The cloud – hype or a sustainable strategy?
The last ten years have been characterized by the “cloud first” mantra. Software, databases, storage solutions – everything moved to the public cloud. But the reality for many companies today is different: The cloud is no longer seen as the sole solution. Instead, cloud repatriation – the relocation of workloads and data back to in-house data centers or hybrid solutions – is gaining ground. This article sheds light on the background, shows current examples and explains how unbyte supports companies in this strategic reorientation.
What does cloud repatriation actually mean?
Cloud repatriation describes the deliberate relocation of applications, workloads, data and IT resources from a public cloud environment back to a controlled, in-house infrastructure. This repatriation can take place either in a traditional on-premises data center of the company or in a colocation center where the hardware belongs to the company but is operated externally.
Companies opt for cloud repatriation when it turns out that the expected benefits of the public cloud – such as cost savings, flexibility and scalability – do not materialize in reality as planned. Instead, factors such as rising operating costs, loss of data control, vendor lock-in or compliance issues lead to a reassessment of the cloud strategy.
Re-migration can take place gradually, for example as part of a hybrid cloud strategy, or specifically for particularly critical applications that require data protection, low latency times or high reliability.
Why companies are turning their backs on the cloud
More and more IT managers are shifting workloads from the public cloud back to their own or dedicated infrastructures. However, this is not a blanket departure from the cloud – but rather a conscious adaptation and further development of the cloud strategy. The aim is to achieve a balance between costs, control and technological flexibility. This process is also known as cloud repatriation, cloud exit, reverse cloud migration or simply returning from the cloud.
Main reasons:
- Cost explosion: What initially appeared to be a low-cost option is turning into a cost trap for many companies. The initial charm of pay-as-you-go models turns into the opposite as they grow: the fees for data transfers (egress), API calls and storage access increase linearly (or even exponentially) with usage. Services such as Amazon S3, Lambda, CloudWatch or BigQuery in particular cause considerable costs when used continuously. This is compounded by a lack of transparency in the billing models and the inability to plan long-term budgets.
According to an IDC study from 2023, 69% of IT decision-makers surveyed found that actual cloud costs have exceeded their original expectations(IDC report). A survey by Andreesen Horowitz also shows that cloud spending can account for up to 80% of total infrastructure costs for some companies – even though it was originally intended as a cost-saving measure(a16z Cloud Cost Economics).
The phenomenon of “cloud waste” is also relevant in this context – according to Flexera’s “State of the Cloud Report 2024”, companies estimate that up to 32% of their cloud spending is unused or inefficient. Companies that do not have a cloud cost strategy or internal FinOps expertise run the risk of falling into a structural cost trap from which the only way out is through repatriation or hybrid models.
- Vendor lock-in: Many companies underestimate the lock-in to proprietary services, APIs and platforms. This makes switching to another provider or moving back on-prem technically complex and expensive. This massively limits independence in infrastructure planning – a strategic risk.
Proxmox, an open-source, enterprise-ready platform for virtualization and containerization, offers a solution for on-premises virtualization. Proxmox enables companies to operate their own cloud infrastructure – securely, cost-efficiently and without proprietary lock-in. unbyte GmbH provides comprehensive support to organizations in the migration, setup and operation of Proxmox environments.
- Compliance & data protection: In many industries (healthcare, finance, public sector), particularly strict requirements apply to data storage. The GDPR, ISO 27001 or industry-specific standards can often be implemented better and more securely on-prem – especially when it comes to access control, logging and physical security.
In addition, industry-specific frameworks such as the BSI C5 catalog (Cloud Computing Compliance Criteria Catalog) are becoming increasingly important. For financial institutions, the European Union’s DORA regulation(Digital Operational Resilience Act) also requires critical IT services to be operated in a resilient, redundant and auditable manner. These requirements can be met more specifically and clearly documented using on-premises or hybrid cloud models.
- Strategic independence: In-house systems also mean complete control over upgrades, maintenance cycles and cost structure. In volatile markets in particular, this offers a major advantage in terms of flexibility, speed of innovation and crisis resistance.
However, this advantage is highly dependent on the size of the company and the available resources. While large organizations with their own IT teams can take full advantage of this independence, smaller companies are often faced with the challenge of maintaining the appropriate specialist staff for operation, maintenance and security. This is where modern managed services concepts come into play.
Current examples & figures: The return of the server rooms
One particularly prominent example is the company 37signals, known for Basecamp and HEY. The company migrated its storage workloads from AWS to its own pure storage on-premises solution. According to CTO David Heinemeier Hansson, this saves the company around 1.3 million US dollars a year, as this Heise report states.“The cloud was good – until we understood how much cheaper and more secure our own infrastructure can be,” summarizes Hansson.
Dropbox also decided back in 2016 to set up its own data centers under the codename “Magic Pocket” and thus partially break away from AWS. Akhil Gupta, VP Infrastructure at Dropbox, explained: “We were able to tailor our infrastructure and achieve significant cost benefits at the same time.” According to the Dropbox Engineering Blog, the annual savings amount to tens of millions of euros.
The SEO tool company Ahrefs even went one step further: it completely dispensed with cloud providers such as AWS and invested around 60 million US dollars in building its own servers and infrastructure. In a blog post, the CTO justifies this decision with a significantly lower total cost of ownership (TCO) in the long term: “We spent $60M on our own servers because it made more sense than paying AWS.”
Another example is Backblaze, a provider of cloud storage. Unlike many of its competitors, the company operates its own data centers and deliberately does not use hyperscalers. “Our own infrastructure is the key to our pricing strategy,” explains CEO Gleb Budman in the Backblaze blog.
Cross-industry studies also confirm the trend towards cloud repatriation: according to a study by Barclays (2024 ), 83% of CIOs are now considering partial or full repatriation(CEOWORLD Magazine). Another survey by Citrix (2024 ) shows that 94% of the companies surveyed are already running at least individual workloads on-premises again(IT Brew).
Digital sovereignty instead of cloud dependency: why repatriation is also politically necessary
The discussion about cloud repatriation is not just a technical or economic one – it is also highly political. This is because the increasing digital dependence on US providers such as Microsoft, Amazon and Google is jeopardizing Germany’s digital sovereignty.
Microsoft Azure infrastructures continue to hide under the label of supposedly “sovereign” cloud offerings such as the Delos Cloud – a digital Trojan supported by the Chancellery, but now facing growing skepticism in federal states and authorities.
Authorities and administrations are currently heading full steam ahead into a digital data trap, where not only costs, control and IT security are at stake, but also the self-determination of the state. The US CLOUD Act allows American authorities to access data in European data centers – without the knowledge of those affected. And while US authorities are already sounding the alarm and want to reduce their dependency, German ministries are continuing to migrate towards the Microsoft cloud.
The consequences of monopoly-like dependencies are currently also evident at VMware/Broadcom: price increases in the multiple range, lack of alternatives, dependence on licensing policy, although Proxmox would certainly be a sensible open source alternative.
Microsoft and Azure seem to be ignoring the lessons learned from this. Here too, prices, risks and attack surfaces are increasing.
The Gesellschaft für Informatik (GI) e.V., independent experts and even authorities such as Schleswig-Holstein are calling for: Open source, European solutions and real control instead of license restrictions, lock-in and data leakage.
Cloud repatriation is therefore also a political act – a step towards greater sovereignty, transparency and self-determination.
Advantages and challenges of on-premises & hybrid cloud
On-premises advantages:
- Full control: Companies retain complete sovereignty over their data, processes and physical systems. This considerably simplifies security concepts, customizing and compliance controls.
- Calculable costs: After the initial investment, mainly fixed operating and maintenance costs are incurred. This allows for more precise budgeting and reduces the risk of unexpected price increases from third-party providers.
- Data protection compliance: Data storage within your own four walls makes it easier to comply with legal requirements, especially in regulated industries. Access, logging and backup can be precisely controlled.
On-premises challenges:
- Investment hurdles: Purchasing your own servers, storage and network infrastructure is capital-intensive. This can be a barrier to entry for smaller companies in particular.
- Operation & know-how: Ongoing operation requires expertise in areas such as virtualization, security, storage and network management. Without dedicated teams or partners such as unbyte, this can quickly lead to excessive demands.
Hybrid cloud advantages:
- Load balancing: Resource-intensive tasks such as rendering, AI training or seasonal traffic peaks can be dynamically outsourced to the cloud (cloud bursting) without overloading the on-prem infrastructure.
- Failover & redundancy: Critical systems can be doubly protected: If something goes wrong on-prem, the cloud takes over as a backup: automated and without any noticeable downtime.
- Use modern services: Cloud-native tools such as BigQuery, ML platforms or serverless architectures can be integrated for specific use cases without having to move the entire infrastructure to the cloud.
- Flexibility & scaling: Companies benefit from the elasticity of the cloud without having to sacrifice the control and compliance advantages of their on-prem structures.
When is what the right choice?
| Scenario | Recommended strategy |
| Startup with uncertain growth | Public Cloud |
| Medium-sized companies with stable load | Hybrid or on-prem |
| Critical systems (e.g. medical technology, finance) | On-Premises |
| Project work, seasonal peaks | Hybrid with auto-scaling |
Conclusion: Cloud is not a dogma – but a strategic decision
When rethinking their cloud strategy, managers and CIOs should be careful not to fall into a rigid either/or situation. It is not about pitting cloud or on-prem against each other, but about developing an architecture that is precisely tailored to the respective business needs, security requirements, cost plans and regulatory framework conditions.
Public cloud, on-premises or hybrid: there is no one-size-fits-all solution. The best strategy is always individual and based on real requirements, goals and framework conditions.
Some call it repatriation. Others speak matter-of-factly of cloud exit.
Still others (usually with rigid backup plans, magnetic tapes in the cellar and images of the world from the day before yesterday) call it “remigration of the machines”.
And this cloud exit has nothing to do with nostalgia, but with foresight, control and cost awareness.
Cloud repatriation is not a defeat, but an expression of maturity and strategic thinking.
And this is exactly where unbyte comes in: We accompany you – holistically, independently, competently.
Why unbyte is the right partner for repatriation & hybrid cloud
Technical expertise:
- Kubernetes Cluster Management
- Infrastructure automation with Terraform & Ansible
- CI/CD with GitLab & Azure DevOps
- Monitoring with Prometheus & Grafana
Strategic consulting:
- Cloud strategy development
- Architectural and cost review
- Migration planning with a focus on security & downtime avoidance
Support & training:
- Onboarding of internal teams
- Training courses on cloud native, security, high availability
- Operation & support of hybrid environments
Get non-binding advice now
“Where do you stand with your cloud? “Let’s check together whether repatriation, hybrid or cloud-first is right for you.
👉 Get in touch now: https://www.unbyte.de/kontakt/
PS: This blog entry was illustrated and optimized with AI support.
PPS: Sharing is caring 🙂