Virtual Private Cloud

A virtual private cloud (VPC) uses a multi-tenant shared services model similar to public cloud but partitions a single “instance” of resources for an individual customer. The principles of VPCs are the same as virtual private network (VPN) connectivity solutions. VPN customers all “share” the core network (or Internet) with a portion being dedicated for their own private use (in this case, the tail circuits). Likewise, VPC customers “share” the core cloud platform but the virtual machines they use are dedicated for their own private use.

VPCs typically have the following attributes:

  • Self-provisioning model via browser portal
  • OR managed service – cloud provider handles configuration
  • Firewalling and load balancing provided as part of solution
  • Pay-as-you-go or contract options
  • Highly scalable and elastic
  • Instance size varies by individual customer
  • Typically Windows or Linux OS options

Some public cloud providers also provide VPCs, often via existing configuration and payment portals. However, the smaller scale requirements and more predictable nature of VPCs means that smaller cloud providers can enter this market. This is because they deliver managed services and are thus responsible for customer on-boarding, e.g. they can scale their multi-tenant platform as they grow. Therefore, many providers have a managed hosting or dedicated server background and have taken the managed hosting model into the cloud arena.


A high-level virtual private cloud deployment is shown below:

Advantages of Virtual Private Clouds

Virtual private clouds have many of the same advantages as public clouds, e.g. speed of provisioning and time-limited expansion/contraction. In addition, they also have additional advantages in terms of security (through secure networks and firewalls), predictability (through load balancing and managed services) and cost management (through contracts and fixed pricing not opaque pay-as-you-go models). In short, most VPC customers are seeking the advantages of public cloud but in a more controlled manner through a managed hosting model.

Disadvantages of Virtual Private Clouds

Many regard VPCs as “the best of both worlds” – e.g. combining the benefits of public and private clouds but without the limitations of both. Others prefer to be in a single-tenanted environment and feel that the multi-tenancy of VPCs is a downside (for compliance, regulation, internal governance or individual preference reasons). Some VPC deployments are, deliberately, more “locked down” than public clouds, thus limiting some of the theoretical expansion and ultra-short billing periods available from large public cloud providers, which can be a disadvantage. Note that this can be eliminated by using a hybrid cloud configuration.

Examples of Virtual Private Cloud in the Real World

Virtual Private Clouds are generally used by business customers only. They are typically used for one of three things. Firstly, primary application hosting environments where the business software (e.g. email, CRM, ERP, etc) and data resides on the VPC with network connections to the customer’s offices. Secondly, secondary hosting environments for backup or disaster recovery where the cloud provider replicates the primary environment (which would typically be on-site server rooms) on a VPC to allow restore and recovery services for the customer in the event of data deletion or site outages. Finally, VPCs are used for complex web hosting environments where the customer does not want the unsecured/no-SLA model of public cloud, e.g. for websites that are handling secure transactions or sensitive client data.


Most VPC customers are seeking the advantages of public cloud but in a more controlled manner through a managed hosting model.

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