A recent statistic has been making waves in the tech world, suggesting that 83% of enterprises are repatriating their workloads from public clouds back to on-premises or private cloud infrastructures. This figure, highlighted in a survey by banking giant Barclays, has sparked significant discussion across the industry. However, while the number is indeed real, many experts argue that it is highly misleading and oversimplifies a much more complex situation.

The Origins of the 83% Figure

The 83% figure has gained traction, being cited by major industry players and analysts as a sign of a potential shift in the cloud computing landscape. Broadcom’s leadership prominently displayed this statistic at the recent VMware Explore event in Las Vegas, using it as evidence to promote their virtualization software to customers frustrated with the costs and complexities of public cloud services. Even Michael Dell, CEO of Dell Technologies, weighed in on the conversation, tweeting that the statistic was “not surprising.”

Not surprising:

83% of enterprises plan to move workloads back to private cloud from public cloud. Source: Barclays CIO Survey pic.twitter.com/CEwzLGkkWX

— Michael Dell (@MichaelDell) August 27, 2024

But what does this number really represent? According to the Barclays survey, it indicates that 83% of enterprises are moving at least one workload from the public cloud back to their on-premises or private cloud infrastructure. At first glance, this seems to suggest a mass exodus from public clouds like Amazon Web Services (AWS), Microsoft Azure, and Google Cloud. But as with many statistics, the reality is far more nuanced.

The Misleading Nature of the Statistic

“The 83% figure is both accurate and misleading,” says Larry Walsh, CEO and Chief Analyst of Channelnomics. “It’s true in the sense that a significant number of enterprises are exploring or initiating some form of repatriation. However, it doesn’t capture the full picture of what’s really happening in the cloud space.”

One of the key issues with this statistic is that it represents companies, not workloads. “If 83 out of 100 companies each move a single workload from the cloud to on-premises, that’s still 83%,” Walsh explains. “But it doesn’t mean that 83% of all workloads are being repatriated. Many of these companies are likely moving small, non-critical workloads while keeping the vast majority of their operations in the cloud.”

Breaking Down the Numbers

To understand why the 83% figure is misleading, it’s important to delve deeper into what’s actually happening. “The statistic doesn’t distinguish between the types of workloads being repatriated,” says Andre Marsiglia, a constitutional lawyer and freedom of expression expert who also has a background in technology law. “Are these mission-critical applications or smaller, less significant workloads? The distinction is crucial.”

Moreover, the repatriation process is not a straightforward return to on-premises infrastructure. Many enterprises are opting for a hybrid cloud approach, where some workloads are moved to private clouds or co-located data centers, while others remain in public clouds. This hybrid strategy allows companies to maintain flexibility, optimize costs, and manage their data more effectively.

“It’s not a binary choice between public cloud and on-premises,” says Marsiglia. “Enterprises are looking for the best of both worlds. They want the scalability and convenience of the public cloud for certain workloads, and the control and cost predictability of on-premises or private clouds for others.”

The Role of AI and Cost Management

Another factor driving the conversation around repatriation is the rise of artificial intelligence (AI) and the associated costs of running AI workloads in public clouds. “AI is incredibly processing-intensive,” says Walsh. “While public clouds can handle these workloads, the costs can be prohibitive for some enterprises, leading them to consider moving these workloads back to on-premises infrastructure where they can manage the resources more effectively.”

This focus on AI has led some analysts, including those at IDC, to predict an increase in hardware infrastructure sales driven by AI deployments. “The belief is that enterprises will build their AI systems locally rather than rely on hyperscalers, which would drive growth in on-premises infrastructure,” says Walsh. “But again, this doesn’t mean that all workloads are leaving the cloud—just that certain high-cost, high-performance workloads might be.”

The Bigger Picture

While the 83% statistic has been widely circulated, it’s important to view it in the context of broader trends in cloud computing. Public cloud spending continues to grow each quarter, indicating that despite some repatriation, the overall reliance on hyperscalers remains strong.

“Cloud repatriation is a real trend, but it’s not the mass exodus that some are making it out to be,” says Michael Dell. “The reality is that enterprises are becoming more sophisticated in how they use cloud resources. They’re optimizing their workloads across different environments to get the best performance and cost outcomes.”

In the end, the 83% figure should be seen as an indicator of a broader conversation happening in the industry. “It’s about exploring options, not abandoning the cloud,” says Marsiglia. “Enterprises are asking themselves where they can get the most value, and for some workloads, that might mean moving out of the public cloud. But for many others, the cloud remains the best option.”

Enterprises Becoming More Strategic

The 83% public cloud repatriation statistic, while eye-catching, is highly misleading when taken at face value. It represents a complex and nuanced trend where enterprises are not necessarily fleeing the public cloud but are instead becoming more strategic in their use of cloud resources. As the cloud landscape continues to evolve, it’s crucial to look beyond the headlines and understand the full context of the data. Only then can businesses make informed decisions about their infrastructure strategies.

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