Are rainy days ahead for cloud computing?

🌈 Abstract

The article discusses the trend of companies moving their workloads back from the cloud, a process known as "cloud repatriation". It examines the reasons why some companies, such as 37signals and Plitch, have decided to bring their data and computing resources back in-house, including cost savings, security concerns, and performance issues. The article also looks at the perspectives of cloud providers and companies that continue to rely heavily on cloud services, such as Expedia.

🙋 Q&A

[01] 37signals' Cloud Repatriation

1. What were the key reasons that led 37signals to move away from the cloud?

• 37signals was spending $3.2 million per year on cloud services, which "really radicalised" the company's co-owner and CTO, David Heinemeier Hansson
• Hansson felt they could buy powerful computers for the cost of just one week's worth of cloud spending
• Other concerns included the increasing concentration of cloud services in the hands of a few major providers, which could lead to widespread outages if a major data center goes down
• Hansson did not see any significant productivity gains or speed advantages from using the cloud that would justify the high costs

2. How much did 37signals save by moving away from the cloud?

• 37signals estimates that it will see a profit boost of more than $1 million (£790,000) by moving away from the cloud
• Buying hardware and hosting it in a shared data center costs $840,000 per year, compared to the $3.2 million they were spending on cloud services

3. In what cases does 37signals still recommend using the cloud?

• Hansson recommends the cloud for fledgling businesses with "great uncertainty" about their future, as it allows them to avoid upfront costs of buying computers

[02] Other Companies Repatriating from the Cloud

1. What were some of the key reasons cited by other companies for moving workloads back from the cloud?

• Security concerns
• Unexpected costs
• Performance issues
• Compatibility problems
• Service downtime

2. How did Plitch benefit from moving away from the cloud?

• Plitch, a software company, estimated it saved 30-40% in costs after moving to its own private data centers
• This allowed them to maintain strict security over their proprietary R&D data and code, which was a key concern
• It also provided them with the processing power they needed for their advanced AI-assisted modeling tools, which the cloud could not meet within their budget

3. What role does colocation play in the cloud repatriation trend?

• Colocation allows companies to own their own IT hardware but house it in a secure data center operated by another firm
• This provides the benefits of physical, local infrastructure while still outsourcing the data center management
• Companies like LinkPool were able to significantly reduce their cloud costs, by up to 85%, by moving to a colocation model

[03] Perspectives on the Cloud vs. On-Premises Debate

1. How does Expedia view the role of the cloud in their business?

• Expedia sees the cloud as essential, using it to consolidate 70 petabytes of travel data across its 21 brands
• The cloud provides Expedia with a global presence and the ability to deploy solutions closer to the regions that need them
• The cloud also offers resiliency and availability that Expedia can leverage, without having to worry about the underlying infrastructure

2. What strategies does Expedia use to manage its cloud costs?

• Expedia has a cloud center of excellence that saved about 10% on cloud costs last year
• The company sets policies to ensure cloud resources are consumed wisely, so their cloud bill doesn't come as a surprise

3. How has the perspective on cloud adoption shifted in the IT industry?

• The "change leaders" in IT are now saying "cloud when it fits", rather than the previous "cloud first, cloud first" mentality
• Five years ago, the disruptors were pushing a cloud-first approach, but now there is more nuance in evaluating when the cloud is the best fit