Are rainy days ahead for cloud computing?

This year, software firm 37signals will see a profit boost of more than $1m (£790,000) from leaving the cloud.

“To be able to get that with such relatively modest changes to our business is astounding,” says co-owner and chief technology officer, David Heinemeier Hansson.

The US company has millions of users for its online project management and productivity software, including Basecamp and Hey.

Like many companies it outsourced data storage and computing to a third party firm, a so-called cloud services provider.

They own huge data centres, where they host data from other firms, which can be accessed over the internet.

In 2022, such services cost 37signals $3.2m.

“Seeing the bill on a weekly basis really radicalised me,” Mr Heinemeier Hansson says.

“I went: ‘Wait! What are we spending for a week of rentals?’ I could buy some really powerful computers just on one week’s worth of [cloud] spending.”

So, he did. Buying hardware and hosting it in a shared data centre costs $840,000 per year.

Although costs pushed Mr Heinemeier Hansson to act, other factors were also a concern.

The internet is engineered to be highly resilient.

“I saw the distributed design erode as more and more companies gravitated essentially to three owners of computers,” he says, referring to the three leading cloud providers.

If a major data centre goes down, large parts of the web can go offline.

The cloud was pitched, he says, as cheaper, easier, and faster. “The cloud was not able to make things easier to a point where we could measure any productivity gains,” he says, noting his operations team has always been about the same size.