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Cost-conscious repatriation strategies

Friday December 20, 2024. 10:00 AM , from InfoWorld
In recent years, the cloud computing landscape has undergone a seismic shift. After fully embracing the potential of public cloud services, many companies are reevaluating their strategies and shifting workloads back to on-premises infrastructures.

This trend, known as cloud repatriation, is driven by rising costs and increasing complexities in public cloud environments. More and more repatriation projects are underway as enterprises continue to receive exorbitant cloud bills. Many enterprises now realize that the unexpectedly high costs of cloud services are unsustainable in the long term.

GEICO has made headlines for its decision to repatriate numerous workloads back to on-premises solutions. In a recent interview, Rebecca Weekly, the vice president of platform and infrastructure engineering, said the initial goal of moving to the cloud was to reduce costs and complexity, but it ultimately had the opposite effect.

After a decade of cloud investments, GEICO’s bills spiked at 2.5 times the anticipated costs and the company faced increased reliability challenges. This tracks with what I’ve written in my book, An Insider’s Guide to Cloud Computing. These are the typical problems enterprises face when they use a haphazard lift-and-shift migration strategy that fails to align legacy systems with cloud efficiencies.

GEICO is not an isolated case. Across industries, organizations are discovering that data storage in the public cloud can be prohibitively expensive, mainly when their operational needs rely on vast amounts of data that require efficient and affordable management.

For enterprises operating in sectors such as finance or insurance, regulatory compliance further complicates matters. Companies must retain enormous volumes of sensitive data for long periods, often resulting in sky-high cloud storage expenses. Approaches to cloud computing that were once considered revolutionary are now viewed as a potential liability.

Rethinking cloud

First, this is not a pushback on cloud technology as a concept; cloud works and has worked for the past 15 years. This repatriation trend highlights concerns about the unexpectedly high costs of cloud services, especially when enterprises feel they were promised lowered IT expenses during the earlier “cloud-only” revolutions.

Leaders must adopt a more strategic perspective on their cloud architecture. It’s no longer just about lifting and shifting workloads into the cloud; it’s about effectively tailoring applications to leverage cloud-native capabilities—a lesson GEICO learned too late. A holistic approach to data management and technology strategies that aligns with an organization’s unique needs is the path to success and lower bills.

Organizations are now exploring hybrid environments that blend public cloud capabilities with private infrastructure. A dual approach, which is nothing new, allows for greater data control, reduced storage and processing costs, and improved service reliability. Weekly noted that there are ways to manage capital expenditures in an operational expense model through on-premises solutions. On-prem systems tend to be more predictable and cost-effective over time.

Moreover, the rise of open source technologies provides a pathway for companies seeking to modernize their infrastructure. The open source approach avoids burdensome costs associated with traditional public cloud providers. By leveraging frameworks like Kubernetes for container orchestration and OpenStack for private cloud deployments, businesses can regain control over their data and resources while minimizing dependence on public cloud offerings. Of course, this comes with its own set of cautions. Containers cost more than traditional development. Still, when deployed on owned hardware, you’ve already paid for the excess memory, processor, and storage resources they use.

A trend or just a few cases?

The current rash of cloud repatriations is emblematic of a broader reevaluation of how businesses approach their technological infrastructure. The era of indiscriminate cloud adoption is giving way to a more tempered and pragmatic approach. We’ve learned that it pays to incorporate operational costs, compliance requirements, and specific business use cases into infrastructure design.

Many cloud providers don’t know they have a repatriation problem because it has not yet impacted revenue. They’re also distracted by the amount of AI experimentation going on, which has a massive impact on public cloud providers’ services. However, if cloud providers don’t get a clue about the assistance their clients need to reduce cloud costs, we’ll see more and more repatriation in the next several years.

Technology leaders must now, more than ever, comprehensively understand their company’s unique data landscape and leverage cost-effective solutions that empower their business. That seems like common sense, but I’m disturbed by the number of firms that blindly adopt cloud computing without adequately understanding its impact. Many are now hitting a cloud wall for reasons that have nothing to do with cloud technology’s limitations; they’re the results of bad business decisions, plain and simple. Expect more companies to follow GEICO’s lead as we advance into 2025.
https://www.infoworld.com/article/3628746/cost-conscious-repatriation-strategies.html

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