For more than a decade, public cloud has been the default answer to every IT modernisation question…
It has been scalable, cheaper, and faster — until it isn’t. As the dust settles, CIOs (Chief Information Officers) have been reevaluating their cloud strategies, and a striking trend has emerged: a resolutely decisive “cloud reset” of sorts.
According to the VMWare Private Cloud Outlook 2025 report, enterprises no longer view public cloud as a one-way ticket to becoming hyperscalers, but are intentionally shifting tasks and workloads back to on-premise, or on-prem, computing practices and private cloud. Why? Cost control, compliance, and security. Is private cloud having its big resurgence in 2025?
Storm Clouds Brewing
As the cloud landscape evolves, many enterprises are finding that their expectations of cloud adoption doesn’t always align with reality. For instance, organisations are finding out that their cloud spending is far exceeding their initial estimates, thus negating the promise of cost savings. That, coupled with the complexities of cloud environments, financial implications of new tech like Generative AI, energy costs, and increasing costs of third-party services are contributing increasingly to budget blowouts.
Moreover, not all workloads are suited for the cloud, even as latency and performance increase in frequency. An example is AI and technical-related workloads, which often experience performance issues in public cloud environments. Furthermore, there are concerns about data breaches and compliance, despite advanced cloud security measures, especially in industries like healthcare and finance.
And if all that wasn’t enough, nothing compares to the complexities involved in managing hybrid or multi-cloud environments, which could greatly negate any benefits of cloud adoption.
Private Cloud and the Repatriation Route
Repatriation is moving workloads back to private or on-premises cloud infrastructure from public cloud environments. It’s a broader industry trend of moving back to hybrid multi-cloud strategies, where enterprises are looking to optimise their workload placement across multiple environments.
Gone are the days when private cloud was a clunky, on-prem relic; recent advancements have catapulted it to the position of a dynamic platform rivalling the public cloud in agility, multitenancy, and self-service.
In fact, the previously mentioned VMWare report even notes that nearly 84% of organisations now run both cloud-native and traditional applications in private cloud environs, thus showcasing its versatility. With this evolution, private cloud is poised to be an increasingly feasible alternative for modern workloads, especially with enterprises racing to adopt generative AI.
Another reason driving this repatriation route is the fact that skill shortages and data privacy concerns pose hurdles for the deployment of AI in public cloud. As compared to that, the controlled environs of private cloud are considered a secure haven for storing and working with sensitive AI workloads. With 53% of organisations already planning the building of new workloads in private cloud, it’s clear that private cloud is more than just a fallback — it’s an innovation-driven, strategic choice.
Rethinking Cloud Strategy: Why Now?
This “cloud reset” isn’t reactive, but rather reflective, as IT enterprises are recalibrating their cloud deployment after facing its realities. There are many factors that have come together to transform this private cloud moment to a serious shift to an on-prem or private cloud model. The topmost is, obviously, cost transparency and control, with enterprises realising that they can own infrastructure and optimise long-term costs for predictable workloads.
This, as opposed to them paying premiums for public cloud elasticity that they don’t always need. Since private cloud is operated by trusted local or in-house partners, there are stricter data protection regulations, including industry-specific mandates. This is attractive to industries where data sovereignty and security is paramount, like finance and healthcare.
Dedicated edge infrastructure is often more reliable and performant for workloads requiring high-performance computing or that are sensitive to latency. Moreover, operating a cloud is no longer an experiment, with modern open-source tools like Kubernetes, Ceph, and OpenStack having matured significantly over the past decade; it’s now becoming accessible to organisations of all sizes.
Consequently, there are no traffic costs, as private clouds don’t charge per GB (gigabyte) of data transferred, unlike hyperscalers. For enterprises running traffic-heavy services, streaming apps, or APIs, the savings can be massive.
For instance, take American software company 37signalsm which projected savings of nearly USD 7 million over 5 years after migrating their services off public cloud. And this is after the costs associated with purchasing and maintaining their own hardware and servers. They aren’t alone – many other organisations are reporting substantial reductions in cloud spending – up to percentages as ridiculous as 90% – by transitioning to on-prem or private cloud.
Final Thoughts
The “return” to private or on-prem cloud doesn’t mean abandoning the public cloud. Instead, it means redefining what “cloud” could mean: a model rather than a location. And in that model, private cloud is having a serious moment. Once seemingly passé in favour of public cloud, private clouds — either partner-hosted or on-premises — are now getting second looks, especially with the advent of today’s generative AI gold rush.
As CIOs rethink cloud strategies in the upcoming AI era, a hybrid mix seems to be the likely long-term solution for balancing data security, cost control, and experimentation.
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