Web company 37signals expects to save $7 million over the next five years after moving off of the cloud.

The company announced in October 2022 that project management platform Basecamp and subscription-based email service Hey were migrating off of both Amazon Web Services (AWS) and Google Cloud.

AWS Spot
– DCD/Dot McHugh

This January, the company revealed that it had spent $3.2 million on cloud services in 2022.

A little under a million dollars of that was for storing eight petabytes of files in AWS S3, replicated across several regions. 37signals hopes to stop using this in 2024.

Before that, it is focused on the roughly $2.3m it spent on app servers, cache servers, database servers, search servers, and everything else. This it intends to bring down to zero this year, instead moving to two data centers.

In a blog post, company CTO and cofounder David Heinemeier Hansson said the company was almost ready to buy around $600,000 of Dell servers.

"We're still fine-tuning exactly what configurations we need, but whether we end up ordering eight machines running dual 64-core CPUs (for a total of 256 vCPUs per box!) in each data center or 14 machines running single-core CPUs at a higher clock frequency doesn't really matter to the overall math," he said. "We need to add about 2,000 vCPU per data center, and we run in two data centers, so 4,000 vCPUs for performance and redundancy."

Over five years, that comes to $120,000 per year. Some of that hardware could last beyond then, with cloud providers all extending the life of their gear.

"But that's of course just the boxes," Hansson continued.

"They also have to be connected to power and bandwidth. We currently spend about $60,000/month on two full racks in each of our data centers through [managed IT services provider] Deft. We purposely over-provisioned our space, so we can actually fit all of these many new servers in the existing racks without needing more space or power. Thus the spend remains around $720,000/year."

That comes to an expected total of $840,000 a year, compared to the cloud's $2.3m. "And we'll have much faster hardware, many more cores, incredibly cheaper NVMe storage, and room to expand at a very low cost (as long as we can still fit in two racks per DC)," he said.

Even accounting for half a million in unforeseen expenses, Hansson notes that totals seven million in savings over the next five years.

He said: "Any mid-sized SaaS business and above with stable workloads that does not benchmark their rental bill for servers in the cloud against buying their own boxes is committing financial malpractice at this point."

His comments come after Uber announced it would close its own data centers and move to clouds run by Google and Oracle. Last year, FedEx claimed it would save $400 million by closing its data centers footprint, but JP Morgan said that it planned to spend billions on its own infrastructure.

Subscribe to our daily newsletters