Cloud withdrawal saves 37signals millions of US dollars

[German]The cloud is expensive and sometimes useless – the cloud-first strategy of some providers, which has lured users en masse to such offerings, is leading them into cost traps. Now US company 37signals has pulled the emergency brake after having to pay $3.2 million per year for cloud services. In January 2023, the announcement came to withdraw from the cloud. Now I read the news that by moving to its own data center, the company is probably saving around $1 million per year because the bill for remaining cloud services has dropped sharply. However, the figures cannot be transferred 1:1 to every company.


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37signals is an American web software company based in Chicago, Illinois. The company was founded in 1999 by Jason Fried, Carlos Segura and Ernest Kim as a web design company. Since mid-2004, the company's focus has shifted from web design to web application development. Chief Technology Officer (CTO) is the developer of Ruby On Rails, David Heinemeier Hansson. The latter had already criticized the, in his view, obscure costs for cloud services in a tweet in January 2023 – The Register had reported here.

37signals cloud bill

Now David Heinemeier Hansson has revealed more details in this post from September 15, 2023 (I came across it here). The company has moved its applications from the cloud back to a data center. Cloud spending (excluding Amazon's S3 cloud storage) is now already down 60%, he says. From around $180,000/month to less than $80,000. That's savings of about a million dollars a year. Another big drop is expected in September 2023.

The company did have to buy about half a million dollars worth of new machines to replace all the computers rented in the cloud. These additional servers also came with some other costs, but on the whole they were peanuts, Hansson writes. For example, the company's operations team has remained the same, so personnel costs have not changed. For 37signals, this means that the purchase of the new servers will have paid for itself in roughly six months through the savings in cloud services.

Hansson expects to save about $2 million per year in the future by pulling back from the cloud. The background to why the savings didn't take effect immediately after the shift back to the above amount is that the company tried in advance to lower cloud service prices from "obscene" to simply "objectionable" by booking reserved instances. That means signing up cloud services for a year or more in advance for a set amount of spending. That's why 37signals' costs didn't go down completely immediately after the applications were moved; that item probably won't be eliminated until the end of September. Details on cloud spending from 2022 can be found in this blog post from 37signals. n diesem Blog-Beitrag von 37signals.


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However, the CTO points out that other companies need to take a closer look at their situation and do the math. Hansson cites, for example, that Aurora/RDS or OpenSearch, which were booked by the company, were very expensive services. However, his assessment is that the case at 37signals is not unique and many companies could save money by critically examining cloud services.

He writes that when he looks at the unoptimized cloud bills of other software companies, the savings at 37signals were modest compared to what was possible. Hansson gives the example of Snapchat, which has spent three billion dollars on the cloud over the past five years, according to its stock market announcements.

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