The allure of the cloud has been undeniable over the past decade. Promises of scalability, flexibility, and reduced infrastructure management costs have driven businesses to migrate workloads to hyperscaler cloud platforms. Yet, a counter-trend is emerging: cloud repatriation, where businesses bring workloads back from hyperscaler environments to private cloud infrastructure or local cloud providers offering more personalised service and a focus on customer outcomes. So, why is this happening? And is it something your business should consider? Let’s dive into the key drivers and implications of this growing phenomenon.
What Is Cloud Repatriation?
Cloud repatriation refers to the process of migrating workloads, applications, or data from hyperscaler cloud environments back to private clouds or colocation facilities. This doesn’t necessarily signal a rejection of the cloud model but rather a recalibration of how businesses manage their IT costs and environments.
Before we dive in, it’s important to understand the distinction between private cloud and on-premises. Private cloud provides the cloud consumption model—self-service, scalability, and automation—within a business’s own infrastructure, offering a modern and agile approach. On the other hand, on-premises (as a model) refers to traditional IT setups where infrastructure is manually or semi-automatically managed by a central IT team(s), often functioning as a somewhat static and less flexible “black box.” You’ll frequently hear hyperscalers refer to private cloud as “on-premises”, “traditional” or “legacy” (regardless of how you consume and manage it) to downplay this.
Key Reasons Behind Cloud Repatriation
- Cost Optimisation
While hyperscaler cloud platforms initially promise cost savings, many businesses encounter unexpected expenses as their usage grows. Egress charges, scaling costs, and a lack of predictability in billing often lead to spiralling expenses. In fact, this phenomenon is so widespread it has spawned a field of professionals and services in its own right: FinOps. For consistent workloads with predictable resource requirements, running infrastructure in a private cloud is significantly cheaper in the long run. - Financial Control and Asset Depreciation
Bringing workloads back to private cloud infrastructure or on-premises environments allows businesses to have greater financial control over their expenses. Unlike the public cloud, where ongoing costs are perpetual and the only way to stop expenses is by cancelling your subscription and losing everything, owning infrastructure provides the ability to “sweat” assets—maximising their useful life and spreading costs over time. This becomes particularly important during economic downturns when businesses need to optimise cash flow and avoid continuous spending. - Exchange Rate Impact
Another factor influencing cloud repatriation is the fluctuating exchange rate, particularly the decline of the Australian dollar. Since many public cloud services are priced in USD, businesses operating in Australia are finding that the cost of cloud services has increased significantly, impacting the touted cost savings. This has led many businesses to reconsider their cloud strategies and explore cost-effective alternatives such as private cloud or local providers who offer pricing in local currency. - Performance and Latency Concerns
Certain applications, especially those requiring low-latency interactions or heavy data processing, perform better when hosted closer to end-users or within dedicated infrastructure. By repatriating these workloads, businesses can ensure greater control over performance. - Regulatory and Compliance Needs
Industries such as healthcare, finance, and government face stringent data sovereignty and compliance requirements. Ensuring that sensitive data remains within specific geographic or organisational boundaries is often easier with private cloud infrastructure. - Security and Control
While hyperscaler providers invest heavily in security, some organisations prefer the granular control and visibility that come with managing their own infrastructure or partnering with local cloud providers that offer tailored security solutions. - Vendor Lock-In Avoidance
Many organisations grow concerned about over-reliance on a single cloud provider. Repatriating workloads offers a way to diversify infrastructure strategies and regain flexibility in technology choices. - Application Architecture Limitations
Many benefits of the hyperscaler cloud are realised when applications are refactored to be cloud-native—leveraging microservices, serverless computing, and auto-scaling features. However, this model is far more often only applicable to organisations that develop their own applications. Businesses relying on commercial off-the-shelf software often find themselves unable to take full advantage of cloud-native features, leaving them stuck with higher costs and no substantial benefits. This critical distinction is rarely explained to customers in detail, leading to suboptimal cloud adoption decisions. - IaaS vs. SaaS Considerations
A key differentiation often overlooked is between Infrastructure-as-a-Service (IaaS) and Software-as-a-Service (SaaS) within the public cloud. Many traditionally on-premises applications are being restructured as SaaS offerings, forcing customers to add another subscription to their expenses. This shift often results in increased operational costs without delivering the full benefits of public cloud infrastructure. However, it’s important to acknowledge that when a SaaS tool effectively solves a business problem, it provides real value and should be considered as a viable option. The key challenge is ensuring that businesses adopt cloud solutions to address real needs rather than solving non-existent problems or following a trend. - Advancements in Private Cloud Technologies
The rise of hyperconverged infrastructure (HCI), software-defined data centres (SDDC), and open-source virtualisation tools (e.g., Proxmox) has made private cloud environments more efficient, scalable, and easier to manage than ever before.
Hybrid and Multi-Cloud Strategies: The Best of Both Worlds
For many businesses, cloud repatriation doesn’t mean abandoning the cloud entirely. Instead, it’s part of a broader shift toward hybrid cloud or multi-cloud strategies. These approaches allow businesses to:
- Keep price or security sensitive workloads in private clouds or with local cloud providers while leveraging hyperscaler clouds for bursting or seasonal demands.
- Avoid vendor or platform lock-in by spreading workloads across multiple providers.
- Optimise workloads based on cost, performance, and compliance needs.
- Take advantage of productivity services like Office 365 and Google Workspace, which deliver real, measurable value for money compared to their alternatives, proving that not all cloud services should be abandoned.
- In the EU, alternatives such as Nextcloud have gained popularity as a self-hosted solution, offering a less feature-rich but privacy-focused alternative to Office 365 for businesses that prioritise data sovereignty.
The Future of Cloud Repatriation
As businesses continue to evolve their IT strategies, cloud repatriation will likely grow as a component of a balanced approach to infrastructure. The key is understanding your organisation’s unique needs, workloads, and goals—and building a strategy that optimises both cost and performance.
At Instelligence, we specialise in helping businesses navigate complex decisions like cloud repatriation. Whether you’re looking to optimise existing infrastructure, implement a hybrid strategy, or transition to a private cloud or local cloud provider, we’re here to guide you every step of the way. Contact us to learn more.
