Chris Badenhorst | Head | Azure Core Services | Braintree | mail me |
Companies are increasingly abandoning cloud as they shift data and workloads back to on-premises platforms. However, is this the right move?
Cloud costs more than companies expected.
According to a Citrix survey, organisations are reversing cloud adoption and repatriating workloads to on-prem solutions.
The cloud pendulum swings
Security risks, unmet performance expectations and unexpected financial burdens are driving this shift. Cloud introduces challenges that companies did not anticipate during initial adoption.
Several case studies highlight this trend. 37signals, the developers behind Basecamp, have moved away from cloud, and other companies are following. For some, this shift has signalled a growing trend in cloud repatriation. However, the truth lies somewhere in the middle of the debate.
Expedia remains within cloud because agility and scalability help the company serve a global market efficiently and effectively. The organisation thrives within this architecture due to its cloud centre of excellence, which enables better cost management and optimisation.
Expedia’s cloud strategy has led to savings of around 10% on costs over the past year, demonstrating the benefits of optimisation. Clearly defined policies and well-structured processes reduce cloud spending risks while maximising the value extracted from cloud investments.
Avoiding cloud costs is impossible, particularly in the South African context, where economic conditions add complexity to cloud pricing. The US dollar and fluctuating exchange rates make cloud expensive for most organisations, even before they create workloads or open instances.
Both on-prem and cloud costs are influenced by an increasingly important factor – strategy. Companies must consider strategic planning before making decisions.
Balancing the cloud pendulum
Many dramatic headlines claim cloud repatriation is rising, just as others once declared the mainframe dead. However, the mainframe still exists. Companies need to pause before walking away from cloud. A business must define workload demands, costs, efficiencies and use cases clearly.
Not all workloads returning to on-premises will be cost-efficient compared to their cloud-based usage, requiring careful financial evaluation. Some companies may benefit from a hybrid multi-cloud strategy, which allows flexibility while managing costs and optimising resources efficiently.
A hybrid approach gives businesses the ability to optimise costs without losing operational efficiency or limiting technological advancements. Companies must evaluate which workloads are more cost-effective on-prem versus those that remain cheaper and more stable in cloud environments.
Public cloud stability is easier to maintain than on-premises environments. Business requirements may favour cloud solutions or prioritise other considerations. Visibility remains essential when assessing cloud costs. The conversation involves more than just workload expenses, extending to governance and compliance costs.
Avoiding the cloud pendulum trap
Governance costs in public cloud environments are understandably more complex, requiring careful planning to ensure compliance and cost control. Instead of rejecting cloud as too expensive or risky, companies should adopt a well-defined strategy for managing their cloud investments.
With the the cloud pendulum, a strong strategy ensures educated decisions regarding OPEX versus CAPEX, helping businesses align their spending with long-term financial objectives. Strategic planning provides upfront insights into costs. Businesses must calculate exact expenses before investing in cloud instances or required assets.
Many companies are losing their love for cloud because they fail to evaluate their environments correctly from the beginning. They also overlook the numerous tools and services within environments like Azure that help them analyse and optimise cloud expenditures. These tools give companies options for cloud decision-making by providing expenditure insights and financial data for informed decision-making.
Instead of immediately returning to on-premises, businesses can optimise infrastructure using real-time insights to reduce costs effectively. Access to the right information determines whether a company stays in cloud or transitions back to on-premises solutions.
Making data-driven IT decisions
Many organisations consider exiting cloud due to vague cost-saving promises and unfulfilled expectations that cloud adoption initially presented. Cloud success depends on strategy, stakeholder buy-in and collaboration with decision-makers to ensure alignment with business objectives.
The same principles apply when exiting cloud or adopting a hybrid or multi-cloud architecture to balance costs and performance. Companies must align cloud decisions with their broader objectives, whether expanding geographically, building an ecommerce site, or refining expenditures.
Every cloud or on-prem decision should return to strategy and planning to ensure alignment with future business goals. Businesses must evaluate whether their plan considers long-term strategies and accounts for technological advancements over the next five to ten years.
Will the pendulum settle or keep swinging?
Will the existing cloud or on-prem architecture deliver what the business needs as it grows and evolves? How does leaving cloud compare to staying in terms of expenditure, stability, and scalability over the long term?
Ultimately, no single architecture fits all businesses. The ideal solution depends on each company’s unique strategy and operational requirements. Finding this balance determines whether companies pivot towards cloud or on-prem solutions to achieve long-term sustainability and efficiency.
A knowledgeable partner can help identify this sweet spot, ensuring companies do not make costly mistakes in their technology strategy.
