When it comes to decisions around adopting cloud technology, the answer, most of the time, will start with, `It depends…’
There’s certainly a lot to consider, such as what applications the business has, where they’re running, and how much it’s costing. What does the company’s infrastructure look like at the moment, and what’s the size and growth trajectory of the company? What kind of heritage data and infrastructure does it have in place?
Here, we look at two companies that couldn’t be more different, but share a commonality in their belief that on-premise works out cheaper.
There are plenty of anecdotal tales about how companies have put some things in the cloud and then, for one reason or another, decided they didn’t want to do this anymore. But these tales are often vague, with little in the way of detail, which is why it was a surprise to come across a couple of candid blog posts from a US web software company called 37signals, which make the project management software Basecamp, and email program HEY, among other things.
In his post, ‘Why we’re leaving the cloud’, 37signals co-owner and CTO David Heinemeier Hansson says it’s been using some cloud services for Basecamp for over a decade, and HEY has been running in the cloud exclusively for two years. In a post from late last year, he says the company has seen all of what the cloud has to offer, and he’s concluded that ‘renting computers is (mostly) a bad deal for medium-sized companies with stable growth’. He writes that the promised cost savings in reduced complexity never materialised, and thus it was laying its plans to pull its products from the cloud.
What happens if you want to move off the cloud and bring your data back in?
Helen Constantinides, AVBOB
Hansson says the cloud excels at two ends of the spectrum: one, where a company has a simple application and low traffic, and this means it will benefit from having a fully managed service. The other area where it’s useful is when there are unexpected peaks, such as what happened when it launched HEY and 300 000 users signed up in three weeks. Now, usage has settled down, and the company is paying half a million dollars a year to Amazon for its relational database service and Elasticsearch.
“Do you know how many insanely beefy servers you could purchase on a budget of half a million dollars a year?” he asked.
Colo datacentre
He also pours scorn on the cloud providers’ argument that it’s hard for a business to manage their own machines, and that savings will come with reduced labour costs. Heinemeier, who also happens to be the inventor of the Ruby on Rails web development framework, says he’s yet to hear of organisations, at least at the scale of 37signals, being able to shrink their operations team just because they moved to the cloud.
Fernando Álvarez, a senior site reliability engineer at 37signals, in his post digs into the specifics, and says its AWS usage for HEY includes running the full Rails application on Kubernetes clusters on EKS, Aurora RDS for its MySQL database servers, Elasticache for its Redis database, and OpenSearch.
“In total, we spent $3 201 564 on all these cloud services in 2022. That comes out to $266 797 per month. Whew!”
Álvarez says it’s planning to slash these costs this year by moving a lot of services and dependencies out of the cloud and onto its own hardware in a colo datacentre. He says that doesn’t mean anyone from 37signals is going to be spending any time in a datacentre.
Rather: “We order from Dell, have it delivered straight to the datacentre, and then we see the servers appear online, and then we get to work.”
Choices, choices
A company that could define the term ‘heritage’ is South Africa’s AVBOB, which started doing business in Bloemfontein in about 1918. It now looks after 7.5 million lives, and is the continent’s largest mutual assurance society. Helen Constantinides, the group chief information officer, says some of its customers are 99 years old, while others are ‘brand-new’. “We have to keep their entire history, all of their benefits, bonuses and transactions. The policies are alive.”
AVBOB has its own datacentre where it runs its core insurance and financial applications. It also has a strategic relationship with Dell, and Constantinides says it’s cheaper to run her compute on-prem, as well as procure, manage and set up servers.
She says moving to the cloud was one thing, “but then, what choices are you left with? What happens if you want to move from one cloud provider to the next? What happens if you want to move off the cloud and bring your data back in?”
AVBOB is using Software AG’s Adabas database for its core systems, which was launched in 1971. It’s also using Software AG’s programming language Natural for its application development and deployment. Software AG has also announced that both the database and the language will be supported ‘beyond 2050’.
Constantinides says its Adabas database is capable of millions of transactions at any one time. “We’re talking huge volumes,” she says.
The cloud might make sense for a new company, “but when you start adding more people and governance and compliance requirements and security, then your costs go up,” she says.
She believes that if proper planning is done, “there’s no reason why you can’t do it for cheaper, and be more agile than (running your workloads) in a cloud provider.
“I’ve spoken to a number of CIOs at banks, and they wanted to come back from Microsoft implementations in the cloud, but were locked in because of cost, not having thought through their roadmap.”
Furthermore, if you move to the cloud, some of the projects may have scaled so much that the costs have shot through the roof.
“Everyone is saying, ‘Go cloud, go cloud’, and there are a lot of followers. People think, ‘If they’ve done it, why can’t I do it? Am I losing out by not doing it?’
“It’s not about any of that. The decisions you need to make are about how the business runs, and what your strategic innovation elements are.
“It all depends on how your applications and data is set up. We have 25 000 custom-made applications, so just to put that in the cloud, and with all of the integration that’s needed, is not easy. Cloud won’t solve that problem for us.”
* This feature was first published in the March edition of ITWeb's Brainstorm magazine.
Share