Private Cloud: Definition, Architecture, Benefits, and Limits

Learn how Identity as a Service (IDaaS) solutions bolster security and manage identity and access with speed and confidence.

What is a private cloud? It's a form of computing service in which resources are available to authorized members of a specific organization or company rather than the general public. 

Private cloud services stem from hardware, like a server. 

In a private cloud setup, your services and infrastructure exist within a private network, and the hardware and software are exclusive to your organization. Typically, the cloud is physically located within your organization or your data center. 

Anyone can use a private cloud. Typically, however, organizations with both deep pockets and a strong need for control and security are the ones who use them. Banks, government agencies, and healthcare organizations typically rely on private clouds. 

Don't think the private cloud services market is small, however. In 2020, the market size for private clouds was over $60 billion. All companies need control and security. If private clouds make both of those goals possible, more organizations may take the plunge.

How do private clouds work?

You want your customers and employees, no matter where they are located, to access your services. But you don't want interlopers snooping. A private cloud infrastructure makes these two goals possible.

Handle this with:

  • Existing equipment. Your private cloud is based on resources and infrastructure you already have within your headquarters or data center. Rather than asking employees and customers to logb directly in to servers within your building, you place capabilities in a private cloud. They can do the same things, but their connection points change. 
  • Infrastructure as a service (IaaS). You partner with a company and tap into their storage and server capabilities. They provide the hardware and software you need to get started on your cloud environment.
  • Platform as a service (PaaS). You partner with a company to use their existing cloud products. You might use your own hardware, but they will provide the software. You don’t share the version you buy with anyone else.

Organizations use private clouds because they want security and control. No matter what method you choose to build a private cloud, you’ll have the ability to alter and shape it to suit your needs. You won’t share the product you have with anyone else. 

Types of private cloud services

Any cloud product stems from a great deal of computer programming and know-how. Since private cloud infrastructure is personalized, it's essentially infinitely customizable. But a few basic types exist.

Your private cloud could be:

  • Hosted. You pay an organization to configure your cloud and ensure the software remains up and running. You may, in some cases, need to address your hardware and keep your server up-to-date. 
  • Managed. Your vendor partner handles every part of your private cloud, from the hardware to the software to the upkeep. You don’t do anything at all to make the process work except pay the bills. 
  • Virtual. You pay an organization to build and maintain a private cloud for you. But this organization may have several different types of clouds (including public versions) available. In essence, they promise to keep your information in a walled garden. 

Private clouds vs. other clouds

Multiple types of cloud infrastructure exist, and it can be hard to determine which is right for you. Walking through all the options can make your choice easier.

The three main types of cloud environments include:

  • Private clouds. You don’t share servers with anyone else, and your users are limited to employees, staff, and others you specify. 
  • Public clouds. A vendor owns resources, and you share space with many other organizations. You still specify who can see your information, of course. But a hacker that gains access to a neighbor could jump into your space too. 
  • Hybrid clouds. In a mixed environment, you hold back some resources on a private cloud, but the rest is in a public space. You can alter and switch where things are located based on traffic and need.

Many companies prefer public clouds, as they come with low costs and plenty of flexibility. But again, this isn’t the right solution for every company.

Pros and cons of private clouds

Should you invest in a private cloud, or is a public version better for you and your company? Walking through the pros and cons can make the decision clear.

Private cloud benefits include:

  • Security. Public cloud data breaches have hit up to 70 percent of companies in single year. While no form of cloud computing is entirely secure, private clouds are considered more stable than their public counterparts. 
  • Control. You don't share the product with anyone else, so you can set it up to do just what you need. 
  • Scalability. You don't pay per unit of space in a private cloud setup. You can add users easily without worrying about a bigger bill.

Drawbacks of private clouds include:

  • Cost. Since no other organization shares operational expenses, you will pay more each month. 
  • Staffing. You may need a knowledgeable and quick IT team to handle problems with your server if the vendor doesn’t do that for you. 
  • Accountability. If something goes wrong with a private cloud server, you won’t have a vendor to blame.

Are you ready to move core services to the cloud? We'd love to help. See our comprehensive guide and find out how Okta makes the process easy.


True Private Cloud Isn't Dead: Here Are the Companies Leading the Charge. (August 2018). TechRepublic.

Will the Private Cloud Disrupt Your Infrastructure as Code Practice? TechBeacon. 

IT Governance Critical as Cloud Adoption Soars to 96 Percent in 2018. (April 2018). CIO.

70 Percent of Companies Have Suffered a Public Cloud Breach in the Past Year. (July 2020). HIPAA Journal.

Getting Past Cloud Confusion: How to Avoid the Vendors Traps and Win. (March 2019). CloudTech.