This post was originally published in April 2022 and was updated in October 2022.

The death of data centers was greatly exaggerated. So, too, is the rise of cloud repatriation.

Inspired by Dropbox announcing its move off of cloud and into data centers — and the $75 million in savings that resulted — experts of all kinds started to forecast cloud repatriation as the hot trend of 2021. They weren’t wrong — that many companies would benefit from moving workloads out of the cloud and back into the data center. Basecamp (a Deft customer) was one of them.

But just like the cloud was never universally the best option, cloud repatriation won’t be either. 

What we need is not a retreat from the cloud, but a reevaluation of how best to use it. It’s time for the honest assessments we’ve always called for, with the added urgency of big cloud bills and increasing security concerns behind them. 

Cloud costs and outages are leading companies to reassess the value of data centers

The cloud made it possible for even the smallest team to spin up infrastructure with all the performance and security enjoyed by the biggest corporations. It’s hard to overstate just how much this access transformed our world over the past decade. The speed from ideas to high-quality products and services has accelerated beyond anyone’s expectations.

The problems arise when these ideas start to grow. 

There’s a reason why the biggest, most sophisticated companies by and large don’t live in the cloud (or, if they do, why they become cloud service providers). Cloud enables growth, almost too well. Once a company reaches scale, though, it realizes how expensive it can be to maintain all the cloud resources necessary to run its business. 

It is at this point that the difficult conversations begin. 

When cloud repatriation makes sense

It’s easy to click yes or to automate services in the cloud. Continuing to spin up resources in response to changing business conditions has never been easier. Like a frog in a pot of boiling water, the consequences generally only become clear when it’s too late. Small and scrappy startups have used the cloud to launch, only to grow into businesses whose bottom line is held back by cloud bills.

Or, you have cases like one of our clients at Deft. The team successfully scaled their platform and business on a public cloud. With this scale came the realization there must be a more cost-effective way to manage the incredible amount of data their end-users were creating. As their customers used more features on the platform each day, they realized they could no longer be dependent upon a public cloud storage service. The economics simply didn’t work. They contacted us to begin migrating from their cloud-only solution to a hybrid solution. The resulting architecture integrates Deft’s network and data centers for compute and storage capabilities while using the public cloud platform’s AI services. The economics were brought back in line with the business and the team was able to focus on what matters most – feature functionality and UX, not infrastructure management and optimization.

Stability has always been the hallmark of data centers. In some cases, it is also their downfall as businesses started to move faster and faster. It may take longer to procure physical resources — and carry higher upfront costs — but you can also enjoy the confidence of knowing your infrastructure is there. In a rush to adapt and iterate at all costs, many businesses forgot what hybrid infrastructure can do better. 

Cloud still has its place, but data repatriation may accelerate a new approach to hybrid infrastructure

With all the benefits the cloud offers, we’re not going to be going down a path of full cloud repatriation. There will always be instances where it’s the best option, whether for speed, hyperscaling, or specific services. Still, we’re finally moving away from the belief that everything has to go onto the cloud — that if you’re not a full cloud organization, you’re not doing it right. 

That opens up the door to reconsidering what a hybrid environment should be. Hybrid cloud has always had an amorphous definition. Fundamentally though, when we were talking about taking workloads out of the enterprise and running them in a virtualized environment, we’re talking about hybrid cloud. Done thoughtfully, it offers a way for organizations to take advantage of the stability and the savings of the data center for large, relatively static workloads while deploying a cloud for what it’s best at. 

Cloud repatriation, then, won’t see organizations abandoning their cloud environments en-masse. Instead, what we expect to see over the next couple of years is a slow evolution. The infrastructure within an organization will start to shift to the environment that is best suited to meet availability, performance, and scalability requirements. 

Cloud or data center, build the hybrid infrastructure that’s right for your company

The only reason cloud repatriation is being discussed as a trend in 2022 is that the cloud was a trend for so much of the past decade. It was, by and large, a good trend, bringing unbelievable capabilities to even the smallest companies. Still, people approached cloud migrations like a panacea, expecting to lift and shift everything to the cloud and still see immediate results.

Cloud repatriation isn’t a rebuke of cloud. It’s right-sizing. In some ways, it’s the obvious aftereffect of companies overburdened with work and oversold on the benefits of the cloud. Unable to do the exhaustive but necessary infrastructure audits and planning ahead of time, many companies moved to the cloud with a wing and a prayer, only to end up burned by big bills. 

That doesn’t mean there weren’t any benefits to be had, however. Even a rudimentary cloud migration can have upsides, and if nothing else the sticker shock forced an honest conversation about infrastructure needs and how to meet them. Companies now have a more thorough understanding of the advantages and disadvantages of cloud vs. colocation, and what makes the most sense for them. 

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