37 Signals has provided an update on its migration away from the cloud, saying the move is already saving it $1 million a year.
37 Signals was one of the companies that led the charge to the cloud, creating popular cloud-based apps that reached widespread use and critical acclaim. Despite the company’s heritage, 37 Signals is now leading the charge in the opposite direction, hoping to usher in the “post-SaaS” era.
As part of its efforts, the company has been migrating its own services from the cloud, saving a significant amount of money in the process, according to CTO David Heinemeier Hansson.
Our cloud spend (sans-S3) is down by 60% already. From around $180,000/month to less than $80,000. That’s a cool million dollars in savings at the yearly run rate, and we have another big drop coming in September, before the remaining spend will petter out through the rest of the year.
Now compare that to what we spent on buying our own servers. We had to buy about half a million dollars worth of new machines to replace all the cloud rentals. While there are some additional other costs associated with the extra servers, it’s relative peanuts in the grand scheme (our ops team stayed the same, for example). Which means that by the basic comparison of money saved vs money spent, we’ll be in the money on the big purchase with the current monthly savings in less than six months. That’s just astounding!
Hansson says 37 Signal’s case is a relatively small one, compared to some of the tech giants who rely on the cloud.
In fact, from having looked at the unoptimized cloud bills at other software companies, our savings may in fact be modest compared to what’s possible. Did you know that Snapchat has spent three billion dollars on the cloud in the past five years they’ve been a public company? Don’t tell me there was a billion or so in potential savings on that tab. That didn’t used to matter, because who cared if the business was profitable or not, but now it sorta does!
Companies have increasingly begun to question the value of the cloud amid ongoing security concerns, runaway costs, and questions about data integrity.
If 37 Signals is successful in its efforts to usher in the “post-SaaS” era, it could represent a seismic shift in the technology industry.