Cloud or On-Premises? AWS Says It Faces Challenges with On-Premises
AWS acknowledges challenges from On-Premises solutions
Cloud giant AWS has acknowledged that it is facing strong competition from on-premises infrastructures, marking a significant shift from its previous statement that all workloads would eventually move to the cloud.
Customers are returning to On-Premises
In a document submitted to the UK’s Competition and Markets Authority (CMA), AWS denied that its customers face difficulties when migrating away from its platform. To support this claim, the company provided examples of clients choosing to return to local infrastructure.
In the CMA report, AWS stated: “Building a datacenter requires considerable effort, so the fact that customers are willing to do this highlights the level of flexibility they have and the appeal of returning to on-premises infrastructure.”
Yes, you read that right — some customers are finding it more attractive to move their IT operations back to local environments, despite the challenges involved, rather than stay with AWS. Not exactly a ringing endorsement of cloud benefits.
Reasons behind cloud repatriation
AWS also pointed out that customers may return to on-premises infrastructure for several reasons, including "reallocating financial resources, adjusting access to technology, and increasing control over their data, security, and assets."
Indeed, there is a growing trend of companies shifting part or even all of their workloads back from the cloud — a movement known as “cloud repatriation.” Cost often appears as a key factor.
One widely discussed example is 37Signals, the developer of Basecamp, which decided to return to on-prem infrastructure after receiving a $3.2 million bill for cloud hosting services. By the end of last year, the company had already saved $1 million.
Repatriation remains a minority
But is AWS truly facing strong competition from on-premises infrastructure in the UK, or is this just a strategy to avoid stricter regulatory actions? We asked the company how many of its customers had returned from the cloud.
In response, AWS cited data showing that of all UK organizations that switched cloud infrastructure providers, 29% opted for local (on-premises) services. However, these figures include all cloud providers and don’t specify how many came specifically from AWS.
Andrew Buss, senior research director at IDC for EMEA, told The Register that while cloud repatriation is becoming more common, "we still see only a single-digit percentage of companies actively repatriating workloads from public cloud."
He added that organizations tend to move to another public cloud provider if their current one doesn’t meet their needs. They’ve also become more familiar with public cloud cost models, allowing them to compare with long-term private infrastructure expenses.
Private infrastructure remains relevant
A more prominent trend in the EMEA region is that over half of companies still prefer to run workloads on private IT infrastructures, according to Buss, while around 12% prioritize public cloud use.
Despite this, the IDC analyst noted growing interest in standardized, ready-to-deploy private cloud infrastructures, such as Azure Stack, AWS Outposts, or VMware Cloud Foundation.
Cloud market under investigation
The latest report summarizes the CMA’s hearing with AWS, as part of an investigation into the UK cloud services market, which aims to determine whether major providers are engaging in practices that limit customer choice.
In the document, AWS stated that some customers opt to use a single cloud provider like AWS itself due to operational ease and lower costs. The company also admitted that the training required to operate in a multi-cloud environment may be a barrier for many customers.
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News source: https://www.theregister.com/2024/09/17/aws_cma_investigation/
