Partners: Rising Private Cloud Interest Paves Opportunity

The private cloud club is becoming less exclusive, and partners agree that the trend is opening the door for more businesses to consider a dedicated cloud deployment model.

According to the third annual "State of the Market: Enterprise Cloud" report, produced for 2016 by telecommunications provider Verizon, companies are increasingly turning to private cloud solutions. According to the carrier's report, the main barrier to entry that once stood between companies and private cloud options was cost. Advances in technology have helped lower starting costs, meaning that private cloud is no longer only a suitable option for those with deep pockets.

Extraordinarily high data center costs in the early 2000s kept some businesses out of the cloud, or at least out of the private cloud. But as prices leveled off, more enterprises have been able to easily stand up a private cloud infrastructure, said Patrick Lee, business development executive for Morristown, N.J.-based Alliant Technologies, a solution provider and longtime AT&T partner.

[Related: Verizon 2016 State Of The Enterprise Cloud Market: Services Can Fuel The Channel]

And as prices go down, demand goes up, said Lee. "We are seeing a trend toward hybrid and private cloud."

Even the companies that have been including private cloud as part of their cloud strategy would often use the private cloud only for highly sensitive data, and would employ the public cloud for less-sensitive workloads, in an effort to be cost-effective. But as the price gap between private and public cloud narrows, it will become a no-brainer for more companies to move toward reassuring, dedicated private cloud solutions, and out of the public cloud, Verizon said in its report.

"We … believe that in the future public cloud will only be used in very specific circumstances," the Verizon report said.

As successful as some of the large public cloud players have been, it's becoming apparent that it's not always the right solution for all workloads -- especially for companies with compliance concerns, said Andrew Pryfogle, senior vice president of cloud transformation for Intelisys, a Petaluma, Calif.-based master agent.

"Private and hybrid clouds are becoming the main destination enterprises are looking at, and we are seeing a significant uptick. We are very bullish on private cloud's future," Pryfogle said.

Verizon's report found that 27 percent of enterprise business respondents indicated their companies were using private cloud solutions, compared with the 24 percent tapping public cloud options. An additional 17 percent noted firm plans to deploy private cloud, compared with 13 percent planning a public cloud deployment.

"I think this [trend] is telling," said Ryan Shuttleworth, chief technology officer for Verizon's cloud division. Some business are starting to mandate that a certain percentage of their applications must move into the cloud and off-premises within a specific time frame and for some of these companies, the economical choice has been the public cloud. "As customers do this, they sometimes are hitting up against risk profiles or data that isn't ready to go into the public cloud," he said.

Alliant provides wide area network (WAN), unified communications (UC), and data center services. The provider agrees that it is seeing an uptick in interest in private cloud services for those platforms as prices fall, Lee said.

The definition of private cloud varies slightly across the industry. Some business simply move servers into a solution provider's or managed services provider's (MSP's) data center. Other businesses consider a private cloud environment to be dedicated storage and connectivity to computing resources within a third-party data center, or even within the company's own data center. Alliant typically deploys both a primary site and a backup site for its customers' private cloud environments, similar to a hybrid cloud deployment. The primary site of a private cloud instance is usually deployed in a secure data center and the backup site on a customer's premises, Lee said.

Enterprise customers are seeking the benefits that the cloud promises, such as agility, scalability and self-service access. These businesses are now able to consider private cloud a "stepping stone" that's helping them avoid issues like data sovereignty in other countries, Verizon's Shuttleworth said.

"Private cloud enables [enterprises] to have cloud services that look and feel like cloud, but is in their own four walls or within a trusted provider's data center," he said.

Verizon's partners can get in on the private cloud opportunity by reselling its managed cloud offerings. The carrier is working on componentizing its own managed cloud offering so solution providers can layer their own services on top of it, Shuttleworth said.

"There's a really big opportunity for managed cloud services around private cloud and we'll be watching where it goes," he said.

PUBLISHED NOV. 18, 2015