Is the Cloud Losing Its Appeal?

Cloud repatriation—the process of moving cloud workloads and storage back to on-premises or rented data centers—has become a hot topic after the recent surge in cloud adoption. A Citrix poll revealed that 94% of hundreds of IT and business leaders in the US have repatriated some workloads, and controlling cloud costs has become a primary concern for executives due to skyrocketing cloud expenses.

IT Brew interviewed two experts with opposing views: one who advocates for abandoning the cloud due to its high costs, and another who argues that moving back on-premises would be a downgrade.

Huge Savings

David Heinemeier Hansson, co-owner and CTO of web software company 37signals, believes his company will save millions by leaving the cloud—specifically, around $7 million over five years.

Hansson explained that 37signals had been considering repatriation for a while but was deterred by the high hardware costs. The decision was finally made after noticing a weekly cloud bill in the “tens of thousands.” He realized, “We’re paying Amazon over $2 million a year for hardware rentals that we could buy for half a million.” This led him to question whether the power, internet, and setup costs justified paying four times the hardware cost annually with no residual value.

In some cases, the cost of purchasing hardware equates to five or six weeks of cloud bills, even after including significant on-premises expenses like real estate, personnel, and electricity. While the cloud offers advantages for startups, Hansson stressed that companies should have an exit strategy and not expect to optimize cloud bills indefinitely. “It’s just nuts,” he said. “Unless you’re on it all the time, it’ll run away from you.”

37signals still uses some cloud services but has gradually repatriated around seven applications over several months. The backbone of their setup now includes virtual machines with Kernel-based Virtual Machine (KVM) and containers with Docker. A crucial part of their migration was selecting a data center close to their original cloud host, allowing for gradual database migration without moving application logic.

Hansson advises, “Use an architecture that, when the time comes—and it will—where it no longer makes sense to be in the cloud, you can pack your bags and get out without too much hassle.”

More Flexibility

John Musser, senior director of engineering at Ford Pro, offers a contrasting view. He believes Ford’s commercial fleet management software wouldn’t function without the cloud.

“Nobody thinks of Ford as a B2B SaaS company,” Musser said. However, Ford Pro provides a unified software experience that assists customers with everything from vehicle financing to monitoring telematics data collected by onboard devices. “Our customers license that on a per-vehicle, per-seat basis.”

One of Ford’s significant challenges is securely managing numerous data streams. Vehicles rely on cellular broadband, which can have inconsistent bandwidth and service. Musser noted, “You don’t want every single piece of data coming off every device all the time. We make strategic choices about what data is transmitted.”

While Ford runs dozens of legacy apps on-premises and performs some data processing in the vehicles, most of Ford Pro’s compute and data storage occurs on Google Cloud Platform. Musser highlighted that cloud computing offers flexibility for over-the-air updates and dynamic scaling. “It’s a modern infrastructure. A lot of the heavy lifting is managed by a partner, primarily Google. Dynamic scaling and automation are hugely beneficial for effectiveness.”

Another advantage is that Ford Pro can focus its engineers’ talents on critical tasks rather than replicating software available elsewhere. For example, Ford uses Salesforce cloud products for sales, marketing, and servicing, which “allows us to have a better view of the customer and greater flexibility without building it ourselves,” Musser said.

Article Credit: https://www.itbrew.com/stories/2024/04/19/two-ctos-weigh-in-on-cloud-repatriation-vs-expansion