Developers save $2 million with cloud waiver • The Register

The web software company, which decided to exit the cloud after a huge bill, says it saved nearly $2 million in its first “clean year” after moving to on-premises and the cost of the additional Hardware needed to have already been recouped.

A few years ago, 37signals was horrified to discover that cloud services were being charged $3,201,564, much of which went to Amazon Web Services (AWS). The Register previously described in detail.

The developer of the project management platform Basecamp then planned to invest in new servers and instead gradually migrate its applications and customer data into its own infrastructure.

In the latest update on LinkedIn, CTO David Heinemeier Hansson said that 37signals successfully moved seven cloud apps, including its email and calendar tool HEY, from AWS to its own hardware last summer.

With various contractual obligations taking until the end of the year to expire, 2024 was the first clean year of savings and, according to Hansson, “we were pleasantly surprised that they were even better than originally estimated.”

In fact, the cloud bill for 37signals is now about $1.3 million, a reduction of nearly $2 million per year, and the savings are expected to be above the company’s original estimate of $7 million over a period of five years as it managed to adapt to the new hardware requirements in the existing data center racks and power limitations.

Speaking of new hardware, 37signals purchased about $700,000 in Dell systems to replace its cloud instances, but Hansson claims that those costs were “fully recouped” in 2023 as those contractual obligations expired one after the other.

“Think about it for a moment. We expect to be using this equipment for the next five, maybe even seven years! Everything will be paid off by the savings accumulated in the second half of 2023,” he commented.

The remaining $1.3 million that 37signals still spends on cloud services goes entirely to AWS S3, as part of a four-year deal that doesn’t expire until next summer, when the web software company plans to forego that too.

While 37signals currently stores nearly 10 PB of data in S3, it plans to replace this with a dual data center configuration for redundancy based on Pure Storage with a total capacity of 18 PB. According to Hansson, this setup is expected to cost about as much for initial hardware as AWS S3 for a year.

“This brings our projected total savings from the combined cloud exit to well over $10 million over five years, while also providing us with faster computers and much more storage,” he said.

AWS may have had such a situation in mind when it told the UK Competition and Markets Authority that it was facing strong competition from local infrastructure.

The claim was in response to the regulator’s investigation into the UK cloud services market and questions about whether major players such as Amazon are engaging in practices that could limit customer choice.

AWS argued that “building a data center requires significant effort. The fact that customers are doing this therefore highlights the level of flexibility they have and the attractiveness of returning to on-premises data centers.”

However, even Hansson acknowledged that when comparing cloud and on-premise solutions, “there is never a direct comparison” and that this obviously depends on the circumstances of an individual organization, such as what infrastructure it has and what applications and applications it has Services she needs.

One analyst previously told us that while such “cloud repatriation” projects are becoming more common, “we would estimate the proportion of companies actively repatriating workloads from public clouds to be in the single digits.”

Still, it’s notable that 37signals was able to achieve such savings by moving away from the cloud, Hansson noted.

“We’ve been out for just over a year now and the team that manages everything is still the same. There were no hidden dragons of additional workload associated with the exit that forced us to bloat the team, as some viewers speculated when we announced it.” ®