Hosted servers prove cheaper than cloud

Writing at The Register, Simon Sherwood reports on a company saving large sums of money by moving from the cloud to hosted servers.

37 Signals says cloud repatriation plan has already saved it $1 million

Sharwood writes:

David Heinemeier Hansson, CTO of SaaS project management outfit 37Signals, has posted an update on the cloud repatriation project he’s led, writing that it’s already saved the company $1 million.

Hansson has previously revealed that his company spent $3.2 million a year on cloud computing, most of it at Amazon Web Services. His repatriation plan called for the company to spend $600,000 on eight meaty servers that each pack 256 virtual CPUs, and have them hosted at an outfit called Deft.

That plan was projected to save $7 million over five years.

It's a huge saving. And not a surprise. Cloud computing can be a lot more expensive than doing things the old fashioned way.

Old-fashioned - or sensible?

37Signals' alternative isn't as old fashioned as managing on premise servers. That's a lot of fannying about with industrial grade power supplies, uninterruptible power supply batteries, air conditioning, extra physical security and the rest.

In addition, on prem servers need tending by an expensive and hard to find class of high priests and priestesses. Having servers hosted offsite by professionals can give you a lot of the advantages of cloud without the cost.

37Signals uses its own staff to manage its servers and the company continues to use AWS for certain tasks. It's not a complete retreat from the cloud.

Hidden costs

There have been other similar stories about companies not being happy with what they found when they chuck out the hardware and buy "compute services sold as a utility". Cloud companies have a habit of hiding all the costs of their services during the early engagement stage with prospective customers who, once committed, find there are extra unavoidable fees that turn up.

You'll hear people in cloud circles pointing out that you should migrate to the cloud if you are looking for cost savings alone. They have a point.

Cloud retains the advantage of being an operational expense rather than capital expenditure. That can be attractive to business planners, boards and CEOs with short term targets to chase. Opex simplifies the business. It looks better on the balance sheet.

What if it goes pear shaped?

Meanwhile, it's unlikely 37Signals has the level of redundancy it could get from a cloud vendor. That's worth money, doing it the old fashioned way could add back in many of the cost savinbgs the company says it is making.

Perhaps the strongest argument in favour of a 37Signals-style approach is that running your own kit means you're not locked into a cloud vendors' world. Getting your data off a cloud service or moving to an alternative service provider is notoriously expensive and, at times, difficult.

Which brings us to the interesting aspect of this story. Twenty years after cloud first emerged, the arguments in favour or against cloud computing are not fully settled.