What Is OpenStack? A Simple Guide to Cloud Computing

When organizations search for “what is OpenStack,” they’re often facing a critical infrastructure crossroads. Traditional cloud solutions are driving costs through the roof while limiting customization options, forcing businesses to adapt their operations to fit vendor constraints rather than the other way around. OpenStack emerges as the answer to this dilemma – an open-source cloud computing platform that puts you back in control of your infrastructure destiny. The question isn’t whether you can afford to explore OpenStack, but whether you can afford to remain dependent on vendors who prioritize their profits over your success. Let’s dive into this blog to truly understand this platform. 

What is OpenStack? 

OpenStack is a set of open-source software tools for building and managing cloud computing platforms for public and private clouds. Often referred to as the “Linux of the Cloud,” it provides an IaaS (Infrastructure as a Service) solution, allowing you to control large pools of compute, storage, and networking resources throughout a datacenter, all managed through a dashboard or via APIs. 

Born in 2010 from a joint project by NASA and Rackspace, OpenStack was envisioned as an open-source alternative to Amazon’s burgeoning cloud ecosystem. Its rapid growth was fueled by a community of developers and backing from major tech giants, evolving into one of the most significant open-source projects in the world. This community-driven approach ensures it remains on the cutting edge, responsive to real-world infrastructure needs rather than a single vendor’s roadmap. 

OpenStack isn’t a monolithic application; it’s a modular ecosystem of interconnected services. Each service handles a specific core function. Think of it like a city’s infrastructure: different departments handle power, water, roads, and public safety, but they all work together to make the city run. The key components include: 

• Nova (Compute): The heart of OpenStack. It provisions and manages vast networks of virtual machines (VMs), handling the life cycle of compute instances. It’s the city’s construction department, building new houses (VMs) on demand. 

• Swift (Object Storage): A highly scalable, redundant storage system. It’s ideal for storing unstructured data like documents, images, videos, and backups where data is stored as objects in a distributed environment. Think of it as an infinite, highly secure warehouse for your digital assets. 

• Cinder (Block Storage): Provides persistent block-level storage devices for use with Nova compute instances. This is like adding a dedicated, removable hard drive to your virtual machine, separate from the machine itself. 

• Neutron (Networking): Enables network connectivity-as-a-service between interface devices. It allows users to create complex network topologies, including firewalls, VPNs, and load balancers. This is the city’s urban planning and transportation department, building roads, bridges, and tunnels between buildings. 

• Horizon (Dashboard): The web-based graphical user interface (GUI) that provides administrators and users a visual control panel to access, provision, and automate cloud resources. It’s the city’s central government office where you can manage all services from a single, visual interface. 

• Keystone (Identity): The central directory of users and services, providing authentication and authorization for all OpenStack services. It’s the security gatekeeper for your cloud, issuing passports and keys to everyone and everything that wants to interact with the city. 

• Glance (Image Service): Acts as a repository for virtual machine images. It allows you to store, discover, and retrieve pre-configured OS images (like templates for Ubuntu, Windows, or CentOS) to quickly deploy new instances. This is the blueprint library for your city’s buildings. 

How Does OpenStack Work?

OpenStack operates through a series of APIs (Application Programming Interfaces) that act as the communication glue between all its components. Here’s a simplified example of how it works when a developer requests a new virtual machine: 

1. Authentication: The user makes an API call to Keystone, providing their credentials. Keystone authenticates the user and provides an authentication token for subsequent requests. 

1. Request Initiation: The user sends a request to Nova (the compute API), using the token, specifying the desired VM parameters (e.g., 4 vCPUs, 8GB RAM, Ubuntu image). 

1. Resource Coordination: Nova validates the request with Keystone. It then consults its scheduler to find a suitable compute node with available capacity. 

1. Image Retrieval: Nova instructs the chosen compute node to retrieve the specified Ubuntu operating system image from Glance. 

1. Networking Setup: Nova interacts with Neutron to provision the requested network connectivity—assigning an IP address, configuring virtual switches, and applying any security group rules (firewalls). 

1. Storage Attachment: If persistent storage is requested, Nova calls Cinder to create and attach a block storage volume to the new VM. 

1. Provisioning: The compute node (e.g., a hypervisor like KVM) launches the VM instance. 

1. Dashboard Update: Throughout this process, Horizon can be used to visually track the provisioning status. The user receives confirmation that their VM is ready for use. 

This entire process, which might take a sysadmin day to do manually, is automated and completed in minutes, demonstrating the transformative power of OpenStack. 

What Are the Benefits of OpenStack? 

Adopting OpenStack isn’t just a technical decision; it’s a strategic business move. Its benefits stem directly from its open-source, modular architecture, translating into tangible competitive advantages. Let’s break down the core benefits and their profound impact.

1. Cost Control & Freedom from Lock-in

Unlike proprietary cloud solutions that operate on a recurring subscription or pay-as-you-go model, OpenStack is free open-source software. You avoid hefty licensing fees, paying primarily for the hardware and the expertise to run it. This fundamentally shifts your cloud expenditure from an operational expense (OpEx) to a capital expense (CapEx), which can be favorable for many finance models. 

This freedom creates multiple strategic advantages: 

• Hardware Flexibility – Source servers, storage, and networking equipment from any vendor that meets your specifications, enabling competitive procurement and avoiding single-supplier dependencies. 

• Pricing Predictability – Organizations report cost savings of 30-50% compared to public cloud providers when running consistent workloads, primarily because you eliminate the markup that cloud vendors add to underlying infrastructure costs. 

• Strategic Independence – Make technology decisions based on your business needs rather than vendor roadmaps, ensuring your infrastructure strategy aligns with your organization’s long-term goals. 

The impact on businesses extends beyond immediate cost savings. You gain the ability to negotiate better hardware prices, switch suppliers when needed, and avoid the pricing volatility that can make public cloud budgeting challenging. More importantly, you eliminate the risk of sudden service changes or price increases that can disrupt business operations without warning.

2. Agility & Scalability

OpenStack empowers your organization to achieve the same agility promised by public clouds, but within your own secure confines. Development and operations teams can self-serve their infrastructure needs through the API or dashboard, reducing provisioning time from weeks to minutes.  

This customization capability delivers significant advantages: 

• Compliance Flexibility – Configure OpenStack to meet strict regulatory requirements like HIPAA, SOX, or GDPR without waiting for vendor compliance certifications or worrying about shared responsibility models. 

• Performance Optimization – Fine-tune compute, storage, and networking components for your specific workload characteristics, whether that’s high-frequency trading applications requiring microsecond latencies or scientific computing needing specialized GPU configurations. 

• Integration Control – Seamlessly integrate with existing enterprise systems, authentication directories, monitoring tools, and security frameworks without being constrained by vendor-supported integrations. 

• Resource Allocation – Design custom flavors and resource allocation policies that match your organization’s specific needs rather than accepting standardized offerings that may waste resources or create performance bottlenecks. 

This customization capability becomes particularly valuable for organizations with unique technical requirements. Financial services companies can configure OpenStack to meet strict regulatory compliance standards, while research institutions can optimize compute resources for high-performance computing workloads. The platform adapts to your business rather than forcing your business to adapt to platform limitations.

3. Robust Security & Compliance Control

For industries handling sensitive data—finance, healthcare, government, and telecommunications—this is often the paramount benefit. With OpenStack, your data never leaves your datacenter. You have complete visibility and control over the entire stack, from the physical hardware to the hypervisor. 

This allows you to implement and enforce stringent security policies, access controls, and auditing procedures that are tailored to meet specific regulatory requirements like GDPR, HIPAA, or PCI-DSS. You are not relying on a third party to be compliant; you are in the driver’s seat, able to prove your security posture to auditors directly. 

 4. Flexibility and Customization

The open-source nature of OpenStack means it is infinitely customizable. You are not limited to the features a vendor decides to provide. You can tailor every aspect of the cloud—networking, storage, compute—to perfectly fit the unique requirements of your workloads. 

The platform’s rich ecosystem allows for seamless integration with best-of-breed tools for monitoring, logging, and security, enabling you to architect a cloud that operates precisely to your specifications. This flexibility is especially valuable for businesses building custom web applications. If you’re developing a tailored solution requiring specific infrastructure, our team can help architect an OpenStack environment designed for your needs. 

What are the Challenges of OpenStack? 

For all its power, OpenStack is not a magic bullet. Its strengths are often intertwined with its challenges, and a successful deployment requires a clear-eyed view of these hurdles. Understanding these challenges is the first step to mitigating them.

1. Significant Operational Complexity

OpenStack’s greatest strength – its flexibility and modularity – simultaneously presents its most significant challenge. The platform’s extensive customization options create a complexity that can overwhelm organizations unprepared for the learning curve. This complexity manifests in several critical areas: 

• Architecture Understanding – Grasping how multiple services interact requires deep knowledge of virtualization, networking, storage, and distributed systems concepts. 

• Configuration Management – The extensive customization options mean more opportunities for misconfigurations that can impact performance, security, or availability. 

• Integration Complexity – Connecting OpenStack with existing enterprise systems, monitoring tools, and security frameworks requires careful planning and expertise. 

• Troubleshooting Challenges – When issues arise, problem diagnosis spans multiple interconnected services, requiring systematic debugging approaches. 

The business impact is substantial: organizations often underestimate the time and expertise required for successful OpenStack deployments. Companies frequently discover that their initial deployment timeline estimates were overly optimistic, leading to delayed project launches and increased costs.  

However, this challenge can be addressed through comprehensive planning, adequate training programs, and partnerships with experienced OpenStack integrators who can accelerate the learning curve.

2. The Expertise Gap and Talent Scarcity

OpenStack demands expertise that spans multiple domains – virtualization, networking, storage, and Linux system administration. This comprehensive skill requirement creates several organizational challenges: 

• Talent Scarcity – Finding professionals with comprehensive OpenStack knowledge remains challenging, particularly in competitive job markets where cloud expertise commands premium salaries. 

• Training Investment – Existing staff require extensive training to become proficient with OpenStack architecture, troubleshooting, and operational procedures. 

• Knowledge Concentration Risk – Organizations often become dependent on a small number of OpenStack experts, creating operational risks if key personnel leave. 

• Ongoing Education – The platform’s rapid evolution requires continuous learning to stay current with new features, security updates, and best practices. 

• Infrastructure Requirements – OpenStack deployments require dedicated hardware for control plane services, monitoring systems, and management tools beyond the compute resources needed for workloads. 

You overcome this by investing in training for their existing infrastructure teams, who often have the underlying Linux and networking knowledge to build upon. Cultivating internal expertise is a long-term strategy that pays dividends in operational stability and independence.

3. Upgrades and Long-Term Maintenance

Running OpenStack means taking responsibility for the entire cloud stack – from hardware failures to software updates to security patches. This operational burden creates significant ongoing responsibilities: 

• 24/7 Monitoring Requirements – OpenStack environments require continuous monitoring of hardware health, service availability, performance metrics, and security events across distributed infrastructure. 

• Update Management – Regular security patches, bug fixes, and feature updates must be carefully planned and tested to avoid service disruptions while maintaining security posture. 

• Capacity Planning – Proactive monitoring of resource utilization, performance trends, and growth patterns to ensure adequate capacity for business needs without over-provisioning. 

• Backup and Disaster Recovery – Comprehensive backup strategies for configuration data, databases, and tenant workloads, plus tested disaster recovery procedures for business continuity. 

• Performance Optimization – Ongoing tuning of storage systems, network configurations, and compute resource allocation to maintain optimal performance as workloads evolve. 

• Security Management – Continuous security monitoring, vulnerability assessment, and incident response procedures to protect both infrastructure and tenant data. 

However, this challenge also represents an opportunity for organizations that invest in proper automation and tooling. Many successful OpenStack deployments implement comprehensive automation frameworks using tools like Ansible, Puppet, or Salt that handle routine maintenance tasks, reducing operational overhead while improving reliability and consistency. The key lies in treating OpenStack not just as software to install, but as a platform requiring ongoing investment in operational excellence. 

What is OpenStack Used For? 

OpenStack has moved far beyond its experimental roots and is now the backbone of critical infrastructure across numerous industries. Its use cases are a testament to its versatility and power, solving real business problems across sectors. 

1. Private Cloud Infrastructure for Enterprise 

Large enterprises increasingly turn to OpenStack to build private clouds that deliver public cloud-like capabilities while maintaining complete control over their data and infrastructure. This use case addresses critical enterprise requirements that public clouds cannot adequately meet: 

• Financial Services Implementation – Banks and financial institutions use OpenStack to create development environments that mirror production systems, enabling faster application development cycles while keeping sensitive customer data completely isolated from external providers. 

• Regulatory Compliance – Organizations in heavily regulated industries leverage OpenStack’s customizable architecture to meet strict compliance requirements like SOX, HIPAA, or PCI-DSS without relying on shared responsibility models. 

• Retail Seasonal Scaling – Major retailers deploy OpenStack-based private clouds to handle traffic spikes during holiday seasons, Black Friday events, or product launches with predictable infrastructure costs regardless of usage patterns. 

• Data Sovereignty – Companies operating in multiple countries use OpenStack to ensure data remains within specific geographic boundaries to comply with local data protection regulations. 

The retail sector exemplifies this perfectly – unlike public cloud solutions where costs can spiral unpredictably during high-traffic periods, OpenStack provides cost predictability that allows retailers to budget accurately for peak periods while maintaining the flexibility to scale resources as needed. 

2. Hybrid Cloud Orchestration 

OpenStack excels as the foundation for hybrid cloud strategies where organizations need to seamlessly integrate private infrastructure with public cloud services. This approach provides the best of both worlds while addressing specific business requirements: 

• Telecommunications Infrastructure – Telecom companies use OpenStack to manage core network functions on private infrastructure while leveraging public cloud resources for customer-facing applications during traffic spikes, ensuring security for critical operations while maintaining cost-effective scalability. 

• Manufacturing Integration – Manufacturing companies deploy OpenStack in hybrid configurations, keeping sensitive intellectual property and production control systems on private clouds while using public resources for supply chain management, customer portals, and analytics workloads. 

• Workload Portability – The standardized APIs across OpenStack and major public cloud providers enable seamless workload migration between environments based on cost optimization, performance requirements, or regulatory changes. 

• Disaster Recovery Strategy – Organizations use OpenStack as their primary infrastructure while maintaining public cloud environments as backup locations, providing cost-effective disaster recovery without maintaining duplicate private infrastructure. 

This hybrid approach proves particularly valuable for organizations with varying workload characteristics – some requiring the security and control of private infrastructure, others benefiting from the global reach and specialized services available through public cloud providers. 

3. High-Performance Computing and Research 

Academic institutions and research organizations rely on OpenStack to democratize access to high-performance computing resources. This use case demonstrates OpenStack’s ability to handle specialized computing requirements that traditional cloud platforms cannot accommodate: 

• Academic Research Support – Universities deploy OpenStack to provide researchers with on-demand access to specialized computing environments, from bioinformatics workloads requiring massive parallel processing to physics simulations needing high-memory configurations. 

• Hardware Specialization – The platform’s ability to support diverse hardware configurations including GPU accelerators, high-speed networking, and specialized processors makes it ideal for compute-intensive research applications. 

• CERN Implementation – The European Organization for Nuclear Research runs one of the world’s largest OpenStack deployments to process data from the Large Hadron Collider, demonstrating the platform’s capability to handle extreme-scale workloads while providing flexibility to adapt as research requirements evolve. 

• Government Laboratory Applications – National laboratories use OpenStack to support everything from climate modeling to nuclear research, taking advantage of the platform’s ability to create isolated, secure computing environments for sensitive research projects. 

• Cost-Effective Resource Sharing – Research institutions leverage OpenStack to share expensive computing resources across multiple departments and projects, maximizing utilization while providing researchers with access to capabilities they couldn’t afford individually. 

This research-focused deployment model has inspired similar implementations across government laboratories and private research institutions worldwide, proving that OpenStack can scale from small departmental deployments to massive, mission-critical research infrastructure. 

4. Edge Computing and Distributed Infrastructure 

The rise of edge computing has created new opportunities for OpenStack deployment, particularly in scenarios requiring distributed infrastructure management. This emerging use case showcases OpenStack’s adaptability to next-generation computing paradigms: 

• Telecommunications Edge Deployment – Telecom companies use OpenStack to manage edge computing resources across thousands of cell tower locations, providing low-latency services for applications like autonomous vehicles, augmented reality, and IoT data processing. 

• Content Delivery Networks – CDN providers leverage OpenStack for managing caching servers and content processing resources across global locations, ensuring consistent performance while maintaining operational efficiency. 

• Industrial IoT Applications – Manufacturers deploy OpenStack at factory locations to process sensor data locally, enabling real-time control through reduced latency while maintaining connectivity to central data centers. These industrial IoT implementations require specialized architectures that integrate with OpenStack’s infrastructure. Explore how our IoT development services can help implement your edge computing solution. 

• Smart City Infrastructure – Municipal governments use OpenStack to manage distributed computing resources for traffic management, environmental monitoring, and public safety systems across urban areas. 

• Retail Edge Computing – Large retail chains implement OpenStack at store locations to handle local analytics, inventory management, and customer experience applications while maintaining connection to corporate data centers. 

The platform’s distributed architecture aligns naturally with edge computing requirements, enabling centralized management of geographically dispersed resources while providing the local processing power that edge applications demand.  

How to Install OpenStack? 

The thought of installing OpenStack can be intimidating, evoking images of thick manuals and complex terminal commands. While it is a serious undertaking, the process has been significantly streamlined by automated tools, making it more accessible than ever before. The key is to choose the right tool for your goal. 

• For Learning & Development: Use DevStack. It’s a shell script that quickly deploys a complete OpenStack environment on a single machine (like your laptop). It’s perfect for kicking the tires but not for production. 

• For Production: Use Kolla-Ansible. This is a production-grade method that uses Docker containers to deploy OpenStack services. This ensures isolation, ease of upgrades, and consistency across environments. 

A production deployment typically requires multiple physical servers, detailed network configuration, and careful planning across three phases: environment preparation, installer configuration, and deployment validation. This process demands significant time and expertise to execute properly. 

FAQs 

Is OpenStack still relevant? 

Absolutely. While the hype cycle has cooled, OpenStack has matured into a robust, battle-tested platform. It is more relevant than ever for use cases where public clouds are not ideal due to cost, data sovereignty, regulatory compliance, or performance requirements. Its strong adoption in telecommunications (for 5G core networks) proves its ongoing relevance. 

How does OpenStack work with Kubernetes? 

OpenStack and Kubernetes are complementary. OpenStack (IaaS) provides the underlying virtual infrastructure (VMs, networks, storage). Kubernetes (Container Orchestration) is typically deployed on top of OpenStack to manage containerized applications. Think of it as OpenStack providing the “datacenter OS,” and Kubernetes providing the “application OS.” 

What is the difference between OpenStack and AWS? 

AWS is a public cloud—a service you consume. OpenStack is software you use to build a cloud, typically a private one. The key difference is control vs. convenience. AWS manages everything for you, but you have less control. OpenStack gives you full control but requires you to build and manage the platform. 

Is OpenStack a Public or Private Cloud? 

OpenStack is primarily known as a private cloud platform, allowing organizations to build and manage their own cloud infrastructure on-premises or in dedicated data centers. However, it is not limited to private deployments. Some service providers also use OpenStack to deliver public cloud services, offering similar capabilities to AWS or Azure but with more flexibility and openness. 

Final Thoughts 

OpenStack represents a strategic choice: control over convenience. It offers complete infrastructure sovereignty for organizations that need tailored solutions beyond what generic clouds provide. While requiring expertise to implement, it delivers unmatched long-term advantages for specific performance, compliance, and customization needs. 

If you’re considering OpenStack for your organization, professional guidance can help you navigate its complexities and maximize its value. Reach out to Newwave Solutions to discuss how we can support your cloud infrastructure goals.