What is a Virtual Private Cloud?

November 30, 2022
10 mins to read

The phrase cloud technology has become an ubiquitous one.

It enables companies to improve scalability, security and integration of their services, whilst also reducing costs.

However, some companies, not wanting to share cloud resources with others, decide to choose a private cloud platform for their digital transformation.

When implementing a private cloud — many have encountered quite a few downsides as if you don’t know what you’re doing, running a private cloud is expensive and not as scalable as a public cloud solution — and it doesn’t essentially increase the security over other cloud solutions.

So why do it?

The virtual private cloud (VPC) model is an on-demand pool of computing resources shared within a public cloud.

Part of the public cloud affords users levels of isolation, so that the cloud infrastructure isn’t shared with other users.

It’s estimated that the virtual private cloud market will reach US $107.29 billion by 2028.

By choosing VPC, companies can build a secure environment for critical enterprise cloud applications and quickly deploy backup and disaster recovery options.

What is a VPC (Virtual Private Cloud)?

A virtual private cloud (VPC) is a self-contained, private cloud computing model which is contained within a public cloud. Thus, VPC dedicates some of the public cloud’s resources for use by just one customer.

Common features of VPCs include:

  • Processing and data storage systems are not mixed with other tenants. This is achieved by using physical and virtual mechanisms managed by cloud providers.

  • The VPC splits logically isolated parts of a public cloud to create a virtual private environment.

  • Users obtain a unique private IP subnet to use in case the hardware and software are on-premises.

  • VPC users can store data, run code, host websites and do everything that is available on a private cloud.

  • VPC uses a secure virtual channel with or without a dedicated circuit to the cloud provider.

  • Virtual private cloud resources are available on-demand.

The terms ‘private’ and ‘virtual private’ cloud are quite different.

The private cloud is single-tenant — a service dedicated for one client. The virtual private cloud is a private cloud within a public cloud.

With a private cloud, users should invest in hardware, software and space — to be rented or bought from cloud service providers. Private clouds also require experienced personnel to operate them, which makes them expensive to possess.

In the VPC model, a public cloud provider has the role of the service provider, while the clients are the tenants. The benefits of a VPC is that the company possesses a secure private cloud environment, and still retains its own control.

How does VPC work?

The virtual private cloud (VPC) combines features of private and public cloud models.

VPC operates as a private cloud that runs on public, or shared architecture. VPC can be described as ‘infrastructure as a service’ (IaaS), where the vendor provides the public cloud infrastructure, and VPC services can be provided by multiple vendors.

Hence, the public cloud infrastructure provider guarantees that a private cloud customer’s data is separated for each customer — both in transit and inside the cloud provider’s network. This is done by using security policies that contain the following elements:

  • Allocating a unique virtual local area network (VLAN) to each customer. A VLAN is a group of computing devices connected to each other without the use of the internet.

  • Private IP addresses (subnets). A subnet is a range of IP addresses in a network reserved for a certain user. These private IPs are not accessible via the public Internet.

  • Encryption. VPNs (virtual private networks) use encryption to create a private network above the public network. VPN traffic passes through the Internet, but it’s encrypted — invisible to other users.

The VPC users can create and manage their own network components including: IP addresses, network gateways, access control parameters and subnets.

Benefits of VPC

VPC allows users to possess logically separated areas for private workloads — and also taking advantage of public cloud models, such as rescaling of the resources. VPC has all the benefits of a public cloud including:

  • Availability. Redundant resources and architectures that are highly fault-tolerant meaning that the VPC environment has almost 100% uptime.

  • Improved performance. VPC enables a hybrid cloud environment, so that companies can use a VPC as an extension of their own data center, without need to build on-premises private cloud.

  • Agility. VPC users can control the network size and automatically scale resources up or down when needed. Resources can be scaled dynamically in real-time.

  • Security. VPC is part of the public cloud, but it logically isolates user’s data and space from the provider’s other customers. Also, firewall capabilities are fully available.

  • Easy deployment of Hybrid clouds — by connecting a VPC to a public cloud, or to on-premises cloud architecture via a VPN.

  • Satisfied customers. The high availability of the VPC model provides reliable online presence and experience that improve customer satisfaction.

Practicalities of using a VPC

  • Possibility for specialty hardware / configuration. If a workload requires a virtual machine (VM) with a non-standard CPU and RAM configuration or an operating system that’s not supported by a public cloud provider, you can choose a VPC option.

  • Regulatory requirements. In some cases, security or governance issues force corporations into using a private cloud. Some industries (e.g. finance) have such requirements.

  • Network Latency. If your users are in an area distant from a public cloud provider, your application will run slowly, thus making the private cloud a better option.

  • Cost. When planning for cloud, you should calculate your total cost of ownership (TCO) over the project lifetime. For workloads with a steady-state load, you may find that a private cloud is more cost effective than on-demand public cloud infrastructure.

Feel free to contact us for a quick demo on how to improve your cloud experience.