There is no one answer that fits all. Where cloud will always be cheaper is data storage.

If you were to host everything on-prem, that would be a lot of capex. It would cost to maintain that as well. For on-prem, you have to think more about electricity, redundancy, backups, security, and so on. Anything you would need to do to build out a data center. Once you have it set up though, yes it would be cheaper.

For tech companies, this is already a non starter as they want to scale and scale fast. They also can’t just spend all their investors money, so they convert capex into opex instead.

Also, historically, IT is slow. Very slow. This is why there is a world of DevOps because developers became increasingly frustrated with how slow it is to provision infrastructure for them. To fix this, you could probably hire more people, but again, that’s an extra expensive that you can just now offset to cloud.

With cloud you can set up something in multiple data centers within minutes. If on-prem, you would need to have multiple physical locations of your own.

Another option is to rent out space in a data center, then you just buy your own hardware and do not have to worry about 80% of what would go into a data center. You would still need to set up these systems in a way that can scale for future use, which means more capex up front.

At the end of the day, there is no one size fits all. As you mentioned, most businesses could benefit in the long run by hosting their own stuff. I will say though, managing things like your own email server has become a nightmare. This is just a lot easier to let someone else manage. Then again, you have the concern of data storage, this is just easier and cheaper to host in cloud. Something like Google workspace or m365.

To put it another way, go to your boss and tell him you need to pay $2,000,000 up front for IT hardware. Now tell him you’ll need to pay $250,000 a year for the same services in cloud. What do you think they will go with?

I do hate that it’s come to this though, because I feel like people are losing knowledge. Only the people that build data centers these days will have that IT knowledge and you have people that can no longer tinker like we used to.

LLMs are smart, they are just not intelligent

I have to ask, why start with 0? I never understood this with infrastructure. I would do something like 00000 if I did numbers so it would be easy to sort, but I always started with 1. I’m just curious.