By Stewart Laing, chief executive, Asanti.
Since 2013 “Cloud First” has been the guiding mantra for countless IT leaders, promising agility, scalability, and a low barrier to entry. Public cloud providers like AWS, Microsoft Azure and Google Cloud Platform have touted their services as one-size-fits-all solutions, offering organisations access to cutting-edge technology without substantial upfront costs. However, our recent research paints a more nuanced picture, revealing that 67% of IT decision-makers now wish they had initially adopted a hybrid approach rather than going all-in on the public cloud. The reasons? Cost overruns, a lack of flexibility and, crucially, limitations in cloud architecture for certain applications.
Here we explore the rise in cloud repatriation and why IT leaders are pivoting towards hybrid models.
The cost realities of ‘cloud first’ strategies
Cost is often cited as one of the public cloud’s main selling points, especially given the minimal initial capital expenditure. However, our research reveals that 77 per cent of IT decision makers found their operating costs in the public cloud were higher than expected, and 63 per cent reported that these expenses outweighed those of their previous non-cloud models. The subscription costs can become unwieldy, especially as businesses scale and require more storage.
Putting this into context, a notable example of calling time on public cloud for this very reason comes from software firm 37signals. According to its website, it spent $3.2 million on the cloud in 2022 but has reduced this to $840,000 by moving its data to its own servers, hosted in a colocation facility, and is forecasting a saving of $7m over five years.
The experience of 37signals underscores a broader trend of buyer’s remorse where 45 per cent of IT leaders admitted they should have spent more time understanding their cloud providers’ terms and conditions before migrating.
Beyond costs: flexibility and compatibility challenges
The challenges aren’t just financial. Our findings show that 98 per cent of those surveyed encountered unexpected obstacles during their migration to the public cloud. Many of these issues stemmed from rigid cloud architectures, which didn’t suit all applications. Data-intensive applications, especially those requiring low latency or fast processing power, are often hampered in public cloud environments.
The survey revealed that 91 per cent of organisations have now taken steps to bring some applications back on-premise or to colocation data centres. These repatriations are driven by reasons beyond cost, including the need for greater control over sensitive data, compliance with security regulations and the limitations of cloud computing for legacy applications.
In particular, the cloud’s distributed nature can pose challenges for data compliance, a pressing issue for industries dealing with regulated data. Some IT decision makers faced hurdles when trying to manage data stored across the cloud provider’s global servers or when configuring security controls for unfamiliar cloud environments.
Use cases: what works (and what doesn’t) in the cloud
A deeper understanding of the types of applications that thrive in the cloud – and those that don’t – is now guiding the shift towards a hybrid approach. Off-the-shelf productivity tools, customer-facing web applications and environments for product development are typically well-suited for the cloud, offering scalability and easy access for remote teams and can benefit from the cloud’s ability to scale with fluctuating traffic.
Conversely, bespoke applications, proprietary R&D data and certain legacy systems often fare poorly in the cloud. Many legacy applications are built around specific architectures and may require substantial modifications to function in a cloud environment. Such adaptations can lead to delays and cost overruns. The survey revealed that 44 per cent of respondents experienced challenges with skill gaps, as traditional server expertise does not always translate into cloud-based knowledge. This hurdle is often overlooked in migration planning, leading to unforeseen delays and rising costs.
The hybrid model: balancing cloud and on-premise needs
The appeal of a hybrid IT infrastructure lies in its flexibility. A hybrid approach enables organisations to leverage the benefits of the cloud for certain applications whilst colocation delivers the security and control required for others. This model is particularly beneficial for organisations that need fast data transfer speeds for real-time applications, an issue highlighted by 36 per cent of respondents who cited the need for faster data transfer as a key reason for moving back to local servers.
Furthermore, the rise of artificial intelligence (AI) is driving more organisations toward hybrid solutions. AI applications often require real-time data processing and storage, which can become prohibitively expensive in a cloud-only model. 52 per cent of respondents reported that they are prioritising local servers for AI workloads, a sign that the hybrid model may become even more prevalent as AI adoption grows.
Key considerations for a hybrid future
Given the lessons learned from the public cloud journey, it’s clear that many organisations would benefit from better planning when it comes to their IT infrastructure. Nearly half of those surveyed acknowledged that more upfront planning would have served them better, with only 6 per cent saying their initial plans held up to real-world pressures.
A successful hybrid strategy starts with understanding the strengths and limitations of both public cloud and on-premise infrastructure. Here are a few recommendations for organisations considering this model:
- Assess workload suitability: Determine which applications work best in the cloud and which require the control and performance of on-premise systems. Productivity tools and non-sensitive web applications often thrive in the cloud, while high-performance and proprietary applications may be better suited for local servers.
- Prioritise security and compliance: Hybrid infrastructure allows organisations to keep sensitive data within their own data centres or colocation facilities, mitigating security and compliance risks associated with cloud providers’ globally distributed storage.
- Plan for scalability and flexibility: Build in the flexibility to adjust your infrastructure as needs evolve. Hybrid solutions allow organisations to start in the cloud and repatriate workloads if they grow too costly or complex to manage offsite.
- Invest in staff training and development: Migrating to a hybrid model requires diverse skill sets. Ensuring that IT staff are trained in both cloud and on-premise systems can reduce friction and improve overall efficiency.
The path forward
The days of a one-size-fits-all “Cloud First” approach are fading. Organisations are recognising the advantages of a hybrid model that combines the scalability and convenience of the cloud with the control and customisability of on-premise infrastructure. As our research shows, most IT decision makers wish they had adopted a hybrid approach from the beginning, underscoring the importance of a balanced, flexible IT strategy.
Public cloud will continue to play an essential role in modern IT, but the hybrid approach is gaining traction as a more practical and cost-effective solution. Whether driven by performance needs, cost savings or data sovereignty, the hybrid model offers organisations the flexibility to adapt to a rapidly evolving technology landscape. By planning with foresight and keeping options open, organisations can navigate the complexities of modern IT and unlock a resilient, scalable and future-ready infrastructure.
(Our research, conducted by Vanson Bourne in July 2024, surveyed 100 senior IT decision-makers from large public and private organisations with over 250 employees and £25 million in annual revenue. The respondents, including C-level executives and senior management from sectors such as finance, healthcare and professional services, had all been directly involved in their organisation’s move to the public cloud. The study aimed to understand their experiences, challenges and insights gained from their cloud journeys.)
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