The Great Decloud: Why Businesses Are Ditching the Public Cloud for Refurbished IT

During the pandemic-induced lockdowns of 2020 and 2021, the public cloud was hailed as the saviour of business continuity. Indeed, Gartner predicted that worldwide end-user spending on public cloud services would grow by 18.4% in 2021 alone, to a value of $304.9 billion.

But as the world has settled into a new normal in the years since, a surprising trend has emerged: declouding. Businesses are moving away from the public cloud en masse, and refurbished enterprise IT is quickly emerging as a key player in this shift.

Why the public cloud couldn't stay put

Migrating everything into the public cloud might have been a quick fix in 2020/21, but it wasn't sustainable. Research we conducted last year found that a staggering 62% of managed services providers (MSPs) have considered or already begun declouding. This trend coincides with an 80% increase in demand for enterprise IT, identified in that same study, highlighting the growing need for efficient and cost-effective IT solutions.

Several factors are causing organisations to refocus their IT strategies – centring around customer data, control and cost:

· Hybrid Cloud Strategies: The public cloud's one-size-fits-all approach can often prove to be more expensive for organisations while providing limited flexibility. Businesses are, as a result, embracing hybrid cloud strategies so that they can benefit from the best of both worlds: public cloud agility and private cloud control. This, coupled with expiring pandemic-era cloud contracts, is making organisations re-evaluate their cloud strategies.

However, for those who don’t want to take an “all or nothing” approach to the cloud, a hybrid IT strategy is emerging as organisations demand a balance between cloud-based architectures and on-premises infrastructures. Such a move can help organisations keep an eye on costs while retaining reassurance about where their data is stored – which can be extremely important from a regulatory perspective.

· Data Sovereignty Concerns: With stricter regulations like GDPR, companies are seeking greater control over their data. Declouding allows them to uphold compliance and mitigate security risks, especially if they operate across multiple territories or are highly regulated. Global tech vendors including Meta, SAP and Google are also recognising the importance of data control to their customers.

· Cost Management: The rising cost of living is impacting IT budgets too. Inflation is making things more expensive and in parallel, public cloud bills can add up quickly, meaning that businesses are seeking more optimised IT solutions. This is where refurbished enterprise IT can come into its own as it offers significant cost savings compared to brand-new equipment, allowing businesses to maximise their IT budgets.

· Cyber security: High-profile data breaches have made businesses wary of cloud security vulnerabilities. Across 2022/23, the National Cyber Security Centre issued 24.48 million notifications informing organisations that they were experiencing a cyber incident. This means it is more important than ever for organisations to ensure their IT infrastructure is as secure as possible.

The rise of the refurbished hero

Addressing these factors while being mindful of budgets can be a challenge at times. However, an often-overlooked solution is refurbished enterprise IT – which is perfectly positioned to capitalise on the decloud trend. It offers several advantages:

· Cost-effectiveness: Businesses can acquire high-quality IT equipment at a fraction of the price of new, freeing up budget for other priorities.

· Sustainability: Refurbishment reduces e-waste and promotes a more circular economy, aligning with the growing need to address environmental concerns.

· Performance: Refurbished equipment goes through rigorous testing and refurbishment processes, ensuring performance and reliability.

· Flexibility: Businesses can find a wide range of refurbished equipment to meet their specific needs and scalability requirements.

This move back to on-site physical IT hardware may require a bit of investment. At a time when many people are considering declouding, manufacturers can be wise to this and in turn raise their prices. This is something we have also seen as organisations invest in new back-ends to power AI solutions that require powerful servers.

At one point in late 2023, we saw costs increase by almost 100%. While we know there is slack in IT budgets, no way will they stretch to this level – particularly when an organisation might be investing in both declouding AND AI.

Organisations must therefore carefully consider how they will prepare for such a scenario – from a financial, skills and technological perspective.

It is at times like these that firms must do their homework to check if their existing systems will provide the right compute power for their needs. If new equipment is needed, confirming budget availability will be the next step before checking out the market; given the boom in demand for high-power servers, this should include comparing the merits of new versus refurbished stock.

With high levels of stock and more attractive price points, we are likely to see more organisations turn to the refurbished market to bolster their move away from the cloud.

The future is hybrid IT

The decloud trend signals a move towards a more nuanced approach to IT infrastructure. Hybrid IT strategies, bringing the cloud together with the cost-effectiveness and sustainability of refurbished IT, are shaping the future of enterprise technology. As businesses navigate the ever-evolving IT landscape, one thing is certain: the public cloud's reign as the sole solution is over. The future is hybrid, and refurbished IT is ready to play a starring role.