over.
A private cloud consolidates your infrastructure into a single, dedicated environment. While it’s still virtualized, the underlying physical and logical infrastructure is provisioned for your company. There’s a unified control plane. A consistent set of hardware and software components. This consolidation makes management inherently easier.
Isolation
In the public cloud, even with strong logical segmentation, the resources are still shared. In a private cloud, the infrastructure is dedicated entirely to you.
This physical separation significantly reduces the attack surface. There’s no shared control plane or multi-tenant hypervisor layer to secure. With full ownership of the environment, the security perimeter is easier to protect. Logical isolation within the private cloud adds another layer, helping to separate workloads and environments.
Another factor is resource abstraction. In public clouds, compute and storage are pooled and divided across many clients. In a private cloud, there’s no cross-client resource sharing. Data paths are direct and confined. This lowers the chance of misconfigurations or accidental exposure.
Furthermore, a private setup gives you data sovereignty. Because the infrastructure is dedicated solely to you, you maintain complete control over where your data resides and how it’s handled. This helps you meet stringent regulations and ensure your data remains within specific geographical boundaries and under your direct governance.
Should You Expect Immediate Savings from a Private Cloud?
The answer is never clear-cut. When evaluating private vs. hyperscaler from a long-term cost perspective, it’s crucial to look beyond initial setup costs and consider the Total Cost of Ownership (TCO) over several years (e.g., 3-5 years) as the business scales.
The public cloud wins short-term, hands down. Its agility, low upfront investment, with various kinds of starting bonus packages (free credits) make it an attractive choice for many. But the economics shift significantly as infrastructure grows. This is well established and confirmed by multiple studies.
The biggest driver of long-term cost savings in a private cloud for stable, high-usage, and predictable workloads is the economy of scale. Yes, public clouds do offer various saving plans that can accommodate your needs. But, once you hit a certain utilization threshold on your dedicated hardware, the cost per unit of compute, storage, or network can become significantly lower than continually paying a premium for abstract, shared resources in the public cloud. This “tipping point” shows clearly in medium to large setups, like hundreds of VMs.
Besides that, you can procure and configure hardware for your private cloud that is perfectly tailored to your most demanding clusters. This includes the ability to get specialized CPUs, dedicated hardware appliances (like Fortinet for advanced security or Pure Storage for high-performance data needs), and other custom configurations that simply aren’t available in hyperscaler offerings. This precision enables maximally efficient resource utilization and, consequently, lower long-term spend.
All in all, private cloud offers the most optimal ratio between performance and cost.
On-Premises Private Cloud
This approach involves building – and running – the private cloud in your own data center or a rented one, or working with a vendor who can set it up for you. Either way, full control of the infrastructure stack – from hardware to network to security – lies with you. So does the responsibility if anything goes wrong.
How on-prem is established:
- The organization purchases and owns all the physical servers, storage arrays, networking equipment (switches, routers, firewalls), and associated data center infrastructure (racks, power distribution units, cooling systems).
- IT teams (in-house or outsourced) install and configure the virtualization software (e.g., OpenStack, VMware, Proxmox, Microsoft Hyper-V) to create the virtualized compute, storage, and network pools. They also deploy a private cloud management platform to automate provisioning and orchestrate workloads.
- The organization is solely responsible for all aspects of ongoing operations, including hardware maintenance, firmware updates, hypervisor patching, network configuration, storage management, security, capacity planning, and environmental controls within the data center.
Hosted Private Cloud
Option number two is the hosted private cloud. It represents a compelling middle ground, offering a unique blend of control and convenience.
How the hosted cloud is established:
- The service provider invests in and maintains the physical hardware (servers, storage, network), data center facilities (power, cooling, physical security), and often the underlying virtualization layer (hypervisors, network virtualization).
- The vendor also ensures the physical separation and dedication of resources to the client.
- The client manages the virtualized resources (VMs, virtual networks, guest operating systems, applications) within their dedicated environment using a portal or APIs provided by the host. They configure their virtual network settings, security policies at the OS/application layer, and application deployments.
Benefits of Working with a Hosted Private Cloud Service Provider
First off, with a hosted private cloud service, there is no CapEx. The provider investigates your infrastructure needs inside out and defines the hardware and services to cover them fully, in the most cost-effective way. They undertake the due diligence of sourcing, testing, and integrating the components. They’re absorbing the costs of physical server racks, top-of-rack switches, core network switches, and redundant power supplies (RPUs) – a complex procurement cycle that can span months and consume significant internal budget. Your organization’s IT expenditure transforms into a predictable OpEx.
Looking for control without the CapEx burden? Discuss hosted options with our cloud design team
Secondly, foundational hardware management is offloaded to the vendor. They handle procurement, setup, maintenance, monitoring, and disaster recovery planning. Your IT team is freed from time-intensive infrastructure upkeep. You can opt for standard configurations for quick deployment, or highly specific setups. In both cases, sourcing and integrating each component is the vendor’s responsibility – never your team’s.
Distribution of responsibilities
| On-Prem Private Cloud | Hosted Private Cloud |
| Application | Application |
| Data | Data |
| Runtime | Runtime |
| Middleware | Middleware |
| VPS Operating systems | VPS Operating systems |
| Virtualization platform | Virtualization platform |
| Operating systems | Operating systems |
| Storage | Storage |
| Networking | Networking |
| Server | Server |
| Provider’s network | Provider’s network |
| Power | Power |
| Colocation | Colocation |
Bold: vendor’s responsibility.
Finally, you get to establish custom SLAs precisely tailored to your business needs. These go beyond basic uptime, covering crucial metrics like network latency within your private environment and explicit support response times. These SLAs are based on the direct performance and availability of your underlying physical infrastructure and hypervisor, meaning your guarantees aren’t tied to proprietary, abstracted virtualization. This delivers a more predictable and comprehensive safety net, ensuring required resource allocation and clear support commitments.
Conclusion
A hosted private cloud is the sweet spot for organizations that want the performance, control, and cost predictability of private cloud infrastructure, without the burden of building and managing it all in-house.
As businesses scale, their needs often outgrow hyperscaler templates and become too demanding for unpredictable public cloud pricing. Hosted private clouds offer dedicated, enterprise-grade hardware tailored to exact workloads, plus unified governance, stronger security, and long-term cost benefits.
If you’re ready to benefit from a private, managed cloud – built for your mission-critical workloads with enterprise reliability and expert support?