Are there rainy days ahead for cloud computing? – BBC News

Software company 37signals will see its profits increase by more than $1m (£790,000) this year as it moves out of the cloud.

“To be able to achieve this with such modest changes to our business is amazing,” says David Heinemeier Hansson, co-owner and chief technology officer.

The American company has millions of users for its online project management and productivity software, including Basecamp and Hey.

Like many companies, it outsourced data storage and computing to a third-party company, a cloud service provider.

They have huge data centers, where they host data from other companies, accessible via the Internet.

In 2022, these services cost 37signals $3.2 million.

“Seeing this bill every week really radicalized me,” says Mr. Heinemeier Hansson.

“I was like, ‘Wait! How much do we spend on a week’s rental?’ I could buy very powerful computers with just a week’s expenses (cloud).

That’s what he did. Buying the hardware and hosting it in a shared data center costs $840,000 a year.

Although costs prompted Mr. Heinemeier Hansson to act, other factors were also of concern.

The Internet is designed to be highly resilient.

“I’ve seen distributed design erode as more and more businesses have essentially gravitated around three computer owners,” he says, referring to the three major cloud providers.

If a major data center goes down, large parts of the web can be taken offline.

The cloud was marketed, he says, as cheaper, simpler and faster. “The cloud couldn’t make things easier to the point where we could measure productivity gains,” he says, noting that his operations team has always been about the same size.

Was using the cloud faster?

“Yes, but it didn’t matter,” explains Mr. Heinemeier Hansson.

“If you want to connect a hundred servers to the Internet, you can do it in less than five minutes (in the cloud). It’s incredible.

“But we don’t need, and I don’t think the vast majority of companies need, a five-minute turnaround time on a massive number of additional servers.”

It can have new servers delivered and installed in its data center within a week, which is fast enough.

37signals uses the cloud to experiment with new products. “We needed big machines, but we only needed them for 20 minutes,” says Heinemeier Hansson.

“The cloud is ideal for this. It would be a waste to buy this computer and have it sit idle 99.99% of the time.

He always recommends the cloud to fledgling businesses. “When you have a speculative start-up and there is great uncertainty about whether you will be there in 18 months, you absolutely should not spend your money on computers,” he says. “You should rent them.”

37signals is not alone in bringing workloads back from the cloud, known as cloud repatriation.

Digital workplace company Citrix found that 94% of large U.S. organizations surveyed had worked on repatriating data or workloads from the cloud in the past three years.

Reasons given included security concerns, unexpected costs, performance issues, compatibility issues, and service downtime.

Plitch provides software that allows users to modify single-player games, including adjusting the difficulty.

It built its own private data centers and moved cloud workloads there, saving about 30 to 40 percent of costs after two years.

“A key factor in our decision was that we had highly proprietary R&D data and code that had to remain strictly secure,” explains Markus Schaal, managing director of the German company.

“If our investments in features, fixes and games were disclosed, it would be an advantage for our competitors. Although the public cloud offers security features, we ultimately decided that we needed absolute control over our sensitive intellectual property.

“As our AI-assisted modeling tools advanced, we also needed significantly more processing power than the cloud could provide within our budget.”

He adds: “We experienced occasional performance issues during periods of heavy usage and limited customization options through the cloud interface. Moving to a private infrastructure gave us complete control over hardware purchasing, software installation, and networking optimized for our workloads.”

Mark Turner, Pulsant’s Commercial Director, helps businesses migrate from the cloud to Pulsant’s colocation data centers across the UK.

In a colocation arrangement, the customer owns the computer equipment, but hosts it with another company, where it can be kept safe, at the right temperature, and with backup power.

“The cloud will continue to be the most important part of IT infrastructure, but there is a good place for on-premises, physical, secure infrastructure,” he says. “There is a repatriation going on of things that should never have been in the cloud or won’t work in the cloud.”

Some of its biggest repatriation customers are online software providers, where each additional customer puts additional load on the server, increasing cloud costs.

One such customer is LinkPool, which enables smart contracts using blockchain. It was developed in the public cloud, initially using free credits. Business exploded and the cloud bill reached $1 million per month. Thanks to colocation, costs decreased by up to 85%.

“(The founder) now has four racks in a data center in the city where he lives and works, connected to the world. He’s competing and can change his price because his costs won’t change based on (customer demand),” Turner said.

“The leaders of change in the IT sector are no longer those who advocate cloud first, but those who do it when it is necessary,” he adds. “Five years ago, the disruptors of change were cloud first, cloud first, cloud first. »

Of course, not everyone is repatriating. Cloud computing will remain a huge business, with AWS, Microsoft’s Azure and Google Cloud Platform as the major players.

For companies like Expedia, they are essential.

It used the cloud to consolidate 70 petabytes of travel data from its 21 brands.

Applications also work in the cloud, except for legacy software that does not yet work there.

“We’re experts in travel,” says Rajesh Naidu, chief architect and senior vice president at Expedia. “(Cloud providers) are experts in managing infrastructure. It’s one less thing I have to worry about while we focus on running our business.”

“One of the main benefits that the cloud brings us is a global presence, the ability to deploy our solutions closer to the region in which they need to be present,” he explains.

“The other important point is the resilience and availability of the infrastructure. Cloud providers have designed and architected their infrastructure very efficiently. We can benefit from their innovation.”

Expedia has a cloud center of excellence, which saved about 10% on cloud costs last year.

“It is essential to have policies because otherwise, businesses could easily incur huge cloud costs,” says Naidu. “You can opt out of services that you don’t need. If you consume cloud resources wisely, your bill won’t be a surprise at the end of the day.”