Businesses Rethink Cloud Strategy as Under-Reported “Cloud Exit” Trend Gains Traction

16 May 2023

Amazon CEO Jeff Bezos once famously declared that “Your [profit] margins are my opportunity”. While this may have been music to the ears of consumers looking for rock-bottom prices on everything from electronics to groceries, it’s starting to sound like a wake-up call for businesses relying on cloud services like Amazon Web Services (AWS) for their cloud computing needs.

AWS boasts an impressive operating profit margin of 29%, making it Amazon’s most lucrative segment. But now, the “Cloud Exit” trend may be turning Bezos’ quote on its head.

Reports are surfacing that businesses are beginning to regret their decision. Many of which, never had a cloud exit strategy in the first place.

Is Jeff Bezos’ ownership of The Washington Post hindering coverage of these concerns? While there is no evidence of a direct connection, the potential for a conflict of interest is hard to ignore.

The cloud, which I always said was the leasing of someone else’s computers, has become a vital part of many companies’ infrastructures, but the risks of relying on third-party data-storage and computing providers are becoming increasingly apparent.

With the increasing prevalence of cyberattacks, data breaches, concerns around security and data control are prompting some businesses to rethink their cloud strategy.

As the world becomes more dependent on digital technologies, the stakes are higher than ever.

When I joined nSpek, I realized that most of our competitors were cloud based service. And thats ok if your industry allows you to store your data in an unregulated environment, and if you are never disconnected from the internet, most of our enterprise clients built their own servers, on premise, for those reasons.

Is Jeff Bezos’ “opportunity” turning into a dark cloud for businesses? Only time will tell, but the potential fallout could be catastrophic for those who fail to heed the warning signs. As more and more companies grapple with the pros and cons of cloud computing, the debate around the best way forward is sure to intensify.

And since this subject matter is not my expertise, here I asked a few questions to one of my collueges:

“How do you see the cloud computing industry evolving in the next five to ten years? Are there any emerging trends or technologies that you’re particularly excited about?”

I believe that, in broad terms, the cloud computing industry has matured, with cloud services now serving as a toolbox for managing, deploying, and scaling resources. While technologies in this space have stabilized somewhat in recent years, there is still room for improvements in more specific use cases. One of the key benefits of cloud services is gaining specific advantages that are typically not available on-premises and can greatly benefit certain use cases, particularly in maintenance, infrastructure auditing, peak usage management, and on-demand/pay-by-use resources.

While there are many interesting technologies emerging, many are generally outside of the cloud computing space. However, any new tools that help manage resources without requiring an understanding of the underlying hardware or remove entire layers of complexity are the most interesting, though they often come at the cost of flexibility. I hope that as more enterprises recognize that going fully into the cloud doesn’t make financial sense for their projects, they will opt for hybrid solutions that allow them to take advantage of specific tools the cloud provides. Moreover, while some tools are already available on-premises, more options can make hybrid implementation more flexible and seamless.

“Can you speak to any specific examples of businesses that have experienced negative consequences from relying on third-party cloud providers like AWS? What lessons can be learned from these cases?”

From what I’ve seen, companies that have experienced negative consequences mostly did not make a good business case for their infrastructure. Evaluating the cost of running a project in the cloud is not an easy task, as one must have a clear understanding of the usage of each service and make decisions about what is more cost-effective.

If you are migrating from on-premises to the cloud, you should consider the equivalent on the cloud, how much it will cost to run, maintain, and support your infrastructure, both in terms of time and cost. Do you need to change the implementation of your project for the cloud to save money? Is the added infrastructure complexity and therefore maintenance worth it?

If you are already using cloud services and feel that the price is too high, is the staff you would need to maintain and audit that infrastructure outweighing the cost? Is that staff actually available? While cloud services provide great tools for understanding usage, if you use cloud-specific tools, also consider whether you need to factor in development time to support on-premises deployment.

“What are some of the biggest risks and challenges associated with cloud computing, and how can businesses mitigate them effectively?”

In my opinion, the biggest risk associated with cloud computing is not taking the time to make a good business case for production environments. This is something I mentioned earlier. Another factor to consider is that in order to promote cloud utilization, your teams must actually use it. My current experience with hybrid cloud is far from seamless when you think of the full scope of a project. For example, if your test environment is also in the cloud, your infrastructure might require it, which you should consider in the project’s cost.

Most developers will need to experiment with services in the cloud during development. While cloud services have credits available for them, they still end up being considered an additional cost. Paying by usage instead of by server can often scale in ways that are hard to predict, and businesses should ensure that employees have enough training and technical experience with their tools to encourage cloud adoption. On-premises, you could typically spin up a new virtual machine, and the required license would likely already be available, making things more predictable.

How do you see concerns around security and control shaping the future of the cloud computing industry? Are there any technologies or strategies that are particularly promising for addressing these concerns?

In regards to concerns around security and control shaping the future of the cloud computing industry, it’s important to note that most tools are available today, but it’s up to IT professionals to have the right processes in place to avoid mistakes. For example, having a peer review during development and having a QA team test features can improve security measures. This also applies to Cloud security infrastructure, where implementation needs to be reviewed often and audits should be made according to security standards.

To what extent do you believe the media has a responsibility to report on trends like businesses exiting cloud services? How might the media’s coverage of these trends impact the industry as a whole?

Regarding the media’s responsibility to report on trends such as businesses exiting cloud services, media coverage can help enterprises make informed decisions on whether their efforts are sufficient for their needs. Additionally, the media’s coverage of these trends can remind us that security isn’t just a standard, but it’s a necessity as breaches can occur at any time. Not taking action increases the likelihood of being taken off-guard, even if a company has never been a victim of theft.

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