The problem with public cloud

Over 80% of South African companies are repatriating public cloud workloads back to their own servers. What’s going on?

Company A was all set for the cloud. It had heard the promises -- drop your IT hardware, streamline your internal IT skills, and get better prices through consumption-based billing. As a medium-sized firm with not too much or too little in its IT pool, a migration to public cloud and a service-only world made sense.
But the benefits fell short. Costs and complexity were much higher than the original systems required. Somehow, the cloud's promises were not materialising. As a result, it began an exercise called repatriation.
Cloud repatriation is when workloads and applications are moved from a public cloud back to an on-premise arrangement. On-prem can still be servers sitting at a third-party facility and running modern cloud-flavour elements such as platforms and microservices. Repatriation exchanges infrastructure -- Platform- and Software-as-a-Service -- on a public platform for assets owned by the customer.
So they may not be shifting back to the bad old days of Windows 2000 behind a Babylonian wall, but they are returning to the 'own it and sweat it' model. At face value, this is a reversal of the cloud revolution."They thought to just stick it all in the cloud. But when we worked out their requirements, it didn't add up." Ethan Searle, LanDynamix
Making IT sweat

A recent local case study from LanDynamix reflects at least part of this situation. It helped design an IT strategy for a mid-sized business that was separating from its holding company. It has multiple branches and wanted a unifying technology landscape that didn't demand more of its time and resources, and allowed the company to focus on its core activities.
All of this seems ideally suited for a cloud solution, and the company's management was already thinking along those lines: just lift-and-shift to the cloud.
"The management didn't want on-site employees for IT," says Ethan Searle, senior information technology specialist at LanDynamix. "They thought to just stick it all in the cloud. But when we worked out their requirements, it didn't add up."
LanDynamix has its own public cloud offerings, so it wasn't a case of a provider being antagonistic to the cloud. But for this customer, buying servers to sweat over the next few years turned out to be the better solution. It's a complete contrast to what cloud practitioners have been pitching for several years, yet it was the best fit.
"Public cloud services can save costs in certain situations," continues Searle. "For example, owning your own Exchange or Sharepoint servers makes no cost sense to most companies. But not all cloud options are that clear. Our customer has been around for a long time. They have stable requirements, and they aren't going to double in size overnight. It was cheaper for them to buy servers, place those at a co-location site and sweat them for several years."
Repatriation in SA
In this case, the company avoided a repatriation exercise. But many organisations are learning such lessons the hard way. IDC research reports that 80% of customers have done some form of cloud repatriation. Since repatriation is rarely wholesale, and many repatriation activities end up as private clouds, this trend isn't always obvious. So for some, it's all still cloud. Yet for the people signing the cheques, this is often a radical reversal of cloud's advertised promises.

Repatriation is happening globally, but it's particularly prolific in South Africa. According to the Nutanix Enterprise Cloud Index 2019, 84% of SA companies are moving applications from public clouds to on-premise infrastructure -- well ahead of the 73% global average. Some elements are staying as public cloud services, but clearly, not everything is comfortable in that mould.
Although those figures, again, should be viewed within the scope of repatriation and not overall cloud adoption, it still indicates that there is a lot of unhappiness among customers who bought into cloud's promises.
The problem, though, doesn't seem to be at the biggest scale. Large enterprises are not repatriating at the same rate as the rest of the market. They tend to have the right resources and systems maturity in place to handle cloud's hidden surprises better, says SEACOM's global head of product, Robert Marston: "When companies move into a public cloud, they offload hardware costs. But they pick up other costs, such as virtualisation licences. So you don't pay for the tin, but you do pay for the hypervisor and appliance software. This doesn't make sense at a small scale. Larger enterprises have the resources and experience with complexity to deal with this. But smaller businesses often can't."
Specifically, midsize organisations are struggling, and some are even going back to traditional servers and not private clouds (reflecting Nutanix's findings). The market has mainly focused on large companies, as the payday from those projects compensate for the immense complexity and planning they must manage. Small companies, on the other hand, can often get everything they need through shallow services. But those in the middle can't muster the resources to match their system complexities.
This leaves a lot of businesses in the lurch, particularly after years of dubious cloud marketing. Today, it's unlikely you'll hear a sales rep talking up massive cloud savings. The narrative has moved to driving value and expanding business opportunities. Yet go back only a few years, and everyone was singing from the same 'cloud is cheaper' hymnbook.
Robert Marston, SEACOM Robert Marston, SEACOM

A maturing market
So is repatriation the result of a misbehaving channel? That would be convenient, but it's not accurate, says Jon Tullet, research manager, IT services for IDC Sub-Saharan Africa.
"It's easy to blame the vendors or SIs, but there is too much victim-blaming happening. Both sides are generally correct when you listen to their views, but those positions don't capture the full picture. If we must blame one thing, even though there are many factors, it's the complexity of cloud migrations. The market isn't transparent enough about those."
Repatriation might even be a positive trend. Tullet says the majority of repatriations result from pilot programmes or proofs of concept. That still means the promises of public cloud fell short of expectations, but at least it also indicates growing prudence in the market. Unfortunately, the other fact it exposes is a lack of skills and expertise among implementers, something that has been on the channels' mind for a while now.
"The big cloud myth-- that it's seamless and easy--is gone. There needs to be more partner catch-up happening. The local cloud ecosystem's maturity is a key factor, pushing a need for better channel partners. Complexity keeps moving the bar, and vendors have to grow their ecosystems while reducing the number of poor partners."
He adds that most cloud projects in SA are still headed towards public clouds, especially hyperscale providers armed with massive advantages.
Sven Blom, head of sales at Teraco, also highlights that cloud is growing fast in SA.
"We don't work with actual workloads and applications. But from an infrastructure view, we're not seeing a reduction in cloud usage. We're experiencing massive growth, especially interconnection growth with cloud vendors. A lot of enterprises are using a hybrid strategy. It's the homegrown datacentre that is disappearing and being replaced by using third-party sites."
He adds that the concerns cited just a few years ago, such as latency and data sovereignty, have all but disappeared. Today's customers are more advanced in their understanding of and expectations from cloud.
Jon Tullett, IDC Jon Tullett, IDC
This circles back to Tullet's point: the channel is under pressure to meet those, but vendor partners are not always able to offer the best strategies. This is why the midmarket gets so little attention: complex cloud migrations are risky for systems integrators, so they rather hedge their bets on customers with deep pockets and a stomach for complexity.
Small ripple, big fish
Repatriation seems to have several causes. Overselling 'easy' cloud migrations, and providers that don't develop candid cost projections, are its negative influencers. Yet on the positive side, it also reflects a market that is eagerly adopting public cloud services and willing to experiment a little with pilot projects.
The relatively young age of South Africa's public cloud market can also explain the above-average repatriation percentages: the overall trend is still firmly towards public cloud. Yet, over 80% of companies are repatriating, suggesting that the market's approach to cloud projects is dynamic and even healthy. The market has become more attuned to the nuances of cloud, such as which workloads are appropriate for it.
Instead of treating repatriation as a sign of cloud failure, its small ripples reveal a lot of change and growing maturity in the South African cloud pond. Yet here is one significant negative as well: the tough economic conditions are likely prompting companies to shift to the cloud, rushed without due diligence and often falsely hoping for substantial savings.

Nonetheless, repatriation's presence is good news for customers because it suggests the market's offerings are improving. The pressure is on the channel. Partners need to be more competent and transparent when determining cloud costs. Vendors need to push for more quality partners with the cloud skills to carry them. And the channel needs to grow an appetite for the risks of aiding the midmarket.
Cloud repatriation at the levels experienced locally indicates a healthy and maturing market. But it also reminds us that cloud's simplicity has been oversold and the market's many nuances are being ignored for the sake of low-risk, low-hanging fruit. This may be causing damage to cloud's reputation: the Nutanix report indicates that traditional datacentres are back in fashion while cloud flavours are shrinking. Even though the overall market is moving towards cloud solutions, there is unhappiness and disillusionment as well. The carefree days of selling cloud to replace infrastructure may be behind us.

The six Rs of cloud migration
If you want to plan for a cloud migration, there is a lot of advice available from the market. But one cited more often than others is AWS' six Rs, which covers the different migration choices:
- Remove: Shut down any unnecessary workloads and reduce server sprawl.
- Retain: Keep servers and workloads that are required, but can't be migrated.
- Replatform: Move legacy systems into virtual environments.
- Rehost: Also called 'lift-and-shift'; here, you decommission your infrastructure for IaaS.
- Repurchase: Replace the current service with a new service and/or licences.
- Refactor: Redesign the current service.  
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