Discontent against the public cloud is on the rise with many big players pulling out their IT workload from the cloud. While the once public cloud was thought to be the most cost-effective option, that notion is now changing, and it’s changing fast.
Lets talk about Cloud Repatriation.
Recently, a growing number of organizations have expressed their intention to migrate their workload to the traditional IT infrastructure, a phenomenon termed “cloud repatriation”. A June 2022 survey conducted by IDC (sponsored by Supermicro) reports 71% of the respondents (out of 2,325) want to migrate their workload, fully or partially, to a dedicated IT environment from the cloud in the next two years.
Why are Companies Pulling Out of the Public Cloud?
While there are other disadvantages of public cloud, such as lack of control and security issues, one of the primary reasons for the companies migrating out of the public cloud is its ever-rising and unpredictable cost.
A decade back, the cloud was first used by small and medium-sized companies. Start-ups lacked the resources to construct and maintain physical infrastructure. The public cloud provided them the opportunity to offer their services to a larger number of users at a relatively lower cost. The cloud-first strategy soon became a buzzword in the industry. Especially as a growing number of companies, including large enterprises, began migrating their workload to the public cloud. This was to leverage its scalability, innovation, and cost-effectiveness.
However, as time passed by, many of these organizations realized the cloud was actually eating into their bottom line. While the catchphrase ‘only pay for what you use’ seemed attractive in the beginning; the clients soon realized it was nothing but an illusion created by the hyper-scale cloud platform providers. In reality, these companies end up paying a lot more than they expected. With the data transfer cost and all extra charges, companies soon lose track of their Amazon Web Services (AWS) or Azure bill.
What the Math Looks Like
Recently, at least two corporations have come up with precise calculations on how they can save millions of dollars by moving back to traditional IT infrastructure.
Efim Mirochnik, data center executive of Ahrefs, claims in a blog post that the company saved $400 million in 3 years by not using the public cloud. In 2020, the company rented space in a colocation data center in Singapore. Mirochnik consolidated all the costs spent on the data center. Then, compared it with the cost of running similar infrastructure in AWS. While doing the calculation, in order to find the total cost, Mirochnik considered the colocation center rent and the cost of:
- Initial equipment
- dark fiber connection
- Internal networking
- IT Transit.
His calculation shows they spend $1,550 per month per server in the colocation center. His estimates say they would pay a monthly bill of $17,557 for running an equivalent rig in AWS.
Mirochnik concludes that the company ‘Wouldn’t be profitable, or exist if our products were 100% on AWS’.
David Heinemeier Hansson
A similar view is expressed by David Heinemeier Hansson. Hansson is the CTO of SaaS project management outfit 37Signals. It is a company that announced its decision to pull out from the cloud in October last year. In February, Hansson came up with a detailed calculation showing that the company will save $7 million over the next five years on its IT expenses.
The public cloud is facing criticisms, and the reasons are legit. Many experts have already predicted that cloud repatriation is the next generational leap. They think migrating to a physical data center is soon going to be the trend. That is with more and more companies realizing the cloud is not sustainable.
Companies should periodically review their cloud benefits and cost-effectiveness. This might help them understand whether it’s time to go back to the traditional data center with physical servers. If building an on-premises data center seems like a lot of tasks, the option of managed colocation is always there to save you the pain. Colocation and private cloud are not only cost-efficient, but it also offers more control and greater security.
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