Rising costs & new rules drive cloud rebalancing for CIOs

Rising costs and operational complexities are prompting many enterprises to reconsider their cloud strategies, with a growing focus on cloud rebalancing to optimise efficiency, costs, and compliance.

As more businesses migrate their workloads to the cloud in search of scalable and flexible operations, new challenges have surfaced. Many organisations are encountering unanticipated costs and complexities, leading to a growing trend of moving certain workloads back to on-premises environments. Recent industry data indicates that eight out of ten CEOs are returning to on-premises solutions, highlighting a shift in attitudes towards a more balanced approach to cloud adoption.

The importance of finding a balance between on-premises and cloud environments has become increasingly evident among technology leaders. In 2024, 83% of CIOs reported focusing on balancing their cloud and on-prem infrastructure, compared to just 43% in 2020, according to a Barclays annual survey.

Chris Weber, Vice President and Managing Director at HPE South Pacific, has described the growing prevalence of cloud rebalancing discussions in client meetings over the past two years. He pointed to recent industry data reinforcing this trend, noting, "VMware sees eight out of ten CEOs moving workloads back to on-premises. And a Barclays annual survey has seen CIO interest in rebalancing rise from 43% in 2020 to 83% in 2024."

Weber believes the discussion reflects a broader industry recognition that neither public cloud nor on-premises is a one-size-fits-all solution. "In my conversations with clients, I see the trend boils down to a simple reality: public cloud or on-premises is not a 'one size fits all' solution for enterprises. At a global level, HPE has done the work with Barclays' to support its hybrid cloud strategy. In migrating and deploying more than 50,000 workloads to their private cloud estate, with a further doubling over the next three years, we've learned a lot about putting the right workloads in the right place for the task," Weber said.

One of the main factors driving cloud rebalancing is cost. Australia's high operational expenses, especially around cloud infrastructure, are motivating organisations to review their cloud deployments. Weber observed, "Cost is always a key concern. After an aggressive era of attractive cloud pricing, the explosion in data storage and computational demand has seen prices head further north than anyone expected. So do the numbers still stack up? Understanding which workloads fit the right environment is key to investigating what to do to get the right compute at the right price."

He added that different workloads present different requirements, both operationally and financially. "For example, it may be ideal to run an AI proof of concept with the flexibility of a hyperscaler, but at deployment time the added expense of GPUs and data sovereignty running at enterprise scale can be better suited to on-premises solutions," Weber explained. "Different workloads require different infrastructure, so it's critical businesses understand the possibilities and limitations both from an operational and cost perspective. We are hearing case studies where the savings of reviewing cloud strategy and rebalancing infrastructure is reaping incredible rewards. Tens of millions and even hundreds of millions in savings. If any transformation project could promise these kinds of returns it would be an easy sell to a boardroom."

Beyond cost, compliance and control over data have become increasingly pressing. The growth in regulatory requirements, privacy concerns, and a focus on security have raised the stakes for data management. "While costs have been rising, so have compliance demands on business data controls. Privacy, security, compliance, sovereignty. Each is now a business pillar with many layers of careful management required that continues to grow in a tricky era of global instability," Weber noted.

He continued, "Heightened government and customer awareness circle businesses today when it comes to how businesses should care for information. A false step in any of these areas can have significant immediate harm to a business and long-term reputational fallout. The assurance of a third-party service provider is not always enough to deliver the confidence a boardroom or wider stakeholders demand."

Weber described rebalancing as a process of carefully examining systems and ensuring that workloads and data reside in the most appropriate environment, be that public cloud, private cloud, or on-premises. "So what does it mean to rebalance? It's about examining your systems and looking at what is 'cloud optimised'. The right mix of data and processes in the location that suits each best – whether that be public cloud, private cloud, or on-premises. We run workshops for customers to help them map out the 'right mix' so they have confidence in what should live in the hyperscalers and what should move back to on-premises," he said.

He acknowledged the challenges associated with transitioning workloads, citing technical complexity and the importance of maintaining data integrity. "The rebalancing process can have its challenges. There is technical complexity in moving workloads with minimal disruption, and important analysis processes to ensure data integrity during migration. But there are also great options available for working with experts to make the process as smooth as possible, as well as automation and orchestration tools to maximise the efficiency of the journey," Weber explained.

Weber concluded by highlighting the importance of proactive planning and assessment in digital transformation initiatives. "Cloud rebalancing is certainly a project that requires time and planning. If you are already feeling concerned with those costs or your compliance footing, it's important to start now to get your program underway to make this a smooth and smart path that sits within wider ongoing transformation efforts. Digital transformation has always been a matter of achieving a strong competitive edge through the most effective use of technology possible. We should always be examining the state of enterprise cost, compliance, and control to know we are on the right path. We're seeing plenty of clients ready to share good news with the executive after a right mix assessment. When cost savings align with enhanced performance we move toward the very best of what transformation can be."