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Save $7 million on cloud by spending $600k on servers, says 37Signals' David Heinemeier Hansson

Not doing the sums on repatriation is 'financial malpractice at this point'

Spending $600,000 on servers, and more to have them hosted, will save SaaS project management outfit 37Signals over $7 million, according to CTO David Heinemeier Hansson.

If that name rings a bell it's because in October 2022 Hansson revealed plans to pull 37 Signals out of the cloud and in January 2023 he detailed the company's $3.2 million annual AWS bill.

On Tuesday Hansson again hit the keyboard to share his analysis that quitting the cloud will save the organization he serves $7 million over five years.

He explained that $2.3 million of the cloud bill went towards "app servers, cache servers, database servers, search servers, the works."

Hansson intends to replace cloud servers with eight servers "running dual 64-core CPUs (for a total of 256 vCPUs per box!) in each datacenter or 14 machines running single-core CPUs at a higher clock frequency."

"We need to add about 2,000 vCPUs per datacenter, and we run in two datacenters, so 4,000 vCPUs for performance and redundancy," he added – though he cautioned that these are "rough numbers."

All of the above will cost about $600,000, but those costs will be amortized over five years.

But wait, we hear you say: what about power, cooling, connectivity, and all the other stuff that's needed to keep servers alive?

Hansson has that sorted, thanks to hosting outfit Deft. When the CTO factored in those charges, his back-of-envelope sums yielded annual costs of $840,000 – compared to annual cloud compute costs of $2.3 million.

He did his sums and decided: "In round numbers, let's call it saving a million and a half dollars per year." Next, he tossed an extra half a million dollars into his budget to cover unforeseen expenses over the period, and still found a projected seven million dollars of savings over five years.

And he reckons even larger savings might be possible, because "we have lots of boxes still running at seven years."

His takeaway from his planning exercise is "Any mid-sized SaaS business and above with stable workloads that does not benchmark their rental bill for servers in the cloud against buying their own boxes is committing financial malpractice at this point."

Mid-sized SaaS vendors with stable workloads are not an enormous constituency. But there is plenty of evidence that other cloud customers are worried about their bills, hybrid multicloud is increasingly being advocated as the new normal as organizations use it to avoid going all-in on public clouds, and "cloud repatriation" has become something of a buzzword.

Hansson might be onto something here. ®

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