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Why companies are bringing workloads back on-premise
Tue, 5th Dec 2023

In recent years, the business landscape has witnessed a remarkable transformation with the rapid adoption of cloud computing. Cloud services have revolutionised the way organisations manage and deploy their workloads, offering unparalleled flexibility, scalability, and cost-efficiency.

However, amidst this cloud revolution, a counterintuitive trend has emerged: some companies are beginning to move cloud workloads back on-premise.

Cloud computing has been a game-changer, empowering businesses to scale their operations swiftly, reduce capital expenses and access cutting-edge technologies without the need for extensive infrastructure investments. Migrating to the cloud has many advantages, including:

Cost efficiency: By eliminating the need for in-house data centres and infrastructure maintenance, companies can lower their IT costs and redirect resources to core business activities.

Innovation: Cloud platforms provide access to advanced technologies such as AI, machine learning, and big data analytics, which can fuel innovation and competitive advantage.

Scalability: Cloud services allow organisations to scale their resources up or down on demand for optimal performance and cost savings.

Disaster recovery: Cloud-based solutions offer business continuity and disaster recovery options for unforeseen disruptions.

Accessibility: Cloud-based solutions facilitate remote work and collaboration, enabling users to access applications and data from anywhere.

While the benefits of cloud computing are undeniable, some companies have begun to re-evaluate their cloud-first strategies and migrate some workloads back on-premise. Several compelling factors are driving this shift:

Cost management: While the cloud’s pay-as-you-go model can be cost-effective for variable workloads, it can lead to unexpected expenses when usage spikes. Organisations with predictable workloads may find it more cost-efficient to invest in on-premise infrastructure over the long term rather than paying ongoing cloud service fees.

Performance and latency: Certain applications, particularly those requiring low-latency responses or intense computational power, may experience performance bottlenecks in a cloud environment. Running such workloads on-premise can ensure consistent performance and responsiveness.

Data sovereignty and security: In industries with strict regulatory requirements, companies often need to ensure that sensitive data is stored and processed within specific geographic regions to comply with data sovereignty laws. For many organisations, maintaining control over their data and having physical access to it offers a level of security and compliance that cloud solutions cannot always guarantee.

Complexity and vendor lock-in: As companies adopt multiple cloud services and platforms, managing the resulting technical and security complexities can be challenging. Additionally, concerns about vendor lock-in and potential difficulties in migrating between cloud providers are causing some organisations to consider bringing workloads back in-house.

Changing priorities: As companies evolve and their strategic priorities shift, they may find that some workloads are better suited for an on-premise environment. This could be driven by a desire for tighter control, specific performance requirements, or changing business needs.
Resource optimisation: Workloads that have stable resource requirements may not fully leverage the cloud’s elasticity. In such cases, dedicated on-premise hardware has better resource utilisation and cost savings profile.

The migration of workloads to the cloud has undoubtedly transformed how companies operate. However, the recent trend of bringing certain workloads back on-premise highlights the complex and dynamic nature of the technology landscape.

Organisations must carefully evaluate their unique business requirements, regulatory constraints and cost considerations when deciding on the optimal deployment strategy for their workloads. Whether in the cloud or on-premise, the key is to strike the right balance.