Public cloud repatriation: Why some businesses are retreating from public cloud

This article delves into the growing trend of public cloud repatriation, its core drivers, and the various forms which it can take.

What is public cloud repatriation?

From the mid 2000s onwards, cloud migration (the process of moving data, applications, or other business systems from on-premise infrastructure to a cloud computing environment) became a cornerstone of many companies digital transformation strategy. At its core, the shift to cloud was driven by the promise of cost savings, scalability, and intuitive access to advanced technologies. For the vast majority of enterprises adopting cloud, these benefits were compelling enough to embark on ambitious migration projects, primarily shifting workloads and storage to public cloud offerings championed by providers such as Microsoft Azure, Google Cloud Platform, and Amazon Web Services.

While the trend of cloud migration has continued to accelerate, recent years have increasingly seen certain enterprises questioning their initial cloud strategies — which may no longer be yielding the benefits that were originally anticipated — and instead considering public cloud repatriation. Public cloud repatriation, in this context, is defined as the process of moving applications, data, or workloads that were previously migrated to a public cloud environment back to on-premise infrastructure or to a private cloud. If the 2000s and 2010s were decades defined by cloud migration, there are indications that the 2020s may, in some instances, be characterised by public cloud repatriation.

“In the mid-market, increasing costs, security concerns, and the complexity associated with low-latency, high-speed workloads are driving companies to reconsider the viability of certain cloud workloads. This has led to a growing trend of public cloud repatriation with organisations becoming more comfortable maintaining existing on-premise solutions or shifting to other non public cloud options” – Iain Simpson, Account Director, Croft MSP

What are the core drivers behind public cloud repatriation?

For enterprises considering a “retreat” from the public cloud towards a strategy of public cloud repatriation, there are four principle drivers:

Drivers of cloud repatriation

Source: STL Partners

Cost

The cost factor in public cloud repatriation plays a critical role in many organisations’ decisions to move workloads from the public cloud to on-premise or private cloud environments. According to a 2022 survey by Anodot, 88% of enterprises stated optimising and reducing spend on existing cloud resources was either extremely or very important. While public cloud solutions often offer flexible, pay-as-you-go pricing, this model can lead to unforeseen expenses, such as high data egress fees and unpredictable costs due to overprovisioning. In recent years, numerous enterprises have experienced ‘bill shock’ leading many to consider alternatives. In contrast, shifting towards on-premise or private cloud infrastructure provides more predictablilty and lower long-term costs. In particular for enterprises with stable, predictable workloads, the costs of an on-premise system or a private cloud solution can be more economical.

Control

The control factor in public cloud repatriation is crucial for organisations seeking greater oversight and customisation of their respective IT environments. On-premise infrastructure, as well as certain private cloud environments, allow enterprises to retain far greater control over their hardware, software, and data management, enabling tailored configurations and security measures that meet specific business needs. This level of control can be particularly important for applications requiring specialised hardware. By contrast, public cloud environments involve reliance on the provider’s infrastructure and policies.

Storage needs

For organizations with extensive storage-heavy requirements, public cloud repatriation is becoming an increasingly attractive solution. Public cloud storage costs can accumulate significantly over time, especially for large volumes of data, frequent access, or high data egress fees. Public cloud providers typically make it free to upload data (in order to encourage data storage in their systems), but then charge for data transfers out. These egress fees can apply when moving data between different cloud environments or even between regions within the same cloud provider (this is a particular issue for organisations which store significant amounts of data and often are required to move this data around). Consequently, organizations with substantial or growing data storage needs may find that on-premise or private cloud solutions can offer more cost-effective and scalable options.

Compliance

Regulatory requirements and organisational policies can influence the decision to move data and workloads away from the public cloud. Certain industries (eg: financial, legal) are subject to strict data protection regulations and standards. These dictate how and where data must be stored and managed. Cloud providers may not always offer the necessary level of compliance or data sovereignty that organisations require, causing enterprises to repatriate data to maintain control over its security and ensure adherence to regulatory requirements. Additionally, internal policies related to data governance, security protocols, and risk management can drive the decision to keep sensitive or critical information within an organisation’s own infrastructure.

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Which enterprises could embrace public cloud repatriation?

Given the potential benefits of public cloud repatriation, many enterprises have already begun to consider altering their cloud strategy. There are a series of enterprise profiles which would be most likely to make the transition away from public cloud:

• Large enterprises who were early into cloud and now have an uncontrolled and unconsolidated cloud estate across many vendors
• Enterprises that initially needed the advanced tooling and scalability of public cloud, but now have workloads with stable requirements that could be run more efficiently on other infrastructure
• Private equity-backed businesses looking to reduce cloud spend to a defined percentage of revenue
• Businesses with storage heavy workloads
• Enterprises that are capturing and storing sensitive data who need assurances that this data will remain local and under their country’s data protection laws
• Enterprises with high-frequency transactional systems that perform better in edge architectures designed for lower latency

Alternative options to public cloud

Cloud repatriation deployment options

Source: STL Partners

Shifting to on-premise

A shift from public cloud to on-premise is perhaps the most conventional form of public cloud repatriation. On-premise infrastructure provides several advantages, including complete control over hardware and software configurations, enabling tailored solutions and customised security measures which are directly within the organisation’s oversight. Furthermore, an on-premise strategy offers predictable costs for capital investments and should deliver low latency and fast data access.

On-premise infrastructure, however, presents several disadvantages including high initial costs for hardware, as well as ongoing maintenance expenses. In particular, the need for physical space, comprehensive disaster recovery processes, and sufficient energy provision presents a critical limitation and barrier to adoption. Furthermore on-premise lacks the scalability and flexibility of cloud solutions, requiring significant investment and time to expand or upgrade resources, while also needing dedicated trained IT staff for maintenance and troubleshooting.

Using colocation

In the context of public cloud repatriation solutions, colocation serves as a middle ground between fully on-premise infrastructure and a private cloud environment. Colocation allows organisations to retain ownership and control over their hardware while offloading the responsibilities for power, cooling, and physical security to the data centre provider. This setup combines the benefits of owning and customising hardware with the enhanced reliability of a professional data centre. It also addresses concerns about cloud costs and compliance by offering a more predictable cost structure and helping to ensure data security and regulatory adherence in a managed environment.

“At Pulsant we’ve supported an increasing number of clients with public cloud repatriation projects as organisations aim for greater control and cost predictability. Through colocation businesses can consolidate IT infrastructure and benefit from robust physical security, redundant power, and cooling whilst private and dedicated cloud platforms have become increasingly attractive for the right workloads” – Mark Turner, CCO, Pulsant

Adopting private cloud

Transitioning to a private cloud provides a balanced solution between traditional on-premise/colocation infrastructure and public cloud services. It allows organisations to control costs with more predictable pricing and avoid the variable fees of public clouds. Crucially, a private cloud environment removes any responsibility over infrastructure management, as well as the ability to more easily scale resources as needed (while still retaining ultimate control over the IT environment). Additionally, private clouds offer enhanced security and enable tailored security measures, in turn facilitating a greater ability to adhere to regulatory requirements.

“Public cloud repatriation is definitely something that we’re seeing. Aspire has taken steps to ensure that our private cloud solution delivers functionality of public cloud in terms of self-service and scalability, while also offering predictable pricing and a friendly team to provide support” – Adam Veitch, Head of Product, Aspire Technology Solutions

Private cloud providers across the UK have recognised the increasing shift towards public cloud repatriation and have taken steps to ensure their solutions match the demand.

As disillusionment with public cloud and its hyperscaler providers continues, it is distinctly possible that private cloud may experience a ‘renaissance’, attracting new customers keen to reap the benefits of a public cloud repatriation strategy.

Jonas Topp-Mugglestone

Jonas Topp-Mugglestone

Consultant

Jonas is a Consultant at STL Partners, specialising in data centres and M&A.