The Surprising Reasons Companies Are Leaving the Cloud

In recent years, a notable trend has emerged where companies, both large and small, are shifting their digital assets away from cloud services back to on-premise solutions or towards colocation (Colo) and Managed Service Providers (MSPs). This movement, often referred to as 'cloud repatriation', has caught the attention of industry observers and sparked discussions on the long-term viability and cost-effectiveness of cloud computing. One of the most vocal figures in this conversation has been David Hansen, who detailed his company's cloud exit strategy in the widely read 'The Big Cloud Exit FAQ'. Hansen's insights provide a valuable case study into why some businesses are reevaluating their cloud commitments. Let's delve into the primary reasons behind this trend and what it signifies for the future of cloud computing and corporate IT strategies. ## Cost Concerns: The Primary Driver A significant motivator for companies leaving the cloud is cost. Despite initial promises of cloud computing being a cheaper alternative due to its operational expense (OpEx) model over traditional capital expenses (CapEx), the reality has been different for many. The decline in hardware costs over the past decade has made on-premise or Colo solutions more financially attractive. The disparity between the falling price of physical storage and servers and the stable or increasing costs of cloud services challenges the business case for cloud computing. This economic calculation forces companies to reconsider where to host their workloads and store their data, with many finding on-premise solutions a more cost-effective option in the long run. ## Failed Migrations and Inefficiency Another reason for the cloud exodus is the aftermath of failed migrations. During the pandemic, many companies accelerated their cloud adoption without adequately refactoring or modernizing their applications. This 'lift and shift' approach led to inefficiencies, with applications that were already inefficient on-premise becoming even more so in the cloud. The result was unexpectedly high cloud service bills, prompting some businesses to repatriate their applications back to on-premise solutions to regain control over their IT spending. ## Diminishing Need for Cloud Scalability For startups and small businesses, the cloud's scalability is a vital feature that supports growth without the need for significant upfront investment in hardware. However, as these companies grow, the cost of cloud services can become prohibitively expensive, especially when their usage patterns are predictable and don't require the elastic scalability the cloud offers. In these cases, the economic benefits of moving back to on-premise or other hosting solutions become apparent. ## The Future of Cloud Computing and IT Strategy The trend of cloud repatriation does not indicate a failure of cloud computing but rather a recalibration of its role in corporate IT strategies. Companies are increasingly making nuanced decisions about where to host their digital assets, considering cost, performance, security, and regulatory compliance. This trend encourages a more balanced view of cloud computing, recognizing it as one of many tools in an IT architect's toolkit rather than a one-size-fits-all solution. As businesses continue to navigate their digital transformation journeys, the conversation around cloud computing will evolve. It's not a question of cloud versus on-premise but rather how each can be optimally used to support business objectives. The ongoing debate around cloud repatriation underscores the importance of flexibility, cost management, and strategic planning in IT decision-making. In conclusion, the shift away from cloud services by some companies highlights broader trends in IT management and the need for businesses to continually assess the most effective platforms for their workloads. As this discussion progresses, it will undoubtedly provide valuable insights and lessons for companies striving to optimize their IT infrastructure in an ever-changing technological landscape. For more details, check out David Hansen's 'The Big Cloud Exit FAQ' here.