“On-premise? Isn’t that just for those who don’t have a choice? All the cool kids are obviously using a public cloud, right? I mean, why wouldn’t they?"
That’s what most people think, right? Public cloud solutions have gained a certain “cool factor” and become the go-to for innovative companies, whether they are running artificial intelligence, machine learning models, or big data analytics. It’s quick, relatively easy, and scalable. So yeah, everyone would move to the cloud eventually.
But guess what? Lately, businesses have been taking a closer look at the true costs of their cloud adoption, and, surprise, some are finding that going back to on-premise (aka building and running a private cloud on your own hardware) is not just a “last resort”; for some companies it’s actually a strategic advantage. Whether it’s improving data sovereignty, having more operational control, or even reducing costs: OnPrem is coming back.
Digital Sovereignty: So Much More Than A Buzzword
“Ugh, can we please stop talking about Digital Sovereignty? I’m so over it. It’s just another trend, right?”
Sorry to break it to you, but nope - digital sovereignty is a fundamental aspect of today’s digital world, and it demands serious attention from policymakers, the economy, and the public.
Digital sovereignty refers to "the ability and right of individuals, organizations, and governments to maintain control over their data and digital processes in a secure, self-determined way."[1]. In practice, this means companies and institutions should have full control over their data and be (relatively) free to decide where or on whose infrastructure they operate - without being locked into a specific vendor in the long term.
“But is being tied to a vendor really that bad?” you might wonder. Yeah, it actually can be. It can have severe consequences, particularly when it comes to flexibility, control, and cost. Vendor lock-in makes switching providers complex and costly, limiting your ability to adapt to changing requirements and changes in the market. Many VMWare customers can tell you a thing or two about this.
Even more concerning, given that most major cloud providers (hyperscalers) are based in the U.S., the implications of the CLOUD Act on the one hand and the increasing political uncertainty on the other hand loom large. The CLOUD Act allows U.S. authorities to access data stored by U.S.-based companies, even if that data is hosted in other countries. This poses potential conflicts with the European Union's GDPR, creating a risk of compliance violations and making vendor lock-in even more critical for public institutions and companies that need to protect sensitive data from U.S. jurisdiction. With the new Trump administration, the previous agreements are even more shaky.
But what’s surprising is that the comeback of OnPrem is no longer limited to governmental or heavily regulated sectors: Even companies that don’t have to consider on-prem are starting to make the shift - and not just because of data privacy concerns. So why then? Well, let’s dig in.
The (Hyperscaler) Cloud Cost Dilemma
Beyond digital sovereignty, another factor pushing businesses back to on-premise solutions is cost. While the cloud initially seems flexible and cost-effective - after all, there are no high upfront hardware investments and you can scale on demand - some companies don’t pay attention to hidden fees and long-term costs. In addition, pricing models can become complex and confusing when multiple services are used.
Several well-known companies have already turned their backs on cloud providers due to rising costs:
- SofaScore, a sports scoring platform with over 25 million monthly users, switched from AWS to its own hardware after cloud costs skyrocketed. They now spend just 0.6% of their revenue on infrastructure compared to an estimated 5-10% if they had stayed with cloud services.[2]
- Basecamp, a project management software company, left the cloud after a decade of using AWS and Google Cloud. They estimate this move will save them over $7 million in just five years[3]
- Ahrefs, an SEO tools provider, calculated that staying in the cloud would be ten times more expensive annually than switching to on-premise solutions.[4]
“Huh… sounds like the cloud isn’t always the holy grail - will it fade away completely?!” Oh no, of course not.
The Best of Both Worlds: A Hybrid Approach
The good news is that the cloud isn’t going anywhere - and it’s certainly not “the bad guy” by any means. It offers numerous advantages like flexibility, rapid scalability, and the ability to offload infrastructure management. However, on-premise solutions are making a comeback because they offer cost transparency, data sovereignty, and greater control. So what now?
For many businesses, the ideal solution lies in a hybrid approach - a mix of public cloud and on-premise infrastructure. This allows them to:
- Maximize security and control by keeping sensitive workloads and data on-premise while leveraging the cloud for less critical or highly scalable tasks.
- Optimize costs by using on-premise infrastructure for predictable, stable workloads and the cloud for temporary, dynamic needs.
- Boost flexibility by using multiple platforms, ensuring they aren’t fully dependent on a single provider (avoiding vendor lock-in).
And, just saying: To create some extra security and sovereignty, it’s clever to extend your on-prem setup with regional cloud providers located in Europe rather than using hyperscalers from overseas.
Open-Source Technologies: The Key to a Successful On-Prem Strategy
“Okay, cool, but if I build my own on-prem set-up, I still need software. Any recommendations?”
Sure! Luckily, the open-source community offers a wealth of tools that companies and other institutions can use to build and manage their own digital infrastructure effectively and cost-effectively:
- OpenStack: An open-source cloud infrastructure platform for managing compute, storage, and network resources. It enables virtualization and is highly customizable, making it a popular choice for building private clouds. It has a large and active community and is being further developed by the OpenInfra Foundation.
- Yaook: Ein Tool für das Lifecycle Management von OpenStack, das Bereitstellung und Betrieb vereinfacht. Entwickelt wird es bei ALASCA – Verband für offene, betriebsfähige Cloud-Infrastrukturen e.V.
- Proxmox: A virtualization platform serving as an alternative to OpenStack, often used for smaller deployments. Proxmox gained popularity as a more affordable option after VMWare's pricing increases.
- Kubernetes: A container orchestration tool that automates the deployment, scaling, and management of applications across cloud or on-premise environments. It’s being developed by the Cloud Native Compute Foundation.
- Krake: Ein Workload-Orchestrator, der Workloads automatisch über verteilte Infrastrukturen basierend auf benutzerdefinierten Metriken wie Kosten oder Energieeffizienz verteilt. Ebenso wie Yaook ist es Teil von ALASCA.
Let’s Wrap This Up
On-premise is not just a blanket alternative to cloud services, but a strategic solution tailored to specific requirements - whether for businesses or the public sector. The examples above illustrate that with a well-thought-out approach, organizations can not only reduce costs but also build stable, efficient digital infrastructures with full control over their operation and data.
Whether through a complete on-prem strategy or a hybrid approach that blends on-premise and cloud providers: the key to a modern, sovereign technology stack lies in efficient hardware and open-source tools.
Bei Cloud&Heat Technologies unterstützen wir dich gerne beim Aufbau einer robusten und flexiblen Infrastruktur, die genau auf deine Bedürfnisse abgestimmt ist. Lass uns gern sprechen!
[2] Lehr, Andreas (2024), allesnurgecloud #166
[3] Basecamp: https://basecamp.com/cloud-exit
[4] Mirochnik, Efim (2023): How Ahrefs Saved US$400M in 3 Years By NOT Going to the Cloud
