Why Enterprise are Shifting from Cloud First to Cloud Repatriation Strategy

Before diving into the reasons why enterprises are shifting from a cloud-first to a cloud repatriation strategy, I'd like to go back to 2018 when I was working in a telecommunications company on a cloud transformation initiative heavily invested in cloud migration. One of my colleagues suddenly told me that the future trend would be going back to on-premise. I asked why, but neither of us had an answer back then, just mere speculation.

Looking back with hindsight in 2025, enterprises 8 years ago were mostly engaged in tech-refresh and digital transformation. They faced a dilemma whether to upgrade their aging on-premise bare metal setup or move to the public cloud, which happened to be the new buzz at that time. Thus public cloud is the logical easier route. Enterprise opted for the public cloud for three reasons:

1. technology in private cloud was not yet mature enough to match the developments in public cloud

2. there were limited skill sets on-premise to match the growing talent in public cloud and its capabilities,

3. subscribing to cloud is far way easier than building on-premise cloud. Between 2016 and 2022, organizations kept migrating workloads to the cloud, believing in a cloud-first strategy without much thought. Even legacy applications were forcefully sent to the cloud without a use case or clear objective, simply to justify a business case. Thus, many workloads were migrated to the public cloud.

Fast forward to today, private cloud technology has leveled and caught up with that of the public cloud. Enterprises that moved workloads to the public cloud in the past without much thought now realize that the public cloud, when not done right, is more expensive. This is because the cost of the public cloud includes both the provider's infrastructure investments and profit margin. Migrating workloads to the public cloud with an on-premise mindset turns out to be more expensive. Thus, the cloud repatriation era began in 2024. Make no mistake, public cloud is here to stay, and it will stay for a long period of time. Enterprise though are wiser now being more selective on what goes to public vs private cloud.

I happen to attend a technology summit where Nanticha Kiatibut of VMWare a keynotes speaker in VSTech CXO Summit Event 2025 interviews from CIO indicates a trend towards cloud repatriation strategies were driven by two reasons:

1. 27% has challenges in security and compliance

2. 21% prefers control and customization

Beyond these two reasons, observing enterprise behavior from 2023 - 2025 the motivation to shift to repatriation strategy extend beyond the two reasons which are detailed as follows.

Enterprise are Shifting from Cloud First to Cloud Repatriation Strategy Trend Explained

Cloud Repatriation Reason 1: Cost

In 2016, when the public cloud was emerging as the next major trend, the capital expenditure required to upgrade on-premise systems to match public cloud technology was prohibitively high, creating a barrier to entry. As technology advanced, the cost of acquiring private cloud solutions became economical where vendors competes by providing a good cost models and commercials, while public cloud prices increased if not no longer needed to attract enterprise customers because the honeymoon period has subsided after cloud migration(opinionated). Additionally, the public cloud depends on the same technology as private clouds, leading to additional overhead in subscription cost. Consequently, enterprises that initially transitioned to the public cloud realized it was more cost-effective to develop and maintain their own private clouds which result to repatriation back to their own data center.

Cloud Repatriation Reason 2: Catchup in Technology

Back in 2016, there were only a handful of choices for private cloud, such as OpenStack and VMWare, to name a few. The convenience of subscribing to public cloud offerings like AWS, Azure, and GCP resulted in enterprises having accessible POCs and later continuing the journey to full public cloud adoption. As technology caught up, new private cloud technologies emerged, even free ones like Proxmox, that rival the features of proprietary solutions relative to cost, along with the continuous innovation of incumbents like Nutanix and VMWare. This resulted in enterprises wanting to bring back their workloads by building their own private clouds. Technology in public cloud like storage, network, compute, and containers including AI are now available on-premise to the likes of VMWare VCF and other Hyper Converged Infrastructure. Open source like Proxmox even has their own Disaster Recovery solution.

Cloud Repatriation Reason 3: Catchup in Skill

Between 2016 and 2020, during the bare metal era, system administrators had few chances to improve their skills. They couldn't easily create a sandbox environment for testing new technologies. However, the transition to the public cloud, where infrastructure and services could be effortlessly provisioned, enabled these administrators to enhance their skills by experimenting with cutting-edge technologies. As private cloud technology progressed, administrators were able to apply their public cloud expertise to the private cloud, facilitating workload deployment across both public and private environments. This resulted in workloads being relocated back to on-premises.

Cloud Repatriation Reason 4: Coincide with Technology Refresh

During the migration to the public cloud, it is well known that not all workloads can be migrated. Thus, many workloads remain on-premise. The lifespan of physical servers, compute, and network peripherals is ~5 years—after 5 years, the depreciation of on-premise hardware requires enterprises to modernize in order to keep the lights on. Those that migrated to the public cloud back in 2020 are in the right position to repatriate back to the private cloud coinciding with the tech-refresh this 2025. The purchase of hardware for modernization to replace aging hardware is perfect timing to build a modern private cloud, hitting two birds with one stone—this means both hardware and private cloud purchases can be bundled to build a modern private cloud where workloads from the public cloud can then be repatriated to avoid duplicate costs. Some companies fully migrated back on-premise private cloud.

Cloud Repatriation Reason 5: Hybrid Cloud Realization

In the context of technology refresh and the remnants of cloud migration, during on-premise tech-refresh, workloads that continue to operate on bare metal and have been upgraded to a private cloud become part of a hybrid system with those in the public cloud, connected through high-speed networks like direct connect via SD-WAN. Legacy workloads that were unnecessarily moved to the public cloud are returned to the new private cloud. Consequently, workloads utilizing vendor-specific technology remain in the public cloud, establishing a permanent hybrid cloud where some workloads have been moved back on-premise while others remain public due to tightly coupled dependencies e.g. SQS and Lambda having no counterpart locally.

Cloud Repatriation Reason 6: Latency Sensitivity

Some enterprises have transformed by refactoring and re-architecting their workloads for the public cloud but find themselves unable to migrate legacy dependency applications such as DB2 and Sybase. Over time, these enterprises discover that even a small reliance on legacy on-premise systems results in transactional latency. Similarly, microservices deployed to the public cloud that continue to query on-premise files or databases also experience latency. This situation compels organizations to move these modernized workloads back to on-premise private clouds--a repatriation of workload back to on-premise private cloud scenario.

Cloud Repatriation Reason 7: Data Sovereignty

Data sovereignty refers to the concept that data is subject to the laws and regulations of the geographical location where its owners are located. In general, data sovereignty rules put the responsibility of managing and protecting user data on the organization in that collects and processes it. Proposals advocating for data sovereignty or the utilization of local data centers to process and store data generated domestically are receiving backing from major tech companies. They highlight that this approach could decrease the country's and enterprises' dependence on foreign cloud services and potentially be more cost-effective.

Thus organization is preparing for this policy by building their own private cloud. Once this law or policy is enforced will eventually result to the repatriation of workload to their on-premise private cloud to meet the regulatory requirements.

Cloud Repatriation Reason 8: Forced Legacy Migration

In the early stages of cloud migration, I observed enterprises moving applications to the cloud merely for the sake of doing so, without gaining any value other than migration "citations". Many enterprise simply transferred their on-premises setups to the public cloud, treating it like bare metal. Consequently, no value or return on investment was realized. Given that public cloud infrastructures are essentially private clouds with their own bare metal, the annual cost of ownership ended up being even higher. Over-provisioned servers from on-premises were moved to the cloud with the same excessive specifications. Vendors who certified the applications on-premises were unwilling to allow smaller compute sizes in the cloud for certification, leading to increased infrastructure costs. During modernization and tech-refresh efforts, the same applications that were once considered success stories are now being brought back on-premises following advancements in private cloud modernization.

Closing Remarks

Wether an enterprise goes to public cloud or private cloud, there is no right or wrong answer. It all boils down to enterprise priority. Objectives / Goals / Metrics comes firsts strategy comes after. Public cloud remains a viable technology in the years to come yet no longer the only option.

Disclaimer:

This article is just a expression of my thoughts and opinion. It does not represent any group, company, or organization. Any similar narrative in this article in the industry are coincidental.