Is there really a march from the public cloud back on-prem?
Not exactly, but the public cloud isn’t right for every workload
It turns out that the cloud is expensive, and the more workloads you move to the cloud, the more it costs. Go figure.
When we were in the “growth at all costs” phase between 2021 and 2022, it was easy to ignore or minimize the costs associated with operating in the cloud. But when companies started scrutinizing every entry in the technology budget, it became pretty clear that the cloud bills were big and only getting bigger, and maybe we should look for ways to lessen that budgetary impact.
The brute force way would be to say, “let’s just move back on-prem!” But there are major questions about this approach. Why did you move to the cloud in the first place? Maybe you were thinking there would be cost savings. But even if you were wrong on that point, it’s the agility of the public cloud that has always been its primary value proposition.
Think back for a second to the bad old days of on-prem, when you had to plan for capacity. If your company grew faster than you anticipated, you were pretty much stuck, putting your business in a very vulnerable position. The corporate procurement process has always been fraught with time-consuming bureaucracy. You have to plan to buy servers, then you need to rack and stack them. Even if you want to do that, do you still have the personnel with that skill set? Chances are you’ve been hiring for a cloud DevOps world.
While it’s possible to move certain workloads with less pain than others, consider that earlier this month, Ofcom, a U.K. communications watchdog, issued a report criticizing the top cloud infrastructure players for making it too hard to move workloads between clouds — and presumably back on-prem, if that was the desire. If it’s truly so expensive and difficult, how does it make sense for companies to do that?
I decided to explore if companies really want to move back on-prem. I asked a group of industry experts about it, and while I got a decidedly mixed set of answers, it seems that the cloud repatriation idea is being greatly exaggerated.
The cloud infrastructure market is vast and growing
Let’s start with the fact that the cloud infrastructure market is huge, even as it’s slowing down amid the economic uncertainties affecting every industry. The market reached over $200 billion in 2022. The fourth quarter was up 21% to $61 billion, per Synergy Research. While it was down from the prior year, when the market grew at 36%, it was still a substantial market by any measure.
“From a numbers perspective, we continue to see strong growth in the cloud market — 2022 worldwide spending on cloud infrastructure services was up 26% from 2021, despite problems in China and a much-strengthened U.S. dollar — while investment in enterprise on-prem infrastructure remains weak,” John Dinsdale, chief analyst and research director at Synergy Research, told TechCrunch . “Servers shipped to enterprises grew by 3% in 2022. Looking ahead, we continue to forecast strong growth in the cloud market and weak growth in on-prem infrastructure.”
I’m a journalist who specializes in investigative reporting and writing. I have written for the New York Times and other publications.