Private cloud software is software that turns an organisation's own servers into a cloud. With it, the organisation's teams, or its paying customers, can get virtual machines, storage and containers on demand, as they would from a public cloud provider. It is also called a cloud platform or cloud management software. When the data must stay inside the country, it is often called a sovereign cloud platform. OpenStack is the best-known open-source example.
What makes a set of servers a cloud? In an ordinary data centre, a team that needs a server raises a request, and the IT team sets it up by hand over several days. In a cloud, the team opens a web page, or sends a request through an API, a fixed format in which one program asks another program to do something. It gets a virtual machine in minutes. The software decides which physical server has room. It asks the hypervisor to create the virtual machine, attaches storage and network addresses, and starts counting the hours for the bill. It also keeps each customer's machines and data separate from every other customer's, which is called multi-tenancy.
Who buys it? Three kinds of organisation. Large companies and banks buy it to get the convenience of a cloud in their own data centres. Governments buy it because they want citizens' data kept inside the country. And telecom operators and data centre companies buy it to rent out computing themselves, as a business.
Here is a typical case. A telecom operator wants to sell cloud computing to government departments and to companies that must keep their data in India. It installs private cloud software across two large data centres and 150 small edge sites. The edge sites are rooms with a few servers each, inside its telephone exchanges. A state government's transport department rents 60 virtual machines for its driving licence system. The software places them in the data centre nearest to the state, and keeps backup copies in the second data centre, also in India. A traffic analytics company rents capacity at 12 edge sites near busy junctions. It processes camera video close to where it is recorded, instead of sending it hundreds of kilometres first. Processing data near its source like this is called edge computing. The software decides where each app runs, starts and updates it at each site, and bills each customer at the end of the month.
Modern private cloud software also runs containers. It can create Kubernetes clusters on request, and hand many of them to multi-cluster Kubernetes management to run. A newer version of the same idea runs GPU servers for AI work, in a GPU-as-a-service platform.
How is a private cloud different from a public one? In a public cloud, the provider owns the servers, and many unrelated customers share them. In a private cloud, the organisation owns or controls the servers. Many companies use both, which is called a hybrid cloud. The servers of a private cloud can sit in the organisation's own building, or in a rented colocation data centre.