The Importance of Private Cloud in Today's Hybrid World

Private Cloud has become increasingly important in today's hybrid world for several key reasons related to security and compliance, handling new workloads such as artificial intelligence, and cost predictability.

A private cloud is defined as a cloud computing environment entirely dedicated to a single organization. This means its computing resources, such as CPUs and storage, are isolated and under the direct control of that organization, rather than being shared with multiple users as in a public cloud. Private clouds can be hosted within an organization's data centers (on-premises) or externally on rented infrastructure from a cloud provider, offering enhanced security, greater control, and the ability to customize the environment to meet specific business needs and compliance requirements.

With an estimated 6.64 billion people, or 82% of the world's population, covered by some form of data privacy legislation, compliance with local regulations and data sovereignty laws has become an increasing challenge for businesses operating across multiple geographic regions.

Security and Compliance in the Private Cloud

The "Private Cloud Predictions 2025" report shows that 92% of participants trust the private cloud for security and compliance requirements, driving the adoption of private cloud systems. Furthermore, two out of three IT leaders reported being "very concerned" about storing data in public cloud environments and maintaining compliance.

With increasing data privacy legislation worldwide and the need to comply with it, more and more companies are moving towards adopting sovereign clouds. A sovereign cloud is a cloud computing environment designed to ensure that all data is stored, processed, and managed within a specific country or region, in full compliance with data sovereignty laws and local regulations. These environments aim to protect sensitive data (such as personally identifiable information, intellectual property, and financial data) from foreign access or influence, provide enhanced security, promote digital autonomy, and ensure operational resilience. For example, the General Data Protection Regulation (GDPR) in the European Union imposes strict rules on companies operating within the EU, or those dealing with companies within the bloc, when collecting and processing personal data. For companies bound by these regulations, establishing on-premises deployments can help ensure full compliance. As a result, investments in private cloud infrastructure are increasing, with the global sovereign cloud market expected to grow to over $100 billion by 2034, according to Polaris Market Research.

New Workloads and Artificial Intelligence Requirements

Artificial intelligence is accelerating at an unprecedented pace, and companies worldwide continue to invest in this new technology. Spending on Generative AI (GenAI) is expected to reach $644 billion this year, a 76.4% increase from 2024. Agentic AI tools are expected to be adopted even faster. These new technologies require enormous amounts of data, especially in enterprise environments, where AI experiments are often conducted by multiple teams, pulling unstructured data from everywhere possible. The higher the quality of the data sets, the better the results. In doing so, these processes often result in petabytes of data being moved across the network, leading to a sharp increase in traffic capacity and costs. It's no surprise that analysts expect seven out of ten companies using AI will say that sustainability and digital sovereignty will become the primary criteria for selecting appropriate cloud systems by 2025.

Cost Predictability and Improved Resource Management

As trends show, enterprise cloud spending is growing significantly worldwide. The "State of the Cloud" report for 2025 revealed that 40% of companies spend more than $12 million annually on the public cloud, a 36% increase compared to 2024. Cost management and optimization have become key priorities, especially concerning avoiding over-provisioning. Therefore, most companies value the financial transparency and cost predictability offered by the private cloud.

Overall, these factors indicate that companies are now more inclined to choose cloud environments – public, private, or hybrid – based on workload needs and characteristics. Depending on the requirements, private clouds may be more appealing, especially for data-intensive workloads that demand high security and compliance, or speed, or are highly integrated with other systems.

With a "workloads first" mindset for most organizations, the importance and expectations of the private cloud have increased. Today's IT management wants "the best of both worlds": they want the benefits of the public cloud operating model with the control, security, efficiency, and cost predictability of on-premises solutions. Organizations currently looking to re-localize workloads need to consider scalability, flexibility, and Total Cost of Ownership (TCO) without compromising compliance and resilience.

Private clouds allow companies to adapt and expand their on-premises IT infrastructure to suit specific business requirements and workloads, while enabling greater financial transparency, speed, and predictability. Using sovereign cloud architectures, IT managers can "physically embrace" their server if they wish.

The private cloud approach also supports future-proofing storage infrastructure, as on-premises IT infrastructures open up the emerging capability of Storage Disaggregation, which public cloud providers have been using for years. Storage Disaggregation refers to physically and logically separating storage resources from compute resources (such as processors and RAM) and placing them on separate racks, allowing each to be managed and scaled independently. Not long ago, it was common for organizations to expand their storage capacity by purchasing new servers. After the typical three-year warranty period on a server, IT managers often simply chose to replace the entire server (along with processors, RAM, and flash storage). At the time, this thinking made sense, but it was an expensive and wasteful proposition.

Storage and compute disaggregation – i.e., separating storage – and placing them on separate racks removes the problem associated with scaling by purchasing new servers, as storage and compute can now be scaled independently. Especially in on-premises cloud architectures, disaggregated storage makes it easy for multiple servers to share the same storage pool, helping organizations use resources more efficiently. Therefore, instead of investing in servers loaded with maximum storage, a more flexible approach is to disaggregate and extract storage from a pool and allocate it to applications as needed. As projects fluctuate, demands on storage resources shift from one part of the workflow to another.

But disaggregation not only helps create more efficient data resource management, it also increases flexibility to adapt to rapidly changing needs caused by new applications (such as GenAI or Agentic AI), data sets, and use cases. Disaggregation also creates the opportunity to scale storage resources according to business changes over time. While predicting storage, CPU, GPU, and networking needs is still not easy, disaggregated storage can eliminate the need for private cloud IT departments to make large, long-term bets on purchasing expensive servers loaded with storage. Instead, it enables them to scale compute, GPU, and storage capacity independently. It also gives IT managers more freedom to change their resource allocations on the fly.

There is no one-size-fits-all approach to choosing the right cloud architecture. Security, compliance, independent scalability, cost, performance, location, and talent must be carefully considered before deciding whether a sovereign private cloud architecture is the right choice for the business or specific applications. While on-premises solutions offer greater control and can lead to better planning and cost predictability, public cloud solutions offer faster scalability and ease of use. In an era of unprecedented data growth and increasing workload density, the private cloud architecture path can become an attractive alternative for those seeking greater data control, cost predictability, and data access.