Dedicated Hosted Environments, the OTHER Cloud

Dedicated hosted environments allow organizations to enjoy many of the benefits of the cloud, while providing improved security and greater flexibility.

Most people are now familiar with the concept of the public cloud. Indeed, when “the cloud” is mentioned in the media, it is invariably the public cloud that is referenced. In the public cloud, companies provide software and storage from remote servers that are shared across many users. The cloud delivers its services via a web browser or another client application; the user owns neither the server hardware nor the software itself but instead subscribes to the service as one would a magazine, accessing it for a monthly or yearly subscription fee.

Despite the media’s focus on the cloud as the future, security and compliance issues continue to raise concerns for IT decision makers. No other issue comes close. Although security in the cloud can be, and usually is, very good, questions linger about the ultimate safety of data on public servers. Sixty-two percent of executives surveyed ranked public cloud security as a “serious” or “extremely serious” issue1. The 2011 version of ISACA’s IT Risk/Reward Barometer—US Edition found that 41% of its respondents felt that the risks of cloud computing outweigh the benefits2.

Compliance is another major consideration for IT decision makers. In the United States, a combination of governmental and non-governmental organizations requires companies in industries such as health care and financial services to maintain strict segregation of personally identifiable information (PII). The regulations regarding PII complicate the decision to utilize the cloud. The Payment Card Industry Data Security Standard (PCI-DSS), Health Insurance Portability and Accountability Act (HIPAA), and Sarbanes-Oxley all serve to make cloud adoption more complicated for IT decision makers.

Recently, another type of cloud has made a splash in the media: the private cloud. Private clouds have never received the publicity of their celebrity public sibling, but have become an appealing option for many companies. Unlike in the public cloud, the servers and software in a private cloud are dedicated to one company. Private clouds address many of the concerns that IT decision makers have with the cloud, and IT decision makers prefer private clouds to public clouds for handling sensitive information about 8 to 1. Indeed, 57% of executives indicated that they believe a private cloud will be the best way to manage IT deployments even in three years’ time. Only 7% said the same about the public cloud3.

Private clouds take two basic forms—internally-managed private clouds and dedicated hosted environments.

An internally-managed private cloud is built by a company for its own use, and the company owns the hardware and software and manages the deployment. In the internally-managed private cloud, software and infrastructure is delivered as a service through the company’s network. Internally-managed private clouds differ from traditional on-premise deployments because they make use of several cloud characteristics, including machine virtualization, redundancy, automated provisioning, and an application programming interface (API).

Dedicated hosted environments, or partner-hosted private clouds, are the other form of private cloud. Although they function similarly to internally-managed private clouds, dedicated hosted environments differ from the internally-managed private clouds in a few key ways. First, an outside partner builds, hosts, and manages the dedicated hosted environment for the company that will use it (the subscriber). Second, in a dedicated hosted environment, the subscriber does not have to buy the hardware to build the private cloud or the software running in the environment. Instead, the company subscribes to the software and infrastructure as a service, just as it would in the public cloud. An additional benefit, explained further below, is that the subscriber has the option of deploying additional software in the dedicated hosting environment, not just the software to which the company is subscribing.

There are several reasons that IT decision makers are embracing dedicated hosted environments.

First, dedicated hosted environments provide a greater level of control over security and compliance than the public cloud. The system is not shared as it would be in a multi-tenant, public cloud deployment. Private clouds enable companies to maintain the necessary data segregation and control over privacy and security. In a private cloud, a firewall exists between the network and the Internet, and the user’s software and data is physically separated from other users’ software and data. Users of private clouds can maintain data encryption and restrict access to the system by IP address.

Second, dedicated hosted environments are much more flexible than their public cloud counterparts. Public cloud providers typically restrict the hosting of applications to the providers’ software or to a limited number of trusted partners, but in a dedicated hosted environment, subscribers are free to load any software that they wish onto the dedicated servers. Dedicated hosted environments offer the ability to host unmanaged code such as custom web applications, customer SQL reports, and other applications within the environment. Dedicated hosted environments are also particularly useful for integrating legacy line-of-business applications with CRM platforms such as Microsoft Dynamics CRM. Although the subscriber is responsible for the unmanaged code, the flexibility of being able to host it within the environment is a huge advantage over public cloud deployments.

Third, dedicated hosted environments are scalable. Companies can add server space to meet demand much more easily than is possible with traditional on-premises deployments. Also, machine virtualization allows the managers of private clouds to reallocate the resources in a private cloud as necessary. In a standard on-premises deployment, each individual server needs to have excess capacity in order to handle peak loads. In a private cloud, the virtualized machines within the private cloud share the capacity of the entire cloud. By sharing resources, private clouds are more efficient than traditional on-premises deployments, and less excess capacity is required to handle peak loads.

Fourth, dedicated hosted environments allow smaller companies to leverage the expertise of professional hosting companies, accessing experience and knowledge that they may not otherwise be able to afford in-house, while also enjoying the benefits of a cloud.

Fifth, dedicated hosted environments give the subscribing company access to the latest software while removing the burden of managing the hardware and software to which the company has subscribed. Dedicated hosted environments also give the company the freedom to add other unmanaged software if desired. Additionally, the pace of innovation in the software industry is increasingly making it unlikely that companies can continue to use software licenses long enough to make it more economical to buy software licenses and deploy them in an on-premises environment than to subscribe to software in a dedicated hosted environment.

Private clouds provide a slew of other benefits as well, including single sign on. Read more about the benefits of a dedicated environment hosted by

1 Lange, Larry. “The big dilemma: Security versus scalability”. 24 Oct. 2011. Web. 17 Nov. 2011. <>
2 “2011 ISACA IT Risk/Reward Barometer—US Edition”. 9 May 2011. Web. 17 Nov. 2011. <>
3 Lange, “The big dilemma: Security versus scalability”.

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