What are the types of private cloud?
There are 3 main types of private cloud that are most commonly used today. This includes on-premise, hosted and virtual. It is important to note that every type of private cloud can be managed for you, so that your business can focus on the applications that run on it.
Where can a private cloud run?
A private cloud can run in three places: in your own facilities, in a provider’s datacentre on dedicated hardware, or as a logically isolated environment on shared infrastructure. Each gives a different balance of control, responsibility and cost.
On-premise private cloud
An on-premise private cloud is built in your own facilities, on hardware you buy and own. This gives you full control over the environment, and it also makes you responsible for everything around it: the hardware itself, power, cooling, physical and digital security, and replacing equipment at the end of its life. Some servers, for example, need replacing every four years or so once the manufacturer stops supporting them, which brings a significant cost each time.
That responsibility has become harder to plan around in 2026. Demand for AI infrastructure has put pressure on the global supply of memory, storage and processors, and industry reporting this year points to substantial increases in server memory prices and growing competition for enterprise-grade components. Organisations buying their own hardware are facing higher costs and longer lead times, which makes refresh cycles and budgets harder to predict.
Hosted private cloud
A hosted private cloud runs on dedicated physical servers in a third-party datacentre, used exclusively by one organisation. The provider supplies and looks after the hardware, datacentre, power and connectivity, and managed networking and infrastructure, whilst the customer keeps the flexibility over configuration and software. This solution removes the cost of buying hardware and the refresh cycle that comes with it, with costs usually paid monthly instead.
Hosting does not always include management of the environment itself. Depending on the provider, tasks such as monitoring, patching and day-to-day maintenance may remain with the customer, which is covered in the next section.
Virtual private cloud
A virtual private cloud runs on shared physical infrastructure, but creates an isolated environment within it, with its own dedicated resources, network segmentation and security controls. Because the isolation is logical rather than physical, workloads are kept separate from other users without dedicating an entire infrastructure stack to one organisation. Virtual private clouds are commonly offered within public cloud platforms, which allows a business to run a tool, platform or workload in isolation from other users.
Our Managed Enterprise Cloud is an example hosted on our own multi-tenant infrastructure, a logically isolated environment that provides the scalability of cloud with transparent monthly billing and full management. Due to it sharing underlying hardware, it can be a more cost-effective route to an isolated environment for organisations that do not need dedicated physical servers. Dedicated hardware remains the defining feature of the other two types.
Where the environment runs is only part of the decision, since each of these types can also be self-managed or managed by a provider.
Who manages a private cloud?
Any type of private cloud can be run by the organisation that owns it or by a provider, so who manages the environment is a separate choice from where it runs.
With a self-managed private cloud, the organisation is responsible for building, maintaining and securing the platform, including the virtualisation software, patching and monitoring. This suits businesses with experienced infrastructure teams and the capacity to take that on. Our insight on What is Private Cloud? covers the difference in more detail.
Management works as a service layer on top of the infrastructure. In a managed private cloud, a provider designs, operates and supports the platform so your own team does not have to, and that service can sit on different foundations, from private infrastructure to a provider’s own multi-tenant enterprise cloud and public cloud. You still choose the architecture and the compliance boundary, while the provider handles building, monitoring, security, optimisation and support.
The level of management can be tailored to your requirements, and can include:
- Initial deployment and setup
- Setting up additional services
- Scaling resources as demand changes
- Security monitoring
- Patching
- General day-to-day maintenance
For many organisations, this delivers the benefits of private cloud without needing in-house expertise to run it.
The types of private cloud also overlap. Our Managed Private Cloud is both hosted and managed: it runs on dedicated hardware in our datacentres, and our engineers design, build and manage the platform. Hosted describes where a private cloud runs, and managed describes who looks after it.
What is a sovereign private cloud?
A sovereign private cloud is a private cloud hosted and operated within a specific jurisdiction, so the data it holds is stored in that country and subject to its laws. It is designed for organisations in regulated sectors, or those handling sensitive data, that need to know where their data sits and which legal framework applies.
Two terms are often confused. Data residency is where data is physically stored, while data sovereignty is which laws and jurisdictions apply to it. Hosting data in a particular country addresses residency, but it does not settle sovereignty on its own, because the provider’s ownership and jurisdiction, who can access the environment, contractual arrangements and the infrastructure supply chain can also matter.
Sovereignty can be applied on top of the types described above, most often to hosted and managed private clouds. Our UK sovereign private cloud is designed to keep data in the UK, under UK jurisdiction, on dedicated infrastructure supported by a UK-based team. Whether it meets a particular requirement depends on the regulations and contracts that apply to you, so it is worth confirming with your compliance team.
How do you choose the right type?
The right type of private cloud depends on how much isolation, control and responsibility you need. These questions help narrow it down:
- Do you need dedicated hardware, or is logical isolation enough? Dedicated hardware points to an on-premise or hosted private cloud, while logical isolation points to a virtual private cloud.
- Do you have the facilities and expertise to run it yourselves? If not, a hosted or virtual private cloud with management removes the burden of the facilities and day-to-day operations.
- Do data location and jurisdiction matter? If they do, consider where the environment is hosted, which laws apply and whether a sovereign private cloud is the right fit.
- Who will handle patching, monitoring and support? Decide whether your team will do this or whether a provider will, as part of a managed service.
- How exposed are you to hardware costs and lead times? Buying your own hardware carries the most exposure in 2026, while hosted and virtual models move the purchasing to the provider.
- Do you prefer a capital purchase or a monthly operating cost? On-premise infrastructure typically means capital expenditure and refresh cycles, whereas hosted and virtual private clouds are usually paid for monthly.
Your answers often combine, for example dedicated hardware in a hosted, managed environment that keeps data in the UK. Considering these requirements early helps ensure the platform can support both current workloads and future growth.
The next steps
Private clouds differ in where they run, how they are isolated and who manages them, and the right combination depends on your workloads, compliance requirements and the resources you have in-house. For many organisations that means a hosted, managed private cloud, combining dedicated hardware with day-to-day management by a provider, while for others a logically isolated environment or a self-managed build is a better fit.
Understanding the types is the first step. Choosing between them requires a broader look at your applications, compliance needs, growth plans and budget model.
If you are deciding which type suits you, speaking with an experienced managed hosting provider can help. Speak to one of our Cloud Consultants about your requirements, or explore our Managed Private Cloud and Enterprise Cloud options.
