Public Cloud vs. Private Cloud: Understanding the Difference

In 2025, organizations are continuing to leverage and invest in cloud technologies that modernize their IT infrastructure and enable enhanced security, efficiency, cost savings, and performance. According to a recent TierPoint survey, 72% of IT leaders expect budgets for cloud services to increase over the next two years. If your company is considering a digital transformation project, you may be wondering what’s next for you: public cloud, private cloud, or maybe a combination of both cloud platforms. In this article, we’ll compare public cloud vs private cloud, including benefits, challenges, and steps organizations can take when deciding which environment will work best for them.

Key Differences Between Public Cloud vs. Private Cloud

Cloud infrastructure offers some of the same benefits whether you choose to use public cloud or private cloud. However, there are also differences between cloud deployment models when it comes to infrastructure ownership, access, cost structure, performance, scalability, and more.

Infrastructure Ownership

• Public Cloud: The infrastructure is owned, managed, and maintained by third-party cloud service providers like Amazon Web Services (AWS), Microsoft Azure, or Google Cloud Platform.
• Private Cloud: The infrastructure is exclusively owned and managed by a single organization, either on-premises or hosted by a third party.

Access and Usage

• Public Cloud: Users can access resources in the public cloud from anywhere as long as they have an internet connection.
• Private Cloud: The organization has exclusive access to the environment and can set access controls that meet stricter security and compliance requirements.

Cost Structure

• Public Cloud: Organizations pay for what they consume using pay-as-you-go, reserved capacity, or spot pricing models.
• Private Cloud: Businesses pay for infrastructure upfront and also pay for operational costs for maintaining and managing the environment.

Scalability

• Public Cloud: Resources in the public cloud can be scaled up or down as needed on demand.
• Private Cloud: While businesses can scale in the private cloud, there can be setbacks such as hardware availability and significant lead time for expansion, compared to the instant scaling in public cloud environments. It can also require more planning and possibly upfront investing.

Security and Compliance

• Public Cloud: The business and provider follow a shared responsibility model, where the cloud provider secures the infrastructure, while the customer is responsible for securing their data, applications, and configurations.
• Private Cloud: Businesses can implement personalized security policies and controls in the private cloud, allowing for greater customization but also increased responsibilities.

Performance

• Public Cloud: Public cloud can offer excellent performance, but network latency and shared resources could introduce variability. Dedicated instances can help improve performance but at higher costs.
• Private Cloud: While dedicated resources improve performance consistency, geographic reach and scalability limitations may impact overall performance compared to global public cloud providers.

Customization

• Public Cloud: Because resources are provisioned among tenants, customization options (like VM sizes or networking) are limited to the given constraints of a cloud provider’s platform.
• Private Cloud: Environments can be tailored to the precise needs of the organization, allowing for almost limitless customization configurations.

Maintenance and Management

• Public Cloud: While customers are still responsible for managing their applications, security configurations, and compliance requirements, more maintenance and management tasks are the responsibility of the cloud provider, giving organizations more time to focus on core business activities.
• Private Cloud: Generally, internal IT staff members maintain and manage private cloud infrastructure. Managed private cloud services are available where a third party can take on maintenance responsibilities, reducing the internal IT burden.

Public Cloud Advantages & Challenges

While a public cloud approach can improve scalability and flexibility for organizations looking for a pay-as-you-go solution, costs can also accumulate if resource usage is left unchecked.

Benefits of a Public Cloud Approach

Instead of making sizable upfront investments in hardware and infrastructure, public cloud allows businesses to pay only for the resources they use, which can also be scaled up and down to quickly meet needs.

Instead of feeling siloed in an on-premises environment, businesses that leverage public cloud can access on-demand compute, networking, and storage resources. They can also take advantage of technologies offered by cloud providers to further innovate their offerings, including artificial intelligence and machine learning (AI/ML) solutions and a vast library of services.

Public cloud also improves availability and performance for organizations that have distributed users thanks to their global reach and ability to allocate data and applications across various regions.

Because public cloud providers are responsible for infrastructure, management tasks like maintenance and patching can also be taken off the list for internal IT teams.

Challenges with a Public Cloud Strategy

Cloud providers implement strict security measures, including isolation techniques like virtual private clouds (VPCs) and encryptions, but businesses must still handle data security, access controls, and compliance.

While public cloud can be very flexible and scalable, businesses can run the risk of experiencing vendor lock-in if they use proprietary technologies that are exclusive to one cloud provider. Multicloud and hybrid strategies can mitigate vendor lock-in risks by leveraging containerization and open-source solutions.

Many organizations will appreciate having fewer daily tasks to worry about, but leaving infrastructure up to cloud providers also means that businesses have less control over customization in the public cloud environment. Sometimes this can be as minor as desired configurations. Some cloud providers offer dedicated or specialized solutions to meet stringent compliance and customization needs (Azure Local, AWS Outposts).

Companies should leverage cost management tools, auto scaling, and budgeting features provided by cloud providers to optimize spending and avoid surprises.

Private Cloud Advantages & Challenges

If you’re a business looking for greater customization and control of your environment, private cloud infrastructure could be right for you. However, organizations also need to consider the upfront costs of moving to a private cloud, as well as the ongoing maintenance that will be required to keep it running smoothly.

Benefits of a Private Cloud Approach

Private cloud environments offer greater opportunities for customization and control. They provide a dedicated environment for businesses that need data isolation and more secure options for their workloads. More customization also allows for improved compliance to meet specific industry standards, as well as greater flexibility to integrate with existing on-premises resources.

Dedicated resources can enhance performance consistency, while workload efficiency depends on proper infrastructure design. It’s important to note that private cloud environments may still experience latency if not optimized correctly.

Challenges with a Private Cloud Strategy

Because businesses in the private cloud can bring their equipment into the environment, this can be a greater upfront capital investment for organizations that don’t currently have infrastructural components or are looking to upgrade. This initial investment cost may be more cost-prohibitive compared to the pay-as-you-go model in the public cloud. Businesses are also responsible for ongoing operations and maintenance, which can place a higher burden on internal IT staff.

Private cloud scalability is often limited by physical hardware capacity and procurement cycles. However, automation tools and hybrid cloud integration can help alleviate scalability challenges.

Public Cloud Examples and Use Cases

If you still can’t decide which environment will work best for you, consider the following public cloud examples and use cases.

Startups and SMBs

Startups and small- to medium-sized businesses (SMBs) don’t tend to have the upfront capital to invest in significant infrastructure. It can be hard to predict resource needs in the early years of a business.

For example, if a startup experiences a surge in demand, it may not be able to accommodate the spike without investing in public cloud resources that can scale automatically. These businesses can also leverage cloud-native services, such as serverless computing and managed databases, allowing them to focus on development without managing infrastructure.

SMBs can also be a good fit for public cloud because it can be more cost-effective for smaller organizations to pay for operational costs and keep capital expenditures low. They have the benefit of choosing to leverage public cloud for global reach, enabling market expansion without geographical limitations.

Development and Testing

Rapid testing and deployment are well-suited for public cloud services. Businesses can create and tear down virtual machines on demand in the public cloud, making it easier to create testing environments and rapidly roll out new features.

Beyond VMs, there are also containers and serverless architectures that provide more flexibility for DevOps teams. Public cloud also offers sandbox environments, allowing isolated testing without impacting production workloads.

Disaster Recovery

Public cloud provides multi-region failover, ensuring high availability and compliance with disaster recovery plans (DRPs) and regulatory requirements.

During a natural disaster or a cyberattack, public cloud resources can keep businesses running by offering a redundant system in a geographically diverse location from the primary site. Some businesses need to be available 24/7/365—think E-commerce and health care. Redundant systems can greatly reduce or essentially eliminate the risks associated with downtime.

Private Cloud Examples and Use Cases

Customization that goes beyond what the public cloud can offer can be facilitated in the private cloud. Safeguarding sensitive data, achieving regulatory compliance, and building custom applications can all be reasons businesses choose to move to a private cloud solution.

Private cloud offers deeper integration with existing IT environments, such as legacy systems, specialized hardware, and proprietary databases.

Large Organizations with Sensitive Data

Financial institutions, government agencies, and healthcare providers all store sensitive, personally identifiable information (PII), including medical records, financial records, and information relevant to national security. Maintaining these records is key to ensuring the users and the public are kept safe. Private cloud is often chosen for data sovereignty, where regulations require data to be stored and processed within a specific jurisdiction.

Regulatory Compliance

These industries also tend to be subject to stricter regulatory guidelines. They need to implement specific security controls, store data within certain boundaries, and report information relevant to their compliance measures. Private clouds allow for the level of control necessary to meet these regulatory standards.

Custom Business Applications

Not all legacy applications can be easily translated to a public cloud environment. Private clouds can run these applications in a more easily controlled setting. Businesses may also wish to integrate with on-premises systems or leverage high-performance computing with private cloud resources.

Choosing the Right Cloud Model for Your Business

When you’re considering the right cloud model for your business, you can evaluate your cloud adoption strategy using the following steps.

Assessing Business Needs

If your workload experiences fluctuations in demand and requires scalability with cost efficiency, public cloud may be the right choice. However, for workloads with stringent latency or customization requirements, private cloud could be more suitable.

If your applications require specific configurations or dependencies that may not seamlessly integrate with public cloud platforms, a hybrid approach could provide the flexibility of leveraging both private and public cloud environments.

Evaluating Budget Constraints

Your cloud strategy also needs to be aligned with your overall business goals, including your budget.

Think about the differences between pay-as-you-go and subscription models. Calculate the total cost of ownership for both paths, which can include the upfront expenses, operational costs, and anticipated future costs. Consider what cost optimization strategies you might include, such as discounts, reserved instances, and right-sizing resources.

Considering Data Sensitivity and Compliance Requirements

Greater security and privacy are required for data that is more sensitive. Public cloud providers offer a wide range of compliance certifications, but some industry regulations may require additional layers of security and control best suited for private or hybrid cloud solutions.

Running through these requirements and considerations will help you make the right decision before diving into a project.

Take the Next Step in Your Cloud Journey

What comes next in your cloud journey? Learning more about TierPoint’s cloud services and solutions. We offer better agility and business results for organizations looking to leverage one or more cloud resources.