Companies are increasingly turning away from the cloud as they shift their data and workloads back to on-premises platforms, but is this the right move as the cloud evolves? Chris Badenhorst, Head of Azure Core Services at Braintree, shares his insights.
Many companies are finding that cloud computing is more expensive than they initially expected. According to a Citrix survey, companies are turning back the cloud clock as a result, repatriating workloads to on-prem solutions. This is due to cloud security risks, apparent underperformance, and more zeroes than anticipated on the bottom line. Organisations like 37signals, the developers behind Basecamp, followed by other big names are leading the charge, with others following suit. Could this signal a new trend?
Well... The truth is somewhere in the middle.
Expedia, for example, has remained within the cloud, as the company needs the agility and scale it provides to service a global market. Expedia is thriving within this architecture with its dedicated cloud centre of excellence, and this has led to savings of around 10% on costs over the past year. This is a case study in optimisation and setting clearly defined policies and processes that minimise the risks associated with cloud spend while extracting maximumst possible value.
There is no point going around in circles about cloud costs, particularly in the South African context. The US dollar and fluctuating exchange rates make cloud expensive for most organisations, even before creating workloads or opening instances. However, both on-prem and cloud costs are influenced by one increasingly important factor: strategy.
While there is plenty of hype around cloud repatriation and some dramatically claim that the mainframe is dead (it isn’t), companies need to pause before they walk from the cloud. Regardless of the direction you want to take your business, you need a clearly defined strategy that outlines workload demands, costs, efficiencies and use cases. Not all workloads that return to an on-premises implementation will be cost-efficient compared to their usage in the cloud, and some companies may benefit from a hybrid multi-cloud strategy that gives them the space they need to optimise costs without losing ground. You need to evaluate which workloads are more cost-effective on-prem versus those that are cheaper in the cloud and pay attention to stability. Maintaining stability in the public cloud is not as complex as in on-premise environments so your requirements as a business may lean towards a solution that enhances this, or it may not even be a relevant consideration.
You also need visibility. The cost conversation is more nuanced than just the cost of workloads. There’s also the cost of governance within public cloud environments, which is understandably more complex. However, instead of ditching cloud as too expensive or too risky, a well-defined strategy will ensure you can make an educated decision around OPEX versus CAPEX. It will also provide you with insight into your costs upfront – you need to know exactly how much that instance is going to cost, or how much you will spend on required assets before you invest in the cloud.
Companies are losing their love for the cloud because not enough work is being done to evaluate their environments correctly at the start, and because they don’t realise how many tools and services exist in environments like Azure, which are designed to help them do just that. These tools give companies options when it comes to deciding their cloud futures, because they offer insight into expenditure and give finance teams the data they need to make informed decisions. Instead of jumping back on-prem, you can optimise their infrastructure based on real-time, relevant insights that shift your costs back down to the level you need. It comes down to having the correct information.
Companies are eyeing the exit because of amorphous promises about cost savings and unfulfilled expectations. Strategy, stakeholder buy-in, and engagement with decision-makers are key success metrics for the cloud, and for exiting the cloud or creating a hybrid or multi-cloud architecture. Whether your organisation wants to expand geographically, build an e-commerce site or simply refine expenditure, you must consistently return to your strategy and planning.
The same applies to your decision to leave the cloud. Is your plan taking your strategy into account? Will your existing cloud or on-prem architecture deliver on what the business needs over the next five to ten years? How will leaving the cloud shape expenditure versus staying? Ultimately, there is no singular perfect architecture for everyone, but there is an ideal solution for your business and your strategy. That’s where the sweet spot lies, and where you decide if you’re pivoting out to the cloud or into on-prem.
