David Heinemeier Hansson has become the leading cloud rebel. The co-owner and CTO of 37signals and creator of Basecamp and Hey—which has had its ups and downs with Apple—has long been an evangelist for companies to abandon the cloud and manage their infrastructure locally. This move is called “cloud repatriation,” and it works for his company. The problem is that it may not work for everyone.
Dramatic savings. Heinemeier Hansson announced his intention to abandon the cloud two years ago. Even then, he knew the move would take time but would save a bundle. A few months later, the Basecamp creator estimated the strategy would save $7 million over five years. However, he recently revised his estimate to $10 million. His company has even produced an FAQ to help those considering such a move.
AWS and Azure are very expensive. Analyst Jeremy Theocharis compared the cost of a machine and its storage on Azure and AWS with the price of a similar machine on a bare-metal provider such as Hetzner. According to his calculations, AWS was six to seven times more expensive. Azure was even worse, costing 10 times more, not including hidden costs such as storage, transfer fees, and complex pricing models. The proposition from providers like Hetzner is clear: Your machine, with your chosen storage, is all yours, and you can transfer whatever you want. That’s sobering.
And so is S3 storage. One of Heinemeier Hansson’s few remaining ties to the cloud is AWS S3 cloud storage. Of the $3.2 million a year his company used to spend on the cloud, it now spends just $1.3 million, all of it on S3, where the company stores almost 10 petabytes of data.
The problem is that its five-year contract expires next summer, when it will move to a system with 18 petabytes of capacity. The initial cost is high—about what the company spends on AWS in a year—but the long-term savings are significant. Heinemeier Hansson expects to reduce his expenses by another $4 million over the next five years. Hence, the revised total savings estimate of $10 to $11 million over that period.
When the cloud makes sense. In the initial announcement in the fall of 2022, the Basecamp creator clarified that the cloud is relevant in two scenarios. First, when the application is “so simple and low traffic that you really do save on complexity by starting with fully managed services.” Second, if “your load is highly irregular,” which means your web traffic varies a lot. In those cases, platforms like AWS can dynamically adapt to that. Now, neither of these scenarios applies to Heinemeier Hansson. His company is established and knows its traffic peaks, so it wouldn’t be worthwhile to prepare for an exceptional “just in case.”
Cloud repatriation isn’t for everyone. For Heinemeier Hansson and his company, it’s a no-brainer, but he admits that for businesses with “huge fluctuations in load” or those just starting out, where uncertainty exists, the cloud may indeed make sense. While there are other cases of companies moving away from the cloud, there are also experts—including Amazon—who say it doesn’t always make sense. Gartner analyst Lydia Leong explained that these cases are almost anecdotal. According to her:
“None of these things are in any way equivalent to the notion that there’s a broad or even common movement of workloads from the cloud back on-premises, especially for those customers who have migrated entire data centers or the vast majority of their IT estate to the cloud.”
Every business is different. What’s clear is that while the cloud seemed like a panacea for all types of companies a few years ago, cases like Heinemeier Hansson’s show that today, it can make sense to move to a local, self-managed infrastructure. This isn’t a trivial issue because even if companies save money, they still need professionals to manage it. Even AWS claims to have noticed that cloud repatriation is real, and that says a lot about the trend.
Image | Christina Morillo
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