As Australian organisations accelerate their digital transformation, the decision between public and private cloud infrastructure is more than a technical choice - it’s a strategic one. For organisations in regulated industries like finance, healthcare, legal, and government, compliance, security, and data sovereignty are critical factors that shape cloud strategy.
This post explores how public and private cloud models compare across key dimensions: security, redundancy, cost, scalability, and regulatory compliance.
Security and compliance
Security is paramount, especially for organisations governed by the Privacy Act 1988, APRA CPS 234, and other industry-specific regulations.
- Public cloud: Providers like AWS, Azure, and Google Cloud offer strong security frameworks and compliance certifications (e.g. ISO 27001, IRAP). However, the shared responsibility model means organisations need to secure their own data, identity management, and configurations. And data residency can be a concern if data is stored outside Australia.
- Private cloud: Offers dedicated infrastructure, custom security policies, and greater control over the location of the data, making it easier to meet data sovereignty and compliance requirements. Organisations can also tailor security controls to match internal governance frameworks.
Takeaway: Organisations in regulated sectors often prefer private or hybrid cloud models to ensure sensitive data remains within Australian jurisdiction and under their direct control.
Redundancy and disaster recovery
Business continuity is essential, particularly for organisations with compliance mandates around uptime and data protection.
- Public cloud: Offers built-in redundancy across global regions and automated failover. However, cross-border failover may conflict with data residency requirements.
- Private cloud: Allows for custom disaster recovery strategies, including on-premise failover, local replication, and compliance-aligned recovery plans.
Takeaway: Regulated industries often require disaster recovery plans that ensure data remains within Australia and is recoverable under strict SLAs.
Cost and scalability
Balancing cost with compliance is a challenge.
- Public cloud: Offers elastic scalability and pay-as-you-go pricing which is ideal for dynamic workloads. However, compliance-related configurations like encryption, monitoring and geo-fencing can add complexity and cost.
- Private cloud: Requires higher upfront investment but may be more cost-effective over time for predictable workloads and compliance-heavy operations. Managed private clouds can reduce operational burden while maintaining control.
Takeaway: Organisations with stable, regulated workloads may find private cloud more predictable and easier to align with long-term compliance strategies.
Hybrid cloud: A compliance-conscious solution
Hybrid cloud models are increasingly popular among Australian organisations seeking flexibility without compromising compliance. They enable organisations to segment workloads by sensitivity and regulatory risk, ensuring compliance while leveraging public cloud innovation.
- Sensitive workloads (e.g. financial records, health data) run in private cloud or on-prem.
- General workloads (e.g. collaboration tools, analytics) run in public cloud.
- Governance frameworks ensure seamless integration, monitoring, and policy enforcement across both environments.
Hybrid cloud use cases
Healthcare
Patient records, diagnostic imaging, and treatment histories are stored securely in a private cloud to comply with the My Health Records Act and Australian Privacy Principles. Meanwhile, non-sensitive workloads like appointment scheduling, patient communications, and analytics dashboards can run in the public cloud to leverage scalability and cost efficiency.
This model ensures sensitive health data remains within Australian jurisdiction at the same time as enabling operational agility and innovation in patient engagement and service delivery.
Legal
Sensitive client documents, contracts, and case files are stored in a private cloud environment to ensure confidentiality, data sovereignty, and compliance with legal ethics obligations and privacy laws. Non-sensitive workloads like document collaboration, legal research tools, and internal communications are hosted in the public cloud to control costs but remain capable of scaling as needed.
This model allows legal professionals to maintain strict control over privileged information while leveraging cloud-based tools for productivity and collaboration without compromising compliance.
Financial services
Sensitive customer data, transaction histories, and regulatory reporting systems are hosted in a private cloud to comply with APRA CPS 234, ASIC guidelines, and data sovereignty requirements. Meanwhile, non-sensitive workloads like customer engagement platforms and mobile app front ends can operate in the public cloud to take advantage of scalability and rapid deployment.
This model allows financial institutions to maintain strict control over regulated data while leveraging public cloud agility for customer-facing operational efficiency.
Insurance
Sensitive customer data, policy details, and claims histories are stored in a private cloud to comply with APRA CPS 234, Privacy Act 1988, and internal risk management frameworks. Meanwhile, non-sensitive workloads like customer portals and quote engines are hosted in the public cloud to benefit from scalability.
This model allows insurers to maintain compliance and data integrity for regulated information while accelerating customer engagement and operational efficiency.
Final thoughts
For compliance-driven enterprises in Australia, cloud strategy should be built on a foundation of:
- Security and data sovereignty
- Regulatory alignment
- Redundancy and business continuity
- Cost and scalability
Our recommendation: Begin with a compliance and risk assessment, classify your workloads by sensitivity, and explore the model that balances the control, innovation, and regulatory alignment you require. Reach out to our team if you’d like to learn more.