Cloud Exodus Overhyped, Shifting Back to On-Prem Risky

Over the past year there have been several blog posts and comments by prominent developers calling out the snowballing costs of public cloud, with some pressing businesses to shift back to on-premise solutions if they aren’t seeing the anticipated value from migrating to cloud.

37Signals led the charge for cloud repatriation, with CTO David Heinemeier Hansson writing a lengthy blog post in October 2022 on the millions of dollars being spent by the company on cloud computing. In it, he argues that the switch back to on-premises servers will save the company millions in long-term savings, especially as traffic to 37Signals’ services has become predictable.

Even though there has been a bit of backlash to cloud costs, the idea that there is some cloud exodus happening is a false narrative. Not only have all three of the major cloud computing providers – Amazon Web Services, Microsoft Azure, and Google Cloud – reported higher revenues and customers than the year prior, but there doesn’t appear to be much a shift towards returning to fully on-premises, for several reasons.

See also: Why is Cloud Repatriation Happening?

One is simply the cost of returning to on-premises after migrating to the cloud. While cloud providers make it easy to move data onto their services, egress fees ensure that it is a pain for organizations to move away from them. The legality of this is currently being debated by the European Union and other legislative bodies. If banned or limited, we could see an increase in cloud data movement, although that will most likely be between cloud services rather than to off-premises servers.

Cloud pros and cons

Another reason to move to cloud is that a lot of organizations get benefits from cloud that they cannot obtain from on-premises servers, such as scalability, agility, and access to newer technologies such as machine learning and the Internet of Things. Data-heavy operations, which only use cloud computing for storage, are the least likely to receive these benefits from cloud, and the most likely to shift some or all of their workflows back to on-premises locations in the next few years.

See also: Are Cloud Costs and Sprawl Casting a Shadow? How FinOps Can Help

According to research director of cloud computing at Uptime Institute, Owen Rogers: “Unexpected costs are driving some data-heavy and legacy applications back from public-cloud to on-premises locations. However, very few organizations are moving away from the public cloud strategically — let alone altogether.”

In Uptime’s Data Center Capacity Trends Survey 2022, it found that only six percent of respondents had left the public cloud entirely, with a further eight percent stating that they had significantly reduced public cloud usage over the past 12 months. A majority of respondents (59 percent) said they had reduced the level of public cloud usage by a small amount, but Uptime suggests that it more to do with businesses shifting to a hybrid approach, rather than slowly migrating away from public cloud entirely. 23 percent of respondents said they have not changed their public cloud usage, with only six percent having increase usage in the past 12 months.

On-premises solutions can look tempting to companies that have invested heavily into public cloud over the past five years. The cost of building a few servers has dropped massively in the past decade, especially for mid-range components that are perfectly usable for most workloads. At the same time, cloud costs have increased year-on-year, and the amount of capacity datacenters have is expected to decline as the costs of building and maintaining these centers increases.

But the reality is for a lot of businesses, cloud opens up the doors to a lot of analytics, machine learning, and edge services that are unavailable otherwise. It is also the best way to maintain active service for customers at all times, regardless of traffic.