For years, the public cloud has been seen as the ultimate solution for IT infrastructure: scalable, flexible, and easy to deploy. But as enterprises grow and their needs evolve, many are discovering the cloud’s benefits come with significant trade-offs. From spiraling costs to limited control, businesses are reevaluating their strategies.
One striking example is 37signals, the parent company of Basecamp and HEY. Earlier this year, after completing their transition from AWS, they announced they had reduced their cloud expenses from $3.2 million annually to $1.3 million, saving nearly $2 million a year. By the summer of 2025, they expect to fully exit AWS, including moving their 10 petabytes of data off S3 storage to their own dual-data-center Pure Storage setup. This move will bring their total projected savings to over $10 million in five years.
The cost savings don’t end there. Their hardware, which cost $700,000, was entirely paid off within the first year of savings. For 37signals, this transition wasn’t just about reducing expenses; it was also about gaining control and efficiency. As their co-founder David Heinemeier Hansson said, “Renting computers is (mostly) a bad deal for medium-sized companies with stable growth.”
DHH’s story raises the question: Should your business consider a public cloud exit?
The Cloud’s Hidden Costs
The public cloud promises scalability and pay-as-you-go convenience, but the reality for many enterprises is more complicated. Key challenges include:
- Rising GPU Costs: The surge in AI and machine learning workloads has made GPU instances indispensable—and increasingly expensive.
- Wasted Resources: Overprovisioned containerized environments and idle resources lead to significant inefficiencies.
- Vendor Lock-In: Long-term cloud contracts can trap businesses in costly and inflexible arrangements, limiting adaptability.
These hidden costs add up. For 37signals, the cloud was essential during periods of rapid growth and unpredictable demand, such as the launch of HEY, when over 300,000 users signed up in just three weeks. However, as their workloads stabilized, the cloud’s pricing model became unsustainable.
Their solution? Move critical applications to bare metal servers and colocation facilities, cutting costs while maintaining high performance.
The Case for Bare Metal Servers
For enterprises with predictable workloads, bare metal servers provide an attractive alternative to the cloud. Unlike virtualized environments, bare metal servers offer:
- Cost Predictability: With fixed costs, businesses can avoid the variable pricing pitfalls of cloud services.
- High Performance: Dedicated hardware ensures maximum efficiency for AI, machine learning, and data analytics applications.
- Total Control: Enterprises can optimize configurations for specific needs, unlocking higher performance and cost savings.
The savings can be dramatic. OneUptime, for example, cut their annual infrastructure costs by $230,000 after transitioning from AWS to bare metal. Such stories are increasingly common as companies seek more predictable and efficient solutions.
Why Colocation Makes Sense
Colocation offers a middle ground, enabling enterprises to place their servers in professionally managed facilities while retaining ownership of the hardware. HostDime’s purpose-built Tier IV data centers offer the power, cooling, and connectivity needed for mission-critical workloads.
Advantages of colocation include:
- Budget Stability: Fixed, predictable costs replace the unpredictable pricing of cloud services.
- Enhanced Security and Compliance: Purpose-built facilities are designed for compliance and fault tolerance, critical for regulated industries and sensitive workloads.
- Scalable Growth: Businesses can scale their infrastructure without losing control or incurring the high costs of cloud expansion.
The Hybrid Model: The Best of Both Worlds
For many enterprises, a hybrid approach offers the flexibility to combine the scalability of the cloud with the cost efficiency and control of bare metal and colocation. Workloads can be distributed strategically:
- Public Cloud: Ideal for handling unpredictable spikes in demand.
- Private Cloud and Bare Metal: For stable, resource-intensive workloads requiring consistent performance.
- Colocation: To bring critical applications closer to users, reducing latency, and improving reliability.
LinkedIn’s pivot to a hybrid model demonstrates the effectiveness of this approach. By blending their own data centers with Azure’s cloud services, they’ve optimized their infrastructure for flexibility and performance.
HostDime’s Role in the Transition
The story of 37signals highlights a growing trend among enterprises: rethinking the role of the public cloud. While the cloud remains a valuable tool for startups and unpredictable workloads, its limitations become apparent as businesses scale. The potential savings from bare metal, colocation, and hybrid models are too significant to ignore.
HostDime’s global network of hyper-edge, purpose-built data centers is uniquely positioned to support enterprises navigating this shift. With power densities of up to 100kW per rack, immersive cooling technologies, and direct access to over 100+ carriers, HostDime’s facilities are designed for the demands of AI, machine learning, and other resource-intensive applications.
Key features of HostDime’s offerings:
- Bare Metal Servers: Predictable costs, high performance, and full control for resource-intensive workloads.
- Colocation: Tier IV fault-tolerant facilities with unmatched uptime, security, and scalability.
- Hybrid Solutions: Tailored setups that combine the best of bare metal, colocation, and cloud.
Ready to explore your options? Contact HostDime to discuss how we can help you design a smarter, more cost-efficient IT strategy.