Many companies are understandably interested in using cloud technologies to work more efficiently, manage their data more effectively, create new business models, ensure better security, and more. One of the first decisions facing any company when moving operations to the cloud is: Do we choose public or private cloud?
This quick guide breaks down this complex topic and uses practical examples to show you the pros and cons of both options, so you can make an informed decision about which option is best for your organisation.
Public cloud vs. private cloud: What are the differences?
Let’s start with some definitions:
On-Premise: When a company decides to manage their software directly in their own servers, this is referred to as an on-premise installation. However, this approach often has a higher upfront investment and also requires internal IT resources for maintenance. To reduce risk, many companies are embracing a cloud-first strategy…but the question remains: which cloud option to choose?
Public cloud: A cloud system that is run and managed by an external company (like SAP, Amazon Web Services, Microsoft Azure, or consulting firms such as Aiden). Instead of owning and maintaining their own servers, businesses rent space and computing power from one of these public cloud providers. Multiple companies share the same infrastructure, but their data stays separate. When upgrades are made to the software, the upgrades impact all companies in the shared cloud.
Private cloud: A cloud system that is run and managed by an external company, but is exclusively built for one company, meaning no other businesses share its infrastructure. This set-up allows a company to make more specific customisations to the software and decide when upgrades will take place.
Each option has distinct advantages and potential drawbacks, depending on your company’s specific needs or strategy.
Advantages of public cloud
Public cloud solutions are widely popular, particularly for businesses looking to maximise flexibility and reduce costs. They’re ideal for businesses that need to grow quickly or adjust to changing demands. They offer:
- Scalability and agility: Public cloud options often include recommended best practices for software configuration, which allows businesses to scale quickly.
- Cost-effectiveness: Between public cloud and private cloud, public cloud will always be a more cost effective option because of the shared infrastructure resources.
- Rapid deployment: Migrations to a public cloud can run much faster than to a private cloud because of standard best practices.
- Low IT workload: The cloud provider handles updates, security patches, and infrastructure maintenance for you, reducing workload.
For example, a mid-sized retail company running its online store on outdated servers may struggle with slowdowns and crashes during peak shopping seasons. By moving to a public cloud solution like SAP Cloud ERP (formerly SAP S/4HANA) with Commerce Cloud, the company can now scale up without having to worry about performance during peak shopping events. The cloud provider handles security, maintenance, and updates, which also lowers the company’s IT costs.
Advantages of private cloud
Private cloud solutions are especially beneficial for organisations that have special requirements for security, control, and regulatory compliance. This includes organisations in finance and critical infrastructure industries, including healthcare. Here are the advantages:
- Enhanced security and compliance: Although public clouds offer advanced security, private clouds enable businesses to implement tailored security measures, which may be necessary to meet industry/regulatory requirements.
- Customisation and control: Organisations can configure their infrastructure and plan maintenance around their own schedule and needs.
Many long-term SAP ERP customers choose private cloud when migrating to SAP Cloud ERP because the solution allows organisations to leverage previous investments and maintain control of their ERP system. It is recommended to closely investigate if your current customisations truly require a private cloud. In your discussions with Aiden, you can explore if our low-code solutions cover your customisation needs and therefore public cloud would be better for your organisation.
If you are unsure which approach is best for your business, let us know. An Aiden Digital Transformation Assessment can help your organisation gain a thorough understanding of the impact of a potential migration to a cloud-based ERP.
A powerful strategy for scalability and growth
Whether private or public cloud solutions are best for your company’s needs, the truth is cloud infrastructure is the future of business. As companies become increasingly digitalised, the cloud is enabling them to operate with greater flexibility and efficiency than ever. Now’s a great time to start exploring your options.
