I found this article on The A Register very interesting.

A company (Ahrefs) in Singapore compared the cost of buying and operating its own infrastructure of 850 servers with the cost of using AWS (Amazon Web Services) to do the same job, and reckon their in-house solution will save them $400 million over three years. The per-server cost of buying and operating the machines in their datacentre is $1,500, whereas with AWS it would cost around $17,557 per equivalent server. That is a huge saving!

To be fair to AWS, the level of service from their in-house datacentre may not be quite as good as that of AWS (it depends on what level of service you pay for). It seems that Ahrefs has only one datacentre, located at their offices, whereas, for business critical functions, companies would normally operate two datacentres in different locations, for higher resilience and reliability. Nevertheless, the price difference is enormous; even if they had opted for two independent datacentres, with added redundancy, the cost of the in-house solution would probably be significantly lower that the cloud based solution.

The article contains links to other reports about other companies that have reduced costs by using in-house infrastructure, so the situation for Ahrefs does not seem to be a special case.

There are other downsides to cloud solutions, including:

• Cloud services are not 100% reliable, and there have been a number of notable failures, with significant downtimes;
• There are legal constraints in some jurisdictions on where certain kinds of data can be stored, which can rule out cloud solutions in some cases;
• The added complexity often associated with operating and managing cloud services, which can lead to unforeseen costs and longer time to repair when problems arise;
• The fact that cloud providers usually provide sizing guidance that leads to overspecified systems, and thus unnecessarily higher costs (see this report, also on The A Register).

In short, although cloud solutions are trendy at the moment, they are not always the right answer; a proper cost-benefit analysis and a thorough risk analysis are essential for anyone considering using cloud solutions.