Since the mid 2000s one of the prevailing trends in the IT world has been to move networks, data, operating systems and servers into an environment where they are not tied to a specific piece of hardware.
In the early days the emphasis was on virtualisation. Organisations concentrated on increasing the number of servers on one machine using a hypervisor program with the activities kept in-house.
More recently there has been an emphasis on cloud computing, with more functions passing into the hands of a third party. The latter includes the option for a private cloud, dedicated to one enterprise.
Virtualisation and private cloud strategies are sometimes confused, not helped by the varying definitions.
The strongest distinction is that virtualised technology is a fixture of an IT estate while cloud computing is offered as an on-demand service, for platform, infrastructure or software, available on a pay-as-you-go basis.
Cloud is currently drawing more attention, with the government opening the Cloudstore for the public sector and a stream of big deals in the private sector, recent examples being at Deloitte and Proctor & Gamble.
But there is still a steady, if more low key, move to virtualised environments, with recent deals for organisations such as Thames Water and Medway NHS Trust. Also, Forrester has recently predicted a rise in demand for data virtualisation technology.
As organisations consider which route to take they have to look closely at which is better to meet their business needs.
This can be difficult, not least because both are often described in language which bears little relation to business processes, but there are a number of factors that should be taken into account.
Cost is the most obvious. It will be higher for virtualisation as it involves a considerable amount of work in setting-up and customising, while the provider of a cloud service has already borne these costs.
The latter also provides the scope for efficiency savings through the utility computing model, in which the customer only pays for what they use; but if the service is heavily used the costs can increase and begin to offset the initial savings.
This is unlikely to be the case for many organisations, but there are times when it is cheaper to own the asset.
Virtualisation can provide clear advantages if an organisation needs a high degree of control. Keeping operations within its own data centre can make it easier to manage and make changes to its IT environment, providing more flexibility.
This can be important if it runs a number of specialised applications that have to be tailored to the platform, and if it wants to respond to changes in the use of technology.
It could also be a significant factor for organisations that are increasing their use of remote technology or adopting a BYOD policy.
Greater control is also relevant to the concerns around data security.
There is no doubt that cloud providers take the issue very seriously, and they will offer service level agreements that provide strong guarantees on the integrity of the data they hold.
But the more sensitive the data the greater the anxieties and some organisations will get more assurance from holding it in their own facilities, where their own people are in charge day to day.
The control can also provide more assurance around the management of risk around legal and regulatory issues.
Reliability is also the subject of a debate that is difficult to settle. In a virtualised environment the loss of the network connection can cut access to multiple servers; but there could be a similar problem for a cloud set-up of the wide area network link goes down.
But there is a case for stating that the cloud offers greater resilience in the event of a problem, with the provider likely to have more options for using multiple servers or shifting to other data centres.
In addition, there will usually be more scalability in the cloud, with the scope for a rapidly expanding business to increase its data holdings and processing capacity without the time and cost of a big in-house investment.
This aligns with the flexibility that comes with the short term deals offered by cloud providers, sometimes with commitments of months rather than years, to make it responsive to what the customer needs.
But the fanfare around cloud computing should not distract from the case for virtualisation. Overall it's not clear cut, and depends on a series of value judgements determined by the nature and circumstances of the organisation's business.
Virtualisation is sometimes described as a component that can provide a step towards the adoption of a private cloud.
But some enterprises may want to pause when they have taken that step and see if it has given them everything they need.
David Clarke, MBE is CEO of the BCS, the Chartered Institute for IT
This story, "Virtualization Versus a Private Cloud" was originally published by CIO (UK).