On-Prem vs. Private Cloud: What's the Difference?

Defining on-prem vs. private cloud can be tricky due to varying interpretations and implementation practices, leading to blurred lines between the two concepts.

Christopher Tozzi, Technology Analyst

May 30, 2024

5 Min Read
cloud computing vs. on premises
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If you work in the tech industry, you probably know that on-prem and private cloud refer to different things. But what, exactly, distinguishes an on-prem environment from a private cloud?

The answer is somewhat debatable. Although on the surface there may seem to be clear distinctions between on-prem and private cloud infrastructure, the way folks use these terms can lead to a lot of ambiguity.

With that reality in mind, here's a look at approaches to defining on-prem and private cloud, and why the lines distinguishing each type of environment can be blurry.

Defining On-Prem

On-prem (short for on-premises) refers to IT environments that an organization hosts in a facility it owns. On-prem also implies that the organization owns and has full control over all of the hardware and software within the environment.

Defining Private Cloud

A private cloud is a cloud environment that is used by a single organization. This makes private clouds different from public clouds, where infrastructure is shared by multiple companies.

The infrastructure that powers the private cloud may also be owned by the organization and hosted in a facility it owns, but this is not necessarily the case, as we explain below.

Similarities Between On-Prem and Private Cloud

In some key ways, on-prem and private cloud are similar. Both models do the following:

Related:The 'On-Premise' Debate: How a Data Center Slang Term Went Mainstream

  • Provide more control over how IT resources are configured and managed than you get in the public cloud.

  • Allow companies to run workloads on servers that are used just by them — unlike in the public cloud, where servers are typically shared among multiple customers.

  • May be less scalable and flexible than the public cloud due to limitations on the amount of infrastructure available.

In short, both on-prem and private cloud environments offer a high degree of control and privacy, differentiating them from the public cloud.

On-Prem vs. Private Cloud: Key Differences

In other respects, however, on-prem and private cloud are usually different (we say usually because, as explained below, there is some variation surrounding exactly how on-prem and private cloud environments are implemented, causing them to look more similar than different in some cases).

Server ownership

One major difference is that in an on-prem environment, an organization always owns the servers that host its workloads. This may also be true in the case of a private cloud; a company could use a platform like OpenStack to create a private cloud on top of its own hardware. However, it's also possible to create a private cloud on third-party infrastructure, such as bare-metal servers that a colocation provider offers as a managed service.

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Service model

In a private cloud, compute, storage, and other resources are typically pooled together and made available using an as-a-service model, meaning they can be consumed on demand. If you want to launch a virtual server in a private cloud, you don't need to choose a specific bare-metal machine to host it, then install a hypervisor, and create a virtual machine yourself. Instead, you can use a platform like Harvester to deploy VMs on demand on top of your private cloud.

Most on-prem environments, however, don't pool resources or operate based on an as-a-service model. They're just collections of individual servers, each running different workloads. This makes on-prem infrastructure more flexible in the sense that each server can serve a distinct purpose. But it also increases the time and effort required to deploy workloads, since each one must typically be provisioned separately.

Geographical flexibility

Since on-prem entails hosting workloads on sites that a company owns, on-prem infrastructure offers less flexibility surrounding the geographical location of workloads. A private cloud is more flexible, since it could be hosted on-site or in a third-party data center.

This difference may be important in cases where businesses want to minimize network latency by hosting workloads as geographically close as possible to users.

Why Defining On-Prem vs. Private Cloud Can Be Tricky

Although explaining the differences between on-prem and private cloud environments may seem clear enough, ambiguity can arise due to variations in how some people use the terms.

For instance, some folks define private cloud as "dedicated hardware someone else owns." However, as mentioned above, by most definitions private clouds don't necessarily run on third-party infrastructure. You could set up a private cloud on your own infrastructure if you want.

Likewise, attempts to differentiate on-prem from private cloud may imply that "private clouds offer greater flexibility and control but may be more expensive" while "on-premises resource scalability is less flexible but can be more affordable." It's debatable whether this is always true. Scalability with private clouds can be just as limited as on-prem if the number of servers available is limited, and private clouds and on-prem environments both arguably offer extensive levels of control. It's a stretch to say that private clouds offer more control.

We could go on, but the point is that definitions of on-prem vs. private cloud vary in the wild. Don't assume that everyone means the same thing when they use these terms, or that on-prem and private cloud are mutually exclusive concepts. A private cloud could run on-prem, and on-prem resources could be configured to operate as a private cloud.


In a general and basic sense, the differences between on-prem and private cloud environments are straightforward. On-prem means environments hosted on a company's own sites and that are not configured to make resources available via an as-a-service model. In contrast, a private cloud is an environment that runs either on a company's own infrastructure or uses third-party resources and allows for as-a-service resource consumption.

But as with many terms and concepts in the world of tech, notions of exactly what on-prem versus private cloud means are not always consistent. It's important to understand the subtleties in how different folks interpret these terms.

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About the Author(s)

Christopher Tozzi

Technology Analyst, Fixate.IO

Christopher Tozzi is a technology analyst with subject matter expertise in cloud computing, application development, open source software, virtualization, containers and more. He also lectures at a major university in the Albany, New York, area. His book, “For Fun and Profit: A History of the Free and Open Source Software Revolution,” was published by MIT Press.

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