Why Staying with Cloud Providers Could Be Your Smartest Move Yet
In recent times, several high-profile companies have made headlines by transitioning from cloud providers like AWS to self-managed, on-premise services to significantly reduce costs. One notable example is Basecamp. They announced their departure from the cloud with Why We’re Leaving the Cloud in October 2022 and reported a successful migration to their co-located infrastructure in July 2023 with We Have Left the Cloud. According to DHH, this move is saving them at least $1.5 million per year.
With such compelling stories, you might wonder: is everyone leaving the cloud? And if so, why should you stay?
Let's explore the most significant benefits you gain from using cloud providers:
1. Access to Managed Services
Utilize a wide range of tools and libraries (e.g., S3, DynamoDB, SQS) that simplify development and operations.
2. No Hardware Maintenance
Forget about monitoring, replacing hardware, or dealing with BIOS patching.
3. Standardized Deployments
Deploy to multiple regions and availability zones effortlessly through Infrastructure as Code.
4. Compliance Blueprints
Ensure compliance with audit trails and intrusion prevention mechanisms prebuilt into the services.
5. Efficient Cold Storage
Access cost-effective storage solutions like S3 Glacier with seamless replication mechanisms.
6. Managed Database Services
Benefit from replication services without the complexity of setting them up yourself.
7. Instant Elasticity
Scale resources quickly to handle traffic spikes and maintain performance under varying loads.
Consider the list above and imagine the effort and expertise required to set up and manage these capabilities with an in-house team. Especially for small companies with limited resources, hiring the necessary skills or dedicating substantial time to these tasks is often impractical.
If you're a startup seeking product-market fit (PMF), avoiding cloud providers can cost you precious time needed to develop the right product. Once you achieve PMF, you'll need to scale your services to keep up with business growth. This might also mean hosting your services across different continents. Without a cloud provider, this can become an expensive and time-consuming task that could threaten your business's viability.
The benefits of cloud services extend beyond startups. Small and medium-sized businesses (SMBs) also stand to gain significantly. The main contention against avoiding the cloud boils down to resource constraints. Small businesses generally lack the financial capacity to hire the required skills to operate sophisticated infrastructure independently.
Interestingly, Prerender's AWS migration highlights the hidden costs of traffic, which can account for up to 90% of the bill. For larger companies, moving away from cloud providers or transitioning specific services to a self-hosted solution might lead to significant cost reductions. This transition is particularly viable if the organization already possesses the necessary teams and skills to manage and operate the services.
An impressive example is Dropbox. When they moved away from S3 for object storage to their own solution, it resulted in a $75 million annual savings.
In my own experience, I worked for a startup as a Senior Developer and later became the CTO. The company initially used self-hosting at Hetzner, but this became problematic once we reached PMF and needed to scale further. Additionally, compliance was challenging since we didn't have a System Engineer on our team. I spearheaded the migration to AWS to support further scaling, enable multiple-region deployments, and address compliance needs.
I also encountered a similar situation in a SMB with a strong focus on hardware. They operated their own servers in co-location, facing issues with compliance and system scalability. Supporting new teams with accurate systems took unnecessarily long due to resource constraints.
As a technology leader, it's crucial to make careful decisions regarding your company’s cloud strategy based on current and future business needs. Comprehensive financial planning is essential. Paying a premium for a cloud provider makes sense in many scenarios, consider the total cost of ownership and additional resources for compliance and infrastructure management when running your own infrastructure.