Author: Martin Ewart

Should We Rethink the Cloud and Return to On-Prem Infrastructure?

In the early days of cloud computing, it felt like we’d unlocked something magical. Suddenly, we could store mountains of data, scale resources on demand, and eliminate the headaches of hardware maintenance. We could start new projects or deploy apps without racking up capital expenses on big server rooms. The cloud represented freedom, agility, and innovation. These days, the starting position on this topic is “why would anyone want to go back to on-prem infrastructure when the cloud seems like such a perfect solution?”

But here we are, a decade later, facing the uncomfortable reality that cloud infrastructure isn’t quite the silver bullet we once thought it was. As cloud costs rise—often unpredictably—many organisations are now asking, “Should we go back to on-prem infrastructure?”

To answer that, let’s take a step back and ask ourselves: Why did we adopt cloud computing in the first place? What problem were we trying to solve?

The Cloud Solved Big Problems…But It’s Created New Ones

The big promise of cloud computing was agility: the ability to quickly adjust your resources to match your needs without the lag and overhead of managing your own servers. But it came with a trade-off. By outsourcing our infrastructure to the cloud, we gave up control over the costs. The “pay-as-you-go” model initially seemed like a better deal, but it’s a bit like running a meter in a taxi instead of owning a car. For small start-ups, the cloud remains an ideal solution, but for larger organisations with high-volume, steady workloads, that meter can run up a hefty tab.

Many companies have discovered that they’re paying way more than they ever expected for cloud services. In some cases, they could even be saving money by switching back to on-prem infrastructure. So, what does this mean? Have we been mistaken in relying so heavily on the cloud?

The Right Tool for the Right Job

In my experience, the most successful organisations aren’t those that blindly follow trends; they’re the ones that ask, “What’s the best tool for the job?” They look at their unique needs and choose infrastructure that supports their mission, not just what’s popular.
If we’re looking at cloud versus on-prem, it’s not a simple yes or no question. It’s about understanding what works for different workloads, security requirements, and long-term goals. Some applications, like those with heavy computational needs or predictable workloads, might be more cost-effective on-prem. Others, like dynamic applications that scale quickly, benefit from the cloud’s flexibility.

When On-Prem Makes Sense

Let’s say you’re running a stable, predictable workload that doesn’t vary much throughout the year. It’s a financial application that crunches numbers daily or a database that sees steady traffic. In this case, cloud costs could add up quickly since you’re essentially renting the infrastructure rather than owning it. Going on-prem might reduce your long-term costs, even if the initial setup requires capital investment.

Then there’s data security and compliance. For certain industries—like finance, healthcare, and government—data security is non-negotiable. Sure, cloud providers have made enormous strides in compliance and security, but keeping sensitive data on-prem might still offer an additional level of control and assurance. When reputational risks and regulatory compliance are at stake, there’s value in knowing exactly where your data lives and who can access it.

The Cloud Isn’t Going Anywhere

Does this mean we’re headed for a mass migration back to on-prem servers? Not quite. The cloud remains the best option for dynamic, rapidly growing companies or any project with unpredictable traffic. Think about launching a new app—how could you predict its future needs and scale it without the cloud? Here, the flexibility of cloud resources is invaluable.

For teams focused on innovation, the cloud offers more than infrastructure; it offers a whole ecosystem of advanced tools and services—everything from AI and machine learning capabilities to data analytics and DevOps automation. Leveraging these tools on-prem would require expertise and resources that most companies simply don’t have.

Enter the Hybrid Model: The Best of Both Worlds

The solution isn’t to go all-in on cloud or on-prem; it’s to get smarter about balancing both. This is where hybrid infrastructure comes in, combining the best of cloud’s scalability with the control and predictability of on-prem resources. With a hybrid model, companies can keep sensitive data and stable workloads on-prem while using the cloud for anything that needs rapid scaling, flexibility, or advanced tools.

By using a hybrid approach, companies can avoid over-reliance on cloud resources and regain control over costs while still benefiting from the cloud’s flexibility. It’s not an all-or-nothing decision; it’s about understanding where each option excels and making intentional choices. It’s here the innovators in the valley rarely build solutions for the hybrid environments that typical enterprises need. The valley eco-system is full of companies that predominantly live in a new technology world, quite different from the mixed economy landscapes that often exists in many enterprises.

Rethink, Don’t Regress

I’m not proposing going backward to the way things used to be. It’s about finding balance. As leaders, it’s our responsibility to be proactive, to look beyond hype and headlines and understand the needs of our organisations. Yes, cloud computing brought enormous value, but let’s not forget that technology is supposed to work for us—not the other way around.
So, should we go back to on-prem infrastructure? For some, yes. For others, a hybrid approach will offer the best of both worlds. But one thing is certain: we need to keep questioning our assumptions. Because that’s how we’ll find the right solutions—not by following trends, but by leading with intention and purpose.

Cloud or on-prem? It’s not just a technical decision; it’s a strategic one. And the best choices are those that align with our unique mission, values, and vision for the future.

About Hanya Partners

From running cost transformation programmes, transforming operating models, to building procurement and supply chain capability, Hanya Partners has extensive supply chain and organisational transformation expertise. Therefore, please do not hesitate to reach out if you think we can be of assistance.

Part of the Taranata Group, Hanya Partners has offices in Edinburgh and London. We bring fresh insights, thought leadership and best practices in Sourcing and Supplier Management, Talent and Organisation Health and IT & Digital Transformation.

Martin Ewart | 25th November 2024