Developer Pockets $2M In Savings From Going Cloud-free

The web software biz that decided to exit the cloud after racking up a huge bill says it has saved almost $2 million in its first "clean year" after making the switch to on-prem, and has already recouped the costs of the extra hardware it needed.

A couple of years ago, 37signals was aghast to find it had run up charges of $3,201,564 on cloud services, a large chunk of which was going to Amazon Web Services (AWS), as The Register detailed previously.

The developer of project management platform Basecamp then embarked on a plan to invest in new servers and gradually migrate its applications and customer data to its own infrastructure instead.

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

As it took until the end of the year for various contract commitments to expire, 2024 has been the first clean year of savings, and according to Hansson, "we've been pleasantly surprised that they've been even better than originally estimated."

In fact, the cloud bill for 37signals now stands at about $1.3 million, a reduction of almost $2 million per year, and the savings are likely to be more than the company's original estimate of $7 million over five years as it managed to fit the new hardware into its existing datacenter racks and power restrictions.

Speaking of new hardware, 37signals bought about $700,000 of Dell systems to replace its cloud instances, but Hansson claims this cost was "entirely recouped" during 2023 as those contract commitments expired one by one.

"Think about that for a second. This is gear we expect to use for the next five, maybe even seven years! All paid off from savings accrued during the second half of 2023," he commented.

The remaining $1.3 million that 37signals still spends on cloud services is all going on AWS S3, as part of a four-year contract that doesn't expire until next summer, when the web software biz plans to ditch that as well.

While 37signals stores almost 10 PB of data in S3 currently, it plans to replace it with a dual datacenter configuration for redundancy based on Pure Storage with a combined 18 PB of capacity. This setup is expected to cost about the same for the initial hardware as a year's worth of AWS S3, according to Hansson.

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"This brings our total projected savings from the combined cloud exit to well over $10 million over five years, while getting faster computers and much more storage," he said.

Perhaps this is the kind of situation AWS had in mind when it told the UK's Competition and Markets Authority that it was facing stiff competition from on-premises infrastructure.

That claim was in response to the regulator's investigation into Britain's cloud services market, and whether the big players such as Amazon engage in practices that may limit customer choice.

AWS argued that "building a datacenter requires significant effort, so the fact that customers are doing it highlights the level of flexibility that they have and the attractiveness of moving back to on-premises."

However, even Hansson conceded that when comparing cloud to on-prem, "it's never fully apples-to-apples," and will obviously depend on an individual organization's circumstances, such as what infrastructure it owns and the applications and services it requires.

One analyst previously told us that while such "cloud repatriation" projects are becoming more common, "we'd put the share of companies actively repatriating public cloud workloads in the single digit percentage sphere."

But it is still remarkable that 37signals has been able to secure such savings from leaving the cloud, Hansson noted.

"We've been out for just over a year now, and the team managing everything is still the same. There were no hidden dragons of additional workloads associated with the exit that required us to balloon the team, as some spectators speculated when we announced it." ®