83% of enterprise CIOs plan to repatriate at least some workloads in 2024, a significant jump from 43% in late 2020.
(Source: Barclays CIO survey 2024)
Though it may sound like a niche trend, cloud repatriation is gaining considerable momentum. There has been a significant rise in companies exploring repatriation over recent years, particularly within sectors like finance, healthcare and manufacturing, where data control and compliance are paramount. Leading vendors such as Dell, HPE and NetApp are responding to this shift, offering new solutions that make repatriation more feasible than ever before, providing companies the flexibility to bring workloads back on-prem.
Companies are not repatriating from the cloud because it’s “bad” or failing—quite the contrary. The cloud continues to offer many valuable benefits. However, like all technology, cloud services have their limitations and as organizations mature in their cloud journeys, they discover that specific workloads are better suited to on-prem environments. One major factor driving this shift is cloud costs. Although the cloud was initially touted as a cost-effective solution, many organizations find their cloud spending creeping beyond budgeted limits.
Everest Group found that most companies waste a lot of money on cloud services. In fact, 82% of companies waste at least 10% of their cloud budget, 68% waste over 20%, and 38% waste more than 30%.
Bringing high-volume workloads back inhouse offers budget stability, allowing organizations to manage predictable expenses through owned infrastructure, without the surprise bills.
Another reason companies are repatriating workloads is latency. For industries where speed is critical, such as finance and healthcare, latency issues in the public cloud can be a deal-breaker. For instance, a trading firm can’t afford a lag during a rapid buy-sell decision in the stock market. Many organizations move latency-sensitive workloads back on-prem to ensure fast, reliable performance. Moreover, data privacy and compliance regulations add another layer of complexity to cloud-based data storage. In heavily regulated industries, organizations face strict data governance requirements, making it challenging to comply with regulations like GDPR and HIPAA when using public cloud storage. Repatriating data to on-prem infrastructure can streamline compliance efforts by offering organizations greater control over how data is stored and accessed.
Enhanced security oversight is also a major driver behind the cloud repatriation. While cloud providers have made significant advancements in security, some organizations still feel more comfortable managing their own data, especially when it’s highly sensitive. Repatriation allows these organizations to implement and customize their security protocols to match their unique needs, providing a level of comfort and control that some companies can’t achieve in a cloud environment.
The types of workloads that companies are moving back to on-prem are specific. Heavy data workloads, for example, can accumulate costly data transfer fees in the cloud. Businesses are bringing high-data applications back on-prem to sidestep these fees. Applications requiring real-time processing, such as those in finance, healthcare and telecommunications, also see better performance when kept closer to end-users on-prem. Additionally, highly regulated data that must comply with standards like GDPR or HIPAA is easier to manage inhouse, avoiding the compliance complexities associated with the cloud.
For companies considering cloud repatriation, a structured approach can streamline the process. First, auditing workloads helps identify which are suitable for repatriation based on factors like costs, latency and compliance. Next, companies should explore on-prem solutions that match their needs. Today, options from Dell, HPE and NetApp offer cloud-like capabilities within data centers through hyperconverged infrastructure (HCI) and software-defined data centers (SDDC), blending the best of both worlds. Planning the move carefully, including staging migrations to test workload performance, ensures a smooth transition. Finally, once repatriated, continuous monitoring and optimization help maintain efficient operations and keep costs under control.
However, cloud repatriation does come with its challenges. On-prem infrastructure often requires a significant upfront investment, which contrasts with the cloud’s pay-as-you-go model. For companies with steady workloads, this upfront expense often pays off in the long run, but it’s a considerable barrier for others. Running an on-prem setup also demands skilled IT teams and careful planning for scalability since it lacks the cloud’s instant flexibility. Scaling up on-prem requires additional hardware and planning, so it requires foresight and resource commitment.
So, is cloud repatriation the right choice for every company? Not necessarily. For organizations that need tighter cost controls, improved latency, or enhanced data compliance, repatriation can be a strategic move. Today’s IT landscape allows for blending cloud and on-prem models, letting companies enjoy the scalability benefits of the cloud alongside the control offered by on-prem infrastructure. While the repatriation trend may seem counterintuitive to the initial promises of the cloud, sometimes, taking a step back enables organizations to better move forward.
The future of infrastructure is increasingly hybrid and with cloud, on-prem and hybrid options, every organization can find an approach that suits its unique needs. Whether a company’s infrastructure strategy leans more heavily on the cloud, on-prem, or a mix of both, the ability to balance scalability, cost, and control ensures that infrastructure remains a valuable, flexible asset in an evolving tech landscape.
References:
https://www.eetimes.eu/cloud-repatriation-on-the-rise-83-of-cios-plan-workload-shifts-in-2024/
