MarketsandMarkets published a market research report – “Virtual Private Cloud Market by Component (Software and Services), Service (Training and Consulting, Integration and Deployment, Support and Maintenance, and Managed Services), Organization Size, Vertical, and Region – Global Forecast to 2024”. According to the report, the Virtual Private Cloud Market is likely to grow from $ 20.9 billion in 2019 to $ 58.9 billion by 2024, at a Compound Annual Growth Rate (CAGR) of 23.0% in this period. This phenomenal market growth is likely due to increasing demand for the Virtual Private Cloud, which offers a range of advantages.
What is a Virtual Private Cloud (VPC)?
A VPC, often confused with the Private Cloud, is instead similar to a public cloud, but not precisely the same. It can be more accurately considered a mix of private and public clouds. VPC is defined by WhatIs.com as “the logical division of a service provider’s public cloud multi-tenant architecture to support private cloud computing.” They are a private cloud infrastructure provided in a public cloud. They enable organisations to reap the benefits of a private cloud (like an isolated environment for sensitive workloads) while taking advantage of the resources offered by the public cloud. A clou
d provider owns and operates the resources, but VPCs are reachable only via the Intranet, unlike public clouds like Microsoft Azure and Google Cloud, which are Internet reachable.
Why is it gaining popularity?
Enterprises globally are finding the VPC model to be beneficial to their business in several ways. Some of the important benefits contributing to the increase in demand and the high forecasted annual growth rate in its market are as follows.
Increased cloud bandwidth efficiency
In a public cloud model, traffic destined for the cloud is sent or is looped via the company data centre, leading to wastage of not only bandwidth but also the capacity of switches, firewalls and routers. Consequently, the organisation ends up paying twice for bandwidth as it has to pay for the primary WAN connection and also for internet, not to mention the network sizing costs required if it is sized for peak traffic. This offsets the advantage of not needing proprietary infrastructure. A private cloud, on the other hand, is expensive as it requires not only infrastructure but regular maintenance by the company itself.
A VPC set up, on the other hand, is designed such that the bandwidth required to reach the cloud is billed as per the actual demand, as it is not necessary to size the network for peak loads. The resulting scalability reduces costs by a large margin and enables companies to take the shortest and most cost-effective route to the application required.
2 Better application performance
Application traffic can get slowed down or hampered due to congestion on the Internet, even if the network has been sized for peak times. This slows down applications and disrupts their performance. This disadvantage of the public cloud is rectified if a VPC is used as it operates on the company’s Intranet. The cloud resources are thus routed through the enterprise’s MPLS-based WAN.
3. Higher Data Security
Since public clouds are reachable through the Internet, secure transmission of data to public cloud infrastructure requires encryption technology. While encryption tech is durable and ensures security, it is nonetheless an extra cost for the enterprise. On the other hand, since the VPC infrastructure operates via the Intranet, traffic stays within the company’s firewall and doesn’t have to cross the Internet at all. Moreover, organisations can also design additional routing policies to specify which users can reach the cloud resources and which are not allowed to do so even within the company.
Other advantages stem from the fact that these VPCs are managed by third-party service providers which deliver infrastructure services that also help enterprises manage billing processes for their products and services, focusing on service quality as well as end-user experience. They also manage and take on additional operational challenges that may arise over time. This leads to a range of benefits like increased application efficiency, faster deployment, reduced costs, and improved scalability. It also helps avoid redundancy and duplication of data.
All these advantages are evidently being realised by several corporates today, and they are slowly shifting to VPCs from their own private or public cloud infrastructures.