The case for cloud

Colin Baumgart, Microsoft South Africa

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The US software company 37Signals, the developers of Basecamp, left the cloud in 2022. Co-founder David Heinemeier Hansson said at the time that he expected to save $7 million over five years by moving its hosting back to on-premises. A bill of $3 201 564 from AWS triggered the move and by the end of what Hansson called its first “clean year”, 37Signals had saved nearly $2 million. The company bought $700 000 of Dell systems to replace its cloud systems, but has retained some AWS S3 cloud instances that are under contract and may be removed when the time comes.

Another big name – Akamai – reduced its hyperscale investment and saved 40% in its first year. The company migrated its third-party public cloud workloads to its own public cloud infrastructure.

This is a trend that IDC has noticed in larger organisations, which are opting into hybrid and on-prem solutions. The primary driver? Cost-savings. The IDC’s ‘4Q23 Cloud Pulse’ survey found that more than half of enterprises invested in cloud globally were spending more than they expected, a trend they felt would likely continue. According to the survey, 80% were planning on repatriating some of their cloud workloads across public, private and hybrid cloud by 2026 in a bid to gain more granular control over their expenditure.

You need to understand the cloud partner’s capabilities and how they approach the foundational elements of cloud implementation such as security, data compliance, and customisation.

Ryan Ramawoothar, First Technology

Enterprises are more likely to make this shift because of their size. IDC says that organisations are continuously, or at least should be, reassessing their IT environments to ensure they’re capable of meeting their workload and business needs. They are also more likely to repatriate workloads relating to production data, backup disaster recovery data and processing, and test and development data from public cloud, to dedicated infrastructure. However, companies aren’t shifting entirely away from cloud because it offers the scale and flexibility that on-prem can’t, which is leading to increased adoption of hybrid and multicloud strategies and building dedicated environments on-prem to handle specific workloads.

Meanwhile, companies in EMEA are more likely to overshoot their cloud storage budgets than in other regions, according to a study by Wasabi Technologies. The region is also more likely to opt into cloud as opposed to on-prem despite the fact that budgets are exceeding expectations. The driving factors behind these costs are operations, retrieval, analytics, egress and transfer Cost and data sovereignty are not the only reasons why people are reconsidering the cloud. There has been significant innovation into hyper-converged infrastructure (HCI) solutions and tools designed to simplify the management of on-prem environments.

There is also compliance to consider. Data sovereignty is only going to get more complicated and, as ICASA points out, using the cloud can lead to a loss of control as data can be replicated and stored across multiple jurisdictions. While cloud SLAs can be configured to ensure that data remains within relevant localities, some organisations (particularly in the public sector), and some industries remain cautious due to what they say is a lack of transparency and control.

Even AWS admitted to the UK Competition and Markets Authority (CMA) that on-prem is becoming a challenging competitor. The company said in its report to the CMA that, considering how complex it is to build a datacentre, the fact that “customers are doing it highlights the level of flexibility that they have and the attractiveness of moving back to on-premises”.

IDC’s ‘Server and Storage Workloads Survey’ released in late 2024 says that only 8% to 9% of enterprises are planning a complete repatriation of their workloads. Most are moving bits and pieces, like backups, production data and compute resources out of the cloud so they can tweak their costs and control more effectively.

This aligns with Forrester’s ‘Predictions 2025: Cloud Computing’ report, which suggests that private cloud will thrive this year because companies find it easier to manage their costs, data ownership and sovereignty requirements in their own environments. Hyperscalers are also creating off-the-shelf solutions that make it easier for companies to opt into private cloud, and they’re building options into their platforms that allow for the cloud to come to the customer.

Oracle’s Cloud@Customer offering provides companies with the ability to access both Oracle and non-Oracle workloads across multiple cloud deployment models, while AWS Outposts wheels a storage and compute appliance into the enterprise’s datacentre, making it easier for them to manage and deploy their infrastructure according to their requirements.

Microsoft’s recently-introduced Azure Virtual Desktop for the Azure Stack HCI has made it possible for companies to zip the capabilities of Microsoft’s cloud straight into their own datacentres. It’s simplified the process while still giving companies the space they need to evolve their reliance on pure cloud platforms. In South Africa, the narrative around cloud concerns is similar, but loadshedding and infrastructural challenges add a different perspective. “I think a lot of companies looked at cloud because it was a quick solution to loadshedding and power reliability,” said Andrew Roberts, IT consultant at Privilege IT Solutions. “Cloud provides backup generators, suppression systems and all the boxes are ticked so it’s a nice thing from that point of view. It also has become more accessible to smaller businesses over time, which is why we opted into it.”

Privilege IT Solutions restructured its business to provide cybersecurity managed services from within a cloud infrastructure because of its versatility, but acknowledges that it has been a more expensive journey. “It has improved productivity, and we have more backups, visibility and support,” says Roberts. “However, if I look at the costs over a five-year period, cloud is more expensive. Cloud offers reduced risk and improved compliance, so I think you pay for what you get.”

Then there’s the other side of the coin, where cloud isn’t delivering because companies have lifted and shifted their existing infrastructure. This is what Colin Baumgart, CTO and commercial solutions area director, Microsoft South Africa, believes has contributed to spiralling cloud costs.

“When most companies buy hardware for the next four years, they buy to the maximum requirements, estimating what they will need in the future. With cloud, the opposite is true; you don’t need to provision for the future because you can scale as required, but you need to be very clear about your requirements,” he says. Companies should understand their migration path, how to optimise once they’ve migrated, and put controls in place to mitigate sprawl. “Sprawl can easily happen if you don’t have controls over your environment,” adds Baumgart. “Your costs will spin up if you don’t have this control.”

For Ryan Ramawoothar, software director, First Technology, it is essential the cloud be optimised to suit what the organisation needs, with fewer assumptions about how cloud equates to on-prem. This means planning properly and establishing the right relationships with cloud integrators and providers that have the organisation’s needs at heart. As John Frier, IT executive, SearchWorks, says: “The main lesson I learned when we moved to the cloud many years ago was that you need to trust the company that hosts your environment.”

Frier moved to a virtual private cloud hosted by Routed because it was easy to deploy and removed his concerns around hardware failures thanks to its optimised redundancies. “There is also less complexity because you’re not responsible for storage replication, redundant networking and server clustering,” he says. “We’ve had no surprise hardware failures that cause downtime.”

Ramawoothar agrees that partnerships are important. Costs, migrations, and hardware considerations have to be managed in line with an understanding of the market, cost factors across different countries, and the availability of skills, which means that a cloud partner should have expertise across all these parameters. “There are challenges around skills in the technology landscape and around security and scalability. You need to understand the cloud partner’s capabilities and how they approach the foundational elements of cloud implementation such as security, data compliance, and customisation.”

What is clear is that businesses in Africa will be slower in their move to the cloud. IDC has said that only 12% of companies within the region are public cloud-first and tend to opt for off-the-shelf solutions for private IT infrastructure.

Many firms will opt for a hybrid approach that allows companies to find the balance they need within their budget.