Both Public and Private Clouds work best differently in specific individual organization usage scenarios depending on degree of optimization for cost (public cloud ) or optimization for control (private cloud) or a mix of the two (hybrid cloud).
One definition of a cloud service is based on 3 criteria :
It is accessible via a Web browser
It has Zero Capital Expenditure to get started
It has a Pay As You Go Model.
Private Clouds would not fit the definition above as they would have upfront organizational capital expenditure.
Organizations would go in for private Clouds when they desire the Cloud Computing benefits of Elasticity, Upward & Downward Scalability & Manageability for Computing, Storage & Bandwidth Resources within their own computing environments without the risks of the same with an external entity.
Microsoft describes 5 basic types of Workload Patterns that are Optimal for the Cloud :
On & Off Workloads (Batch Jobs)
Fast Growth Offerings
Unpredictable Bursting (Unexpected / Unplanned Demand Peaks)
Predictable Bursting (Periodic Seasonal Trends)
New IT Resource Based Product / Service Development.
For the five types of cloud work flow patterns, all the 3 possible Cloud options (Private, Public, Hybrid) could get used by customers based on need.
Factors that determine the same are as :
Organizational Size - Large Organizations would tend to use Private Clouds more.
Medium Sized Organizations would use Hybrid Clouds and Small Organizations & Individuals would use Public Clouds.
Ownership Of Organizations - Government & Publicly Owned Organizations & Institutions would tend to use Private Clouds.
Others would use a mix of Hybrid & Public Clouds.
Regulatory, Privacy & Governance Concerns & Constraints - Will determine the location of hosting data and apps whether in an internal private cloud or an external public cloud.
e.g. Health Data of EU Citizens can only be stored within the EU geographies.
US laws such as HIPAA, Sarbanese Oxley & Credit Card industry's PCI standard impose stringent controls on internal personal data.
They cannot be stored outside a physically visible organizational asset & boundary.
Capabilities of Existing IT Infrastructure - Organizations whose existing IT Resources cannot fulfill the 5 possible optimal cloud work flow patterns would look at cloud computing as an option.
The decision to go for any of the 3 cloud types (private, public & hybrid) would be based on many factors :
Hardware / Software Availability
Procurement & Provisioning Time lines
Present / Future Capacity Constraints
Disaster Planning & Recovery Requirements
Availability / Costs of Real Estate
Electricity & IT Administration Resources.
Degree of Optimization of Internal Organizational Capabilities - Organizations may choose to outsource non-core capabilities and applications to highly specialized domain specific vendors (e.g. Email, CRM) who could provide these resources on public clouds at a much lower cost.
Internal core capabilities (e.g. sophisticated proprietary unique specialized applications) where control is paramount would be safe internally in a closed physical private cloud environment.
TCO calculations also would need to be done accurately to determine the best choice.
Organizational Boundaries - Ability of applications to work across organizational boundaries & successfully address security & integration concerns is also important.