On Clouds and On-Premises

Author: Sasank Chilamkurthy

Public cloud providers have done a remarkable job convincing the world that renting computers is better than owning them. For many startups, this is true in the early days. You get instant access to virtually unlimited compute, a rich ecosystem of managed services, and the ability to scale without buying hardware.

But something changes as companies grow. Their cloud bills grow too, often faster than revenue. They discover that egress fees make it expensive to move data out. They learn that Reserved Instances and Savings Plans lock them into long-term commitments. And they realize that critical business data lives on computers they do not control.

The Hidden Costs

Cloud pricing is deceptively simple at first. You pay for what you use. But 'what you use' expands quickly. Storage, networking, monitoring, logging, load balancers, managed databases, API calls, data transfer, support contracts, and training all add up. Before long, a mid-sized company can be spending tens of crores per year without a single server to show for it.

There is also the migration tax. When a company decides to leave a cloud provider, it must pay egress charges to move its own data out. Providers are not incentivized to make this cheap. In some cases, the exit fee alone can run into lakhs or crores.

The Sovereignty Argument

Beyond cost, there is the question of sovereignty. Data is increasingly regulated. Governments want sensitive citizen data stored within national borders. Enterprises want control over where their intellectual property resides. Researchers want reproducibility without dependence on third-party APIs.

An on-premise computer gives you all of this. You know exactly where your data is. You decide who has access. You can audit every layer of the stack. And if you need to comply with a new regulation, you can implement the change yourself instead of waiting for a cloud provider to update their certifications.

When On-Premise Makes Sense

On-premise is not always the right answer. A pre-revenue startup with unpredictable workloads is probably better off in the cloud. But once a company has steady demand, predictable growth, and data-sovereignty requirements, the economics shift dramatically.

We built JOHNAIC for this transition. It is designed to be as easy to manage as a cloud instance, but it lives in your office or data center. You own the hardware, you own the data, and you own the future.

Published on 23/09/24