can we observe a trend of companies moving away from public cloud towards on premises infrastructure

It's no secret that the cloud has become the de facto standard for modern IT infrastructure. Cloud providers like AWS, Azure, and Google Cloud have rapidly grown in popularity over the past few years. But with the increasing adoption of cloud technology, a question arises: is the cloud really as cost-effective as it's touted to be?

The High Cost of Cloud Computing

As it turns out, the cloud can be quite expensive, especially if you're moving more workloads to it. During the "growth at all costs" phase between 2021 and 2022, it was easy to ignore or minimize the costs associated with operating in the cloud. However, when companies started scrutinizing every entry in the technology budget, it became clear that cloud bills were big and only getting bigger. So, how can companies lessen the budgetary impact of cloud computing?

Moving Back On-Prem: A Viable Solution?

The brute force solution would be to move back on-premises. However, this approach raises major questions. Why did companies move to the cloud in the first place? Maybe they thought there would be cost savings. Even if they were wrong on that point, the agility of the public cloud has always been its primary value proposition.

In the bad old days of on-prem, businesses had to plan for capacity. If a company grew faster than anticipated, they were stuck, putting their business in a vulnerable position. The corporate procurement process has always been fraught with time-consuming bureaucracy. Companies had to plan to buy servers, then rack and stack them. Even if they wanted to do that now, they might not have the personnel with that skill set, as the trend has been toward hiring for a cloud DevOps world.

While it's possible to move certain workloads with less pain than others, it's worth considering that earlier this month, Ofcom, a UK communications watchdog, issued a report criticizing the top cloud infrastructure players for making it too hard to move workloads between clouds – and presumably back on-premises, if that was the desire. If it's truly so expensive and difficult, does it make sense for companies to do that?

Is Cloud Repatriation Being Overhyped?

To explore whether companies truly want to move back on-prem, we asked a group of industry experts. While we got a mixed set of answers, it seems that the idea of cloud repatriation is being greatly exaggerated.

The Growing Cloud Infrastructure Market

Let's start with the fact that the cloud infrastructure market is huge, even as it's slowing down amid the economic uncertainties affecting every industry. In 2022, the market reached over $200 billion. While it was down from the prior year, when the market grew at 36%, it was still a substantial market by any measure. The fourth quarter was up 21% to $61 billion, according to Synergy Research.

"From a numbers perspective, we continue to see strong growth in the cloud market - 2022 worldwide spending on cloud infrastructure services was up 26% from 2021, despite problems in China and a much-strengthened U.S. dollar - while investment in enterprise on-prem infrastructure remains weak," says John Dinsdale, Chief Analyst and Research Director at Synergy Research. "Servers shipped to enterprises grew by 3% in 2022. Looking ahead, we continue to forecast strong growth in the cloud market and weak growth in on-prem infrastructure."