Repatriation and Cloud Cost Management

While there are scenarios where public cloud is much less expensive than data centers, there are times when it’s much more expensive. Is repatriation a viable way to manage cloud costs? 

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• The Cost of Cloud, a Trillion Dollar Paradox (a16z)
• Networking in the Cloud: Data Transfer Fundamentals (Last Week in AWS)

ARTICLE QUOTES: 

Repatriation results in one-third to one-half the cost of running equivalent workloads in the cloud

You’re crazy if you don’t start in the cloud; you’re crazy if you stay on it.

infrastructure spend should be a first-class metric

THE CASE FOR REPATRIATION

1. Cloud costs are a large % of Cost of Sales (often times 50-80%)
2. Cloud providers operate on large margins (e.g. AWS at 30%)
3. Repatriation could reduce costs 30-50% of existing cloud spend

THE REALITIES OF REPATRIATION

1. The case in the article is primarily based on 25-40x valuation multiples for software companies. While every companies believes they are a software company today, not every company is getting 25-40x revenue multiple from the market.  
2. All repatriation calculations begin with, “if you run a highly efficient data center”
3. All repatriation calculations next involve, “assuming you have the talent to run a cloud”
4. Repatriation is technical debt. How does your company typically handle that?
5. Less than 100% repatriation creates multiple operational models (ops, billing, security, etc.)
6. Most companies use a subset of the features in any given cloud.
7. Can you create a financial situation in your data center that’s similar to the cloud?

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