The cloud repatriation trend in 2024, or Why companies are returning from the cloud to their data centers?
What is cloud repatriation?
Cloud repatriation is the process of moving data, applications, or workloads from a public cloud environment back to an on-premises infrastructure. It also means moving IT resources from a public cloud environment located outside the country to an on-premises data center, on-premises public cloud, or colocation facility.
Driving forces of cloud repatriation
In recent years, repatriation to the cloud has attracted considerable attention. There are several key reasons why organizations are moving workloads from hyperscale cloud environments to on-premises or on-premises cloud infrastructure. Let's look at some of them.
- Cost savings: One of the biggest reasons for repatriating workloads is the high cost of hyperscale clouds. Organizations often face unexpected financial pitfalls, such as high data (input/output) charges, resulting in significant "bill shock". In many cases, migrating and deploying the wrong workloads in the wrong configurations in public clouds can cost more than on-premises. As businesses scale, many report that it's becoming more cost-effective to manage their workloads locally, allowing for predictable costs and preventing unexpected costs such as data charges.
- Data Security and Sovereignty Requirements: Concerns about data sovereignty, combined with strict regulatory measures from governments, require a more controlled environment for hosting and storing customer data. In-house hosting is often preferred to meet regulatory and security requirements.
- Better performance: Public cloud services, while providing wide geographic coverage, can sometimes cause performance issues. Latency can negatively impact user experience, especially in edge computing that requires real-time data processing. The close proximity of a local data center effectively solves this problem.
- Optimization of resources: Repatriation is not only a reactionary step, but also a strategic one. Companies are constantly striving to optimize IT resources by ensuring that workloads are properly distributed across different environments and geographies.
- Skills Shortage: The diverse nature of hyperscale cloud platforms requires a specific skill set, and the talent shortage to manage these platforms may force organizations to rethink their cloud approach.
- Avoiding vendor lock-in: Vendor lock-in is a situation where companies become overly dependent on the infrastructure and services of a single cloud provider. This can prompt the business to reassess and, if necessary, repatriate to ensure long-term flexibility.
Conclusion
In the beginning, hyperscale and public cloud meant significant reductions in IT costs and increased operational efficiency/productivity. For many of them, the initial results of going all-in on public cloud actually reduced capital expenditures (for IT software and infrastructure) as data centers were gutted and expensive legacy infrastructure was sold. However, recent surveys of data center and data center service providers have shown that cloud repatriation is happening globally, albeit to varying degrees depending on the type of organization and its landscape. Several recent global IT surveys have noted that around 70-80% of organizations are repatriating at least some data from hyperscalers and public clouds due to a number of issues discussed above.
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