Saved a million US dollars a year – the switch from the external cloud to its own data center pays off for 37signals. The business software provider caused a stir with its move, which began in October 2022, also because it relied on hard economic figures instead of the data protection advantages that were already available. Because the announcement was clear that the instances booked primarily with Amazon AWS are not only expensive, but that classic operation in your own data center is cheaper across the board.
Less cloud in the right places
As David Heinemeier Hansson, CTO at 37signals and creator of Ruby on Rails, explains, the savings didn’t happen immediately. This wasn’t surprising, however, because the company had signed contracts with cloud providers that lasted a year or longer. These costs were also incurred after the initial move of the applications. Six months later, cloud costs have already been reduced by 60 percent – specifically from $180,000 to less than $80,000 per month.
Accordingly, 37signals calculates a saving of one million dollars per year – which is offset by the total fees of a good 3.2 million dollars in 2022. But that doesn’t mean that the company no longer has any expenses for the cloud. Hansson expects a further reduction in September, but the curve will then flatten. And the costs for S3 are not included in the bill – the contracts run for four years.
This compares to a good half a million dollars in acquisition costs for servers. Specifically, the experiment started with eight Dell servers: the PowerEdge R6525s with AMD’s Epyc processors and 256 GB of RAM. However, the additional hardware costs are negligible in comparison. And the potentially higher personnel costs for appropriately experienced administrators did not occur – the Ops team did not change with the move out of the cloud.
How transferable is the experiment?
Hansson obviously also emphasizes that other companies should not simply use the same figures. Many of the services booked by 37signals were expensive. Other cloud customers also do not use their rented instances consistently. Nevertheless, he assumes that the trick with its own data center may well be interesting for other companies – and points to Snapchat, which, according to media reports, reached three billion dollars in cloud fees in five years.
Hansson’s invoice can be found on the 37signals blog. The company also provides details on the AWS costs incurred in 2022 for you to understand.
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