Thoughts from the C-Suite
A Fresh Look at the Cloud vs. On-Prem Conversation

After a decade plus of what seemed like a straight-line march to a full-cloud model, it’s apparent that one of the emerging tech trends of 2024 is a re-evaluation of that strategy. Throughout the space, CIO’s and tech leaders of organizations in all verticals are taking a hard look at the current state of their enterprise workflows in search of a model that will allow teams to work more efficiently and effectively.  

In this edition of “Thoughts From the C-Suite”, we’ll explore several of the key factors that are driving the “cloud exit” trend and hear perspectives from members of the executive team at  Level on the business realities that are shaping the cloud vs. on prem conversation in 2024.

The decision between public cloud and on-premises workflow solutions holds significant implications for businesses with a host of factors like cost management, performance optimization, data gravity, and security to consider. The general perspective a few years ago was that virtually any workflow would be cheaper and more effective on the cloud, but that perspective has rarely proven itself factual for most workloads. Often though, organizations feel that for some environments, the speed and agility brought by cloud is worth the added cost. Drawing insights from recent trends, let's dive deeper into the considerations shaping the decisions of today's CIOs.

Cost efficiency remains a huge concern for organizations evaluating their cloud strategies. While the allure of the cloud initially promised substantial savings and scalability, it has become clear that public cloud is almost always more expensive for general, steady state data center workloads.

The disparity between cloud marketing rhetoric and actual cost savings has prompted many businesses to reassess their cloud investments. “Cloud exit became a big theme in 2023 and there’s good odds it’ll turn into a real trend for 2024. The savings are just too big to ignore for a ton of companies,” says David Heinemeier Hansson, the Danish developer of Ruby on Rails and co-owner and CTO of 37signals. In other words, some businesses have begun to recognize that greater cost efficiencies are available through either a return to on-prem or hybrid model. 

While the cloud may have been nothing short of revolutionary for certain business models, it’s important to take a long, hard look at your infrastructure before making a decision. Cloud exit is not always the answer, though. For those willing to pay more for heightened agility and speed, the cloud could still be the answer. Shifting to SaaS applications or refactoring on-prem applications into more cloud-friendly or cloud-native model is also a great way to control public cloud costs. However, this takes a lot of application expertise and next gen methodology. All in all, business owners should carefully consider their organization’s infrastructure, the cost of the transition and its effect on processes and workflow.

Security is a big deal when making your decision, especially for industries with strict regulations to follow. John Musser, a senior director at Ford Motor Co., says it's crucial to make sure your infrastructure fits the regulations and keeps any and all important data safe. 

“It’s a form of rightsizing, trying to balance around cost effectiveness, capability, regulation, and privacy,” says Musser, whose team found it more cost effective to operate some workloads on a high-performance computing (HPC) cluster in the company’s data center rather than on the cloud. .”

Many businesses in highly regulated industries are shifting back towards the control and security of using their own servers over the benefits of public cloud platforms — so in this case, the prize goes to on-prem. This focus on keeping control of data and following rules shows how important it is for organizations to pick the right infrastructure that matches the laws and regulations they have to follow.

Navigating the shift back to on-premises infrastructure demands strategic planning and careful consideration of resources. Start by identifying which applications and data would benefit most from being brought in-house. With informed decision-making and meticulous planning, transitioning back to on-premises infrastructure can prove to be a manageable and beneficial endeavor for your business in the long run for the right workloads.

However, while the switch back to on-prem continues to gain momentum, the transition isn't devoid of challenges. Infrastructure demands — like the need for physical space and hardware — can pose significant obstacles for smaller organizations. Maintaining in-house expertise to manage and upkeep this equipment can also result in needed hires and substantial costs. 

Beyond potential cost savings and enhanced control, localized data storage can lead to improved performance — resulting in quicker response times and enhanced service delivery for customers. Businesses can effectively address obstacles and see results sooner by enlisting the expertise of experienced IT professionals specializing in cloud repatriation, like Level Solutions Group.

While some executives are choosing sides in the public cloud vs. on-prem bout, others feel there’s no need. Lots of businesses are finding that a hybrid blend of cloud and on-prem systems work best. Brian Shields, who works at Boston Red Sox and Fenway Sports Management, says it's smart to use a mix of different types of infrastructure. This way, businesses can adapt to the diverse needs of modern IT and pick the best setup for each job, taking into account things like what the workload is, any rules they have to follow and how well it needs to perform. Certain tasks or needs fit better with certain platforms, and Level Solutions Group is here to help you find the lineup best suited for your organization’s needs. 

The truth of the matter is that a healthy balance exists. At Level Solutions Group, we believe that not everything, no matter what, will improve by making a switch to all cloud — and the same can be said for all on-prem. There will always be things that operate and perform better on public cloud, and there will always be things that live and perform better on-prem. Our position is that businesses should shift from a cloud-first model to a “cloud-wise” model in which they evaluate the specific needs of each facet of the organization and make an informed decision on what belongs where.

Choosing between on-cloud and on-premises solutions isn't straightforward. It takes careful consideration of what tasks need to be done, how much it will cost and how to keep everything secure. As CIOs start to focus more on tailoring their strategies to each task and less on current trends and public opinion, they'll likely see their IT systems become more efficient, flexible and robust. As you continue to do research of your own, remember that Level Solutions Group is here, ready and able to help you navigate this ever-changing landscape over the coming years.