The public cloud has enabled small businesses to gain access to the same storage and compute resources which were previously only available to the largest companies on the planet. However, the value proposition for medium and large enterprises is coming under attack, with a few high-profile businesses publishing criticisms of public cloud services costs.
David Heinemeier Hansson, programmer of Ruby on Rails and partner at Basecamp, published a blog recently in which he discussed the reasons for Basecamp leaving the public cloud. In it, Hansson came to the conclusion that “renting computers is (mostly) a bad deal for medium-sized companies like ours with stable growth.”
Hansson goes on to reference that the cloud has been of enormous value to Basecamp at times, most recently when it launched its email service Hey. The original estimate was that the email service would have 30,000 users, but within three weeks it had 300,000 sign-ups, and needed the cloud to manage the unexpected load.
This was one of the two instances where Hansson sees value in the public cloud: irregular traffic and when there is not enough traffic. Both instances are often a factor with startups, which do not have a lot of users or have a unique selling point that is time or location dependent, like the new social app BeReal, which gets every user to upload a photo at the exact same time.
Hansson discloses in the blog that Basecamp is spending half a million dollars on public cloud costs, and argues that for that price, the company could acquire a huge amount of computational resources. He also rejects the argument that management of the machines will cost more than public cloud fees, and claims suggestions of cost effectiveness and simplicity have not materialized.
It is not the first argument against public cloud, but it does demonstrate a growing consideration amongst businesses that have moved their resources onto the cloud, or have scaled their startup with public cloud resources. Once a business has scaled to a level where it can build its own storage and compute resources, does the public cloud make sense?
In many instances, once a business gets to that level it does not need to be one or the other. Many businesses operate some of their services on the public cloud, while other processes are run on-premises. If we look at another popular social app, Snapchat, it uses public cloud to balance out any spikes in traffic while having its own servers for data storage and analytics.
For organizations moving from fully on-premises, it is highly unlikely that all storage and compute solutions will be run on the cloud. A hybrid approach maintains the values of both on-premises and public cloud, and enables businesses to make cost effective decisions.