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Cloud adoption has risen exponentially in recent years, empowering companies to modernize operations, drive innovation, and meet sustainability and efficiency targets. It remains a strategic enabler for companies looking to transform their business models.
However, achieving a successful implementation is more difficult than it seems. In fact, Gartner forecasts that 25% of organizations will experience notable dissatisfaction with their cloud adoption journeys by 2028. Although the cloud comes with plenty of complexity, these difficulties often stem from a lack of planning, strategy, and execution, rather than the technology itself.
The Promise Versus Reality
Early adopters of the cloud experienced new opportunities for flexibility, scalability, and cost-effectiveness in business operations. But the technology’s rapid growth has gradually exposed the misalignment between its promise and the lived experience for many businesses.
So, how exactly did it fall short of the tech industry’s lofty expectations? In essence, cloud computing initially promised much-needed flexibility, global reach, and faster innovation. But meeting these goals requires more than a simple adoption plan; success hinges on your ability to align the cloud’s potential benefits with your unique business goals.
The ability to scale up or down based on demand continues to entice businesses with fluctuating workloads by removing the need for new hardware investments. With cloud providers that offer pay-as-you-use models, CFOs experience significant operational advantages. Development teams also get the opportunity to build and deploy apps in hours, rather than waiting months for new servers. Additionally, managed services allow cloud customers to leave the maintenance, backups, and patching processes to the provider—and focus on high-value work.
In many cases, these benefits have proven to be more aspirational than realistic. While the cloud can save you money, help scale your business beyond borders, and simplify your tech stack, you still have to:
Carefully govern unforeseen costs like data transfer fees and over-provisioning expenses.
Prevent unnecessary inefficiencies by ensuring the apps you’re scaling are well-designed.
Manage cloud-native tools, legacy systems, and multiple providers with precision.
As with most other digital business initiatives, cloud success depends on your ability to build the right architecture, ensure cost control, and understand the benefits of on-premises or legacy technologies—even after you have migrated to the cloud. Businesses that failed to implement these controls experienced ballooning costs and overwhelming complexity, reversing the progress that cloud adoption was supposed to accelerate. This has driven the ongoing trend towards cloud repatriation, which involves moving applications, data, and workloads from cloud infrastructure back to on-premises or hybrid IT environments.
Most companies don’t abandon the cloud entirely. Hybrid and multi-cloud are go-to models for businesses looking to alleviate the detrimental effects of ambitious cloud transformations gone wrong. This helps them retain the agility of the cloud while retaining the control and predictability of on-premises infrastructure.
Recent research supports the idea that cloud repatriation, even when it’s a partial move, is growing in popularity. In 2024, Barclays reported that 83% of enterprises planned to move some workloads from public clouds to either private or on-premises solutions. Liquid Web also revealed that 42% of IT professionals have already migrated cloud workloads back to dedicated servers, which are physical machines used by organizations to store data.
Many companies also adopted overly aggressive cloud policies in earlier years—and now find themselves paying exorbitant fees that don’t make economic sense today. For businesses that took on the straightforward “lift and shift” strategy to accelerate the cloud migration timeline, there are similar ramifications.
Using the direct “lift and shift” approach, which means simply moving an exact copy of your workloads to the cloud, comes with long-term consequences. Applications that were not initially designed to work in the cloud will end up costing the company more money and resources than if the workload stayed on-premises.
Dropbox and GEICO’s Repatriation Journeys
After spending a decade migrating over 600 applications to a public cloud solution, GEICO experienced a 2.5x increase in its cloud costs. To compound this issue, the company also saw new reliability challenges and vendor lock-in as a result of its ambitious cloud transformation journey.
Naturally, this drove GEICO to repatriate its cloud workloads to an in-house private cloud solution built on OpenStack and Kubernetes to regain cost efficiency, control, and performance outcomes. While GEICO didn’t necessarily leave behind the cloud entirely, this reverse migration speaks to a high level of dissatisfaction with the cloud’s unmet potential.
Another global company that reimagined its cloud-first strategy is Dropbox. To save money, the organization moved 90% of its customer data from an initial AWS-powered infrastructure to a custom-built hybrid cloud architecture. The result? Dropbox unlocked full customizability of its tech stack, driving $74.6 million in operational savings in two years.
A Few More Considerations
The main takeaway from the cloud repatriation trend is that the cloud hasn’t failed—it’s that expectations have evolved. So, what’s the best path forward? Moving from being ‘cloud-first’ to a ‘cloud-smart’ approach.
Here are some limitations of the cloud-first approach:
Unrealistic expectations that are hindered by a lack of technical, financial, or strategic skills.
Siloed business practices and outdated IT tools, governance, and management approaches.
Prioritizing speed over planning, which leaves little room for focus on other strategic initiatives.
By adopting a cloud-smart approach, you’ll need to consider a range of factors, from management, cost, and visibility to interoperability, networking, and the application priorities of a business. With these critical factors in mind, a seamless strategy can foster a unified cloud environment.
To derive the maximum value of your cloud investments, here’s what you can do:
Set realistic goals and expectations for cloud initiatives.
Determine which applications to keep on premises and which to move to public or private clouds.
Make the right investment in services and orchestration technology.
Lastly, if you’re considering a cloud repatriation initiative, here are five critical questions to ask before doing it:
What’s the total cost of ownership of on-premises versus cloud applications?
Will repatriation improve performance or user experience?
Are there compliance or data sovereignty requirements driving the move?
How will this impact vendor relationships and long-term flexibility?
Is hybrid or multi-cloud a better alternative?
In Conclusion
The cloud is neither the savior nor the villain for digitally-driven businesses. It’s simply a tool you can leverage to accelerate your path to success, expand your business’s capabilities, and tackle the longstanding limitations of legacy IT—but only if you use it in the right way. For B2B leaders, the lesson here is that abandoning the cloud will not solve your problems; this will set you at a competitive disadvantage and present a new set of challenges to address. So, before considering a cloud repatriation move, make sure you’ve asked all the necessary questions.
