deFacto Global Blog

The Shifting Cloud

Private Cloud Is Out, Public Cloud Is In

For companies considering putting their planning applications in the cloud, there has been a dramatic shift in the cloud landscape. The private cloud, once touted as the wave of the future, has lost its luster, while the public cloud is now being viewed as a more solid option as its security and business benefits have been proven through experience.

As the private cloud declines, the notion of keeping applications on-premises is having a resurgence. A modernized, virtualized on-premise environment is now seen as the logical choice for companies unable or unwilling to put their data in the public cloud because of security, privacy, or regulatory and compliance issues.

Private Cloud: Reversal of Fortune

Up to 2013 most analysts, including Gartner, were bullish on the private cloud, calling it the wave of the future for companies averse to putting their data and applications in the public cloud. Two years later, in February 2015, Gartner analyst Thomas Bittman was calling the private cloud a failure, saying he was shocked to learn that 95 percent of private cloud deployments had problems.[1] Gartner clients, said Bittman were “self-describing how their private clouds are failing to meet their goals, failing to meet requirements, failing in comparison to public clouds on price or speed.”

Bittman’s findings were echoed by other Gartner analysts who related that, “Since 2007, enterprises have embarked on private cloud computing initiatives that have mostly failed due to complexity, lack of skills and difficulty defining new processes that cross technology domains.”[2]

Matt Asay in “Private Cloud’s Very Public Failure” minced no words in concluding that “the private cloud vision has failed —utterly and completely.“[3] Asay said further that “the very notion of a privately provisioned cloud service is contradictory and nearly always doomed.”

While private clouds can succeed, Asay notes, doing so requires an immense effort focused on building a cloud rather than on the applications that leverage the cloud.  This is the same conclusion reached by Gartner analysts who report that, rather than building cloud infrastructures, “most enterprises have realized that the power of cloud computing is in the speed and agility gained in developing and operating cloud-based applications.”[4]

The change in attitude towards the private cloud is reflected in a Gartner report issued in May 2015 entitled “Internal Private Cloud Is Not for Most Mainstream Enterprises.” Thomas Bittman writes that the private cloud trend is changing as new realities drive organizations to new models. “For most organizations,” he says, “there’s an increasing sourcing shift to third-party providers and public cloud as well as more focus on improved virtualization automation.”[5]

Gartner now sees public cloud IaaS (Infrastructure as a Service) “exploding,” and based on its deployment data believes “we will see far more enterprises running their ‘cloud style’ applications in external clouds only.”[6]

Hybrid Cloud Shares Private Cloud’s Fate

The hybrid cloud typically is perceived as an integrated mix of private and public clouds. Even when the private cloud was at the peak of its hype cycle, the hybrid cloud was being hailed as the cloud of the future. Gartner analysts in 2012, for example, said “hybrid cloud computing is emerging as the next big thing.” While actual hybrid cloud computing deployments are rare, said Gartner, “nearly three-fourths of large enterprises expect to have hybrid deployments by 2015.”

This prediction has not panned out, however, and the hybrid cloud now seems destined to share the same fate of the public cloud as its vagueness, complexity, and integration difficulties come to light.  “Building a hybrid cloud is fairly complex and sophisticated work, and it uses technology that’s really just emerging,” said analyst David Linthicum. “This begs the question: Is the hybrid cloud real?”[7]

Gartner’s thinking about hybrid clouds has changed and its analysts now recommend that “IT leaders should develop a cloud IaaS strategy using a bimodal IT approach, rather than adopting a hybrid cloud approach based solely on extending existing infrastructure investments.”[8]

Microsoft Dynamics AX general manager Dan Brown also sees public cloud adoption accelerating while hybrid cloud falls to the wayside. Even though Microsoft is committed to a hybrid strategy, he says, “the hybrid cloud is quickly becoming less relevant for many organizations.”[9]

Public Cloud Is the Future

Gartner’s current advice is, “Don’t do private cloud if public cloud meets your needs.” Many organizations, says Gartner, are finding that public cloud offerings now meet their compliance, security and service-level needs. It is better, says Gartner, to invest in effective usage and governance of public cloud services than investing in duplicating a public cloud architecture on-premises.

“For most organizations, says Gartner’s Thomas Bittman, “there’s an increasing sourcing shift to third-party providers and public cloud as well as more focus on improved virtualization automation.”[10]

Likewise, analyst David Linthicum reports that “the private cloud is giving way to the public cloud.”[11] Public clouds have matured over the last few years, are ready for prime time, are more cost-effective, and do a much better job of providing time-to-market advantages, business agility, and scalability, he explains. Looking out three to five years, he says, most cloud implementations will be public clouds, and most applications running on clouds will be on public clouds.

Microsoft Sees Cloud-First Future

Microsoft senior managers for MS Dynamics AX told over 1,200 users at AXUG Summit 2015 that they see public cloud adoption moving even faster than most organizations realize.[12] The Microsoft managers believe Dynamics AX customers and prospects are beginning a rapid turnaround in outlook about public cloud deployment, and they see a cloud-first strategy as the wave of the future.

As we reported previously, the increasing number of applications available in the Azure cloud enables businesses to reap the benefits of end-to-end Microsoft solutions delivered as cloud applications. In another blog, we described how Azure Machine Learning[13] and deFacto’s Modeler[14] platform make business modeling and advanced forecasting easier, less expensive, and accessible to a wider audience.

For businesses concerned about security, Azure offers ExpressRoute, which provides a private, extra-secure, fast connection to Azure. ExpressRoute enables companies to connect directly to the Azure datacenter, bypassing the Internet.

Gartner surveys show CRM is the predominant application deployed in the cloud, with BI expected to be the second-leading application by 2017. Gartner also projects that most corporate planning will move to the cloud and that “within five years, new on-premises CPM implementations will be the exception rather than the rule.” For Microsoft shops, MS Dynamics solutions in the Azure cloud will provide ample support for their financial and operational analytical needs.


[1] http://blogs.gartner.com/thomas_bittman/2015/02/05/why-are-95-of-private-clouds-failing/

[2] Gartner, “Exploring Cloud Management Trends and the Actions to Take,” Donna Scott, Dennis Smith, Milind Govekar, February 11, 2015.

[3] http://www.techrepublic.com/article/private-clouds-very-public-failure/

[4] Gartner, “Exploring Cloud Management Trends and the Actions to Take,” Donna Scott, Dennis Smith, Milind Govekar, February 11, 2015.

[5] Gartner, “Internal Private Cloud Is Not for Most Mainstream Enterprises,” Thomas J. Bittman, May 22, 2015.

[6] Ibid.

[7] http://searchcloudcomputing.techtarget.com/feature/Making-a-hybrid-cloud-model-a-reality-in-enterprise-IT

[8] Gartner, “Infrastructure-as-a-Service Strategy — Bimodal IT, Not Hybrid Infrastructure,” March 3, 2015.

[9] http://msdynamicsworld.com/story/how-microsoft-working-change-minds-about-future-dynamics-ax-and-azure

[10] Gartner, “Internal Private Cloud Is Not for Most Mainstream Enterprises,” Thomas J. Bittman, May 22, 2015.

[11] http://www.infoworld.com/article/2609625/private-cloud/the-private-cloud-is-giving-way-to-the-public-cloud.html

[12] http://msdynamicsworld.com/story/how-microsoft-working-change-minds-about-future-dynamics-ax-and-azure

[13] http://azure.microsoft.com/en-us/services/machine-learning/

[14] http://azure.microsoft.com/en-us/marketplace/partners/defacto-global/defacto-modeler-w2012-sql2014-ssas2014-sampleapp01-defacto-business-modeler-byol-01/

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