Cloud is becoming the norm, but enterprises shouldn't assume that it's the best solution for long term, even if they've already made the s

As cloud costs climb, is repatriation the answer?

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2021-07-12 14:30:03

Cloud is becoming the norm, but enterprises shouldn't assume that it's the best solution for long term, even if they've already made the shift.

Dropbox saved nearly $75 million by repatriating workloads from the public cloud and building its own tech infrastructure, the company detailed in its S-1. That such a large company would move largely off public cloud, where startups often begin and established companies shed legacy systems to get to, seemed an anomaly.

But as cloud computing continues to mature, the costs of running such infrastructure is catching up creating a "trillion dollar paradox," according to a recent report from venture capital firm Andreessen Horowitz (a16z), coauthored by Sarah Wang, a partner at a16z, and Martin Casado, general partner at a16z.

In analysis of cloud spend at 50 of the top public software companies — including Adobe, DocuSign, Slack and Zoom — a16z estimates cloud infrastructure costs and impact on margins are eating away at $100 billion in market value.