This week I am taking a slightly different approach. Today, the focus is on a trend that I am starting to discuss among a number of business and technology leaders.
Note: Cloud repatriation refers to the process of moving applications and data back from the cloud (public or private) to on-premises infrastructure.
The term, “Cloud”, as it is used in the current business environment could mean many things, but in essence it is the renting of space in someone else’s compute environment. In renting this space, typically, the responsibilities of securing, storing, maintaining, patching, equipment refresh/replace, and threat reduction of the compute environments are handed over to the organization from whom you are renting. From a business operation perspective, this rental space can be in the form of a replacement to an on-premises configuration and business solution where you still maintain the software licensing, support, and maintenance (like JD Edwards EnterpriseOne or Oracle eBusiness Suite). It can also be a subscription service (Software as a Service – aka SaaS) for your business system (like Oracle ERP Cloud or Oracle HCM Cloud) where you pay “by the seat” for employees to access the items to which you are licensed.
The cloud has revolutionized how businesses operate, offering unprecedented flexibility and scalability. However, a growing number of organizations are re-evaluating their cloud strategies and considering 'repatriating' certain workloads back to on-premises infrastructure.
Key Drivers of Cloud Repatriation:
Cost Optimization:
"Cloud Bill Shock": Unexpectedly high cloud bills due to unpredictable costs, underutilized resources, and complex pricing models can lead to significant cost overruns. Additionally, once locked in, a contract renewal can show up with significant per unit cost increases in the rented compute power.
On-premises can be more cost-effective for predictable workloads with stable resource requirements.
Data Ownership, Sovereignty, and Compliance:
Data residency regulations: Some industries and regions have strict regulations regarding data location and storage.
Data security and privacy: Organizations with highly sensitive data may prefer to maintain greater control over their data security and compliance by keeping it within their own secure environments. Think about how many national or international organizations have hit the news in recent years regarding sensitive data being breached? Is your data compliant with GDPR and CCPA
The General Data Protection Regulation (GDPR) is a European Union (EU) law that protects the personal data of EU citizens. It's considered one of the world's strongest privacy and security laws
The California Consumer Privacy Act (CCPA) is a state law that protects the privacy of California residents. It gives consumers rights to know and control how their personal information is used and shared
Data Ownership: Contractual agreements should outline who owns the data and when/how it can be moved or migrated to a different platform should the need arise. Within the past 5 years, even with contractual agreements in place, organizations have lost control of and access to their data due to hotbed political issues and this must be considered. What is your exit strategy for cloud hosted data?
SaaS Data: For SaaS business systems, you often do not get direct access to the data behind the screens you use. This means that migrating to an alternative solution requires a new, completely full setup of data like Charts of Account, Automatic Accounting Instructions, etc.
Performance and Latency:
Cloud Location: Often the rented compute space will be several states, countries, or even continents away from the location where business operates.
Applications with stringent performance requirements: Applications that require low latency, high throughput, or real-time processing may perform better on-premises with optimized network configurations. Certain financial reporting and cash transactions need to be tracked in real-time.
Edge Computing: For applications that require processing data closer to the source, on-premises solutions or edge computing may be more efficient. IoT operations often require immediate response times.
Maintenance Cycles: For most public Cloud offerings, the owner of the rented compute space tells you, rather than asking you, when various maintenance operations will take place. There is little or no consideration for your business operational needs.
Control and Customization:
Greater control over infrastructure: On-premises deployments offer greater control over hardware, software, and security configurations. You get to decide on your own outage windows for patching, refreshing equipment, and other maintenance operations
Tailored solutions: Organizations can tailor their on-premises infrastructure to meet their specific needs and requirements more effectively.
Vendor Lock-in Concerns:
Reducing reliance on single vendors: Repatriating some workloads can help reduce reliance on a single cloud provider and increase flexibility.
Important Considerations:
Cloud Repatriation is not a one-size-fits-all solution. It's crucial to carefully evaluate the specific needs and circumstances of each organization.
Hybrid cloud strategies: A hybrid cloud approach, combining on-premises and cloud resources, is often the most effective solution for many organizations, allowing them to leverage the benefits of both worlds.
The Future of Cloud Computing: Changes and growth in cloud computing should also be factored into decisions being made. Here are some additional considerations as cloud computing looks to the future.
AI and Machine Learning in the Cloud:
AI/ML-powered Cloud Services: Cloud providers are increasingly integrating AI and ML capabilities into their offerings, enabling businesses to leverage these technologies without the need for significant upfront investment.
Examples: AI/ML-powered services include natural language processing, computer vision, fraud detection, and predictive analytics.
Sustainability and Green Computing:
Focus on Energy Efficiency: Cloud providers are increasingly focusing on energy efficiency and sustainability in their data centers, utilizing renewable energy sources and implementing energy-saving technologies.
Green Computing Initiatives: Organizations are seeking ways to reduce their carbon footprint and contribute to a more sustainable future. Cloud computing can play a crucial role in achieving these goals by enabling energy-efficient data centers and reducing the need for on-premises infrastructure.
Serverless Computing:
Increased Adoption: Serverless computing, where developers only pay for the actual execution time of their code, is expected to see significant growth.
Benefits: Serverless computing offers increased scalability, reduced operational overhead, and improved cost efficiency.
Quantum Computing as a Service:
Emergence of Quantum Computing in the Cloud: Cloud providers are beginning to offer access to quantum computing resources, enabling businesses to explore the potential of this groundbreaking technology.
This only touches on considerations on the leap into cloud computing, repatriation, and hybrid solutions. Information Technology, Information Systems, and Business Operations leaders have a lot coming at them very quickly. It is important to stay informed and have key individuals who can help with navigating these new territories. What thoughts would you like to add to this conversation?