Out of the cloud: in-house operation pays off more than expected
37signals is happy with the move away from AWS: The in-house data center saves more money than expected. And next year it will save even more with the storage.
(Image: Heise Medien)
37signals aims to save just under two million US dollars a year by moving out of the cloud and back into its own data center – significantly more than the initially targeted seven million dollars over five years. The latter projection dates back to the first announcement of the move. And at the first interim stage, the developer of Basecamp and HEY still estimated savings of one million dollars per year.
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Hardware costs quickly offset
Specifically, CTO David Heinemeier Hansson calculates that the costs for booked cloud services have fallen from 3.2 million to 1.3 million dollars. At the same time, 37signals had to spend around 700,000 dollars on data center hardware from Dell – However, the company says it was able to offset these costs with the savings by 2023. And as Hansson also emphasizes, these are not recurring fees; he assumes that the servers will run for five to seven years.
The remaining 1.3 million dollars will go exclusively to AWS S3. And 37signals also wants to replace these storage services with its own operations when the contract expires next summer. According to Hansson, the company has opted for two Pure Storage systems, which will initially cost as much as the annual fees for AWS S3. Among other things, they will store the user data for Basecamp and HEY. 37signals currently books almost 10 petabytes of storage capacity with Amazon; the new systems are expected to have a combined capacity of 18 petabytes.
Finally, Hansson is cautious about overly high expectations because in-house operation involves additional costs such as rent for the server locations. However, he believes that these additional costs are surprisingly low. In addition, there are no hidden fees from the cloud providers. Regarding personnel, he states that the same team can still administer the infrastructure; the feared expansion has not occurred. An unexpected number of IT management tasks are the same as with cloud operation.
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Cloud can still be worthwhile
In conclusion, however, he admits that the cloud is still the right choice for many customers, especially for small companies and start-ups that have to contend with many economic uncertainties and strong fluctuations in the utilization of their IT. However, if costs rise, every company has to make the same calculation as 37signals and compare the cloud fees with the costs of in-house operation.
More details on the current status of the move at 37signals can be found in the announcement on the HEY blog.
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