Public cloud may dominate the headlines, but private cloud is quietly powering a new phase of enterprise transformation. Far from being left behind, private cloud has evolved to deliver many of the same benefits as public cloud while offering greater control, security, and cost predictability.

In the early days of public cloud, enterprise IT decision-makers were cautious. Heavy investments in on-premises data centers and concerns over data security kept many in a wait-and-see mode. Over time, private cloud technologies enabled organizations to modernize those data centers, adopt cloud architectures, and extend the value of existing IT investments without giving up control.

For more than 30 years, the Illuminas research team has tracked major technology shifts, from client-server computing to virtualized data centers and now to cloud-native architectures. Today, that means studying how cloud is evolving in the era of generative AI.

In March 2025, VMware, a Broadcom company, partnered with Illuminas to explore the state of private cloud in North America, Europe, and APJ – examining how enterprises are using it today, where it’s working, where it’s falling short, and where it’s headed next. Here are some of the key findings.

Enterprises Are Rebalancing Toward Private Cloud

Enterprise cloud strategies are entering a new era shaped by economic pressure, evolving workload demands and the rapid rise of generative AI. Many organizations are rethinking early public cloud bets amid rising concerns over cost, security and governance. At the same time, private cloud is maturing, offering security and financial transparency either on premise or hosted and managed by a third party.

Many enterprises are keen to take advantage of previous infrastructure investments in tandem with current public, private and hybrid cloud investments. Our research shows that to navigate this changing landscape, 92% of enterprises currently run a mix of public and private cloud with three-quarters saying that this is an intentional strategy. Over the next three years, the proportion of enterprises running both public and private cloud will stay roughly the same. This data points clearly to the need for flexibility in where workloads are deployed, aligning cloud strategy with the specific use case.

Public Cloud Delivers Scale, But Not Without Tradeoffs

Public cloud continues to offer unmatched scalability, agility, and global reach. However, enterprises are increasingly scrutinizing it in terms of cost management, operational complexity, and compliance gaps. Nearly 70% of organizations are considering repatriating workloads from public to private cloud, and one-third already have.

This shift reflects a growing desire for greater control, transparency, and assurance -- especially as AI and data privacy concerns intensify. While concerns over the three 'C's, cost, complexity and compliance, are certainly driving the shift to private cloud, it is generative AI that is really pushing some companies to re-think their public cloud strategy.

Private Cloud Is For Modern Workloads

Through all of the research we've done around cloud strategies and infrastructure, one thing we've consistently seen is that there is lack of clarity about what private cloud is. Most decision-makers responsible for cloud strategy are confident in their definition of private cloud, but we find they don't always align. Is it on premise only? Can it be delivered by a public cloud service provider? Does it have to be run on bare metal?

While there are differences in how private cloud is defined, what is clear is that private cloud is no longer just a consideration for legacy workloads. It's becoming the strategic core of modern enterprise IT, with 53% prioritizing private cloud for new workloads over the next three years. In fact, 84% of enterprises now run both traditional and cloud-native applications in private cloud environments.

Security, AI and Cost Control Are Driving this Shift

Our data shows that public cloud will continue to be a strategic option for future workloads, and a meaningful portion of workloads will continue to be run in public cloud. Yet despite the advantages public cloud offers, like scalability, reliable performance and simplified ITOps, security and compliance concerns are the top drivers for workload repatriation.

A striking 92% of IT leaders trust private cloud for meeting these requirements. Additionally, as adoption of generative AI accelerates, private cloud is emerging as the preferred environment for model training and inference by offering sought after data control and performance predictability. In addition to security and control, private cloud is also believed to offer enterprises necessary cost transparency.

Unlocking Private Cloud's Full Potential

Despite these advantages, to deliver on its full potential, private cloud must overcome key challenges: siloed environments, persistent complexity, and platform limitations. One-third of organizations cite siloed teams as a top challenge, while 80% rely on external expertise to bridge capability gaps.

The market opportunities are obvious for private cloud. Enterprises will get the best of private and public cloud if cloud service providers continue to build and deliver more, robust, scalable private cloud platforms. Cloud and managed service providers will benefit from the growing demand for private cloud platforms and the services to help deploy and manage them.

A mix of public and private cloud is here to stay

As the rapid rise of generative AI and other emerging technologies drive cloud strategies forward, enterprises are crafting intentional, hybrid strategies that balance innovation with control across public and private cloud environments.

Our study points to the growing view among cloud infrastructure decision-makers that a single deployment model is not a winning strategy - only 15% indicate they prefer an all-public cloud model while only 10% prefer a private cloud only approach.

Application workload use cases demand flexibility to choose between public and private cloud deployments, without sacrificing core requirements. What is clear, is that a mix of public and private cloud is here to stay as organizations balance their use of cloud resources with the need to deliver security, cost, and performance across their entire infrastructure estate.

Read Broadcom's blog: Broadcom’s Private Cloud Outlook 2025 Report Reveals Definitive Cloud Reset - Broadcom News and Stories

Read Broadcom's report: Private Cloud Outlook 2025: The Cloud Reset