Why cost, data sovereignty, and security are pulling businesses back from the cloud
A decade ago this combination of tricks would have seemed impossible. People and skateboarding, like technology, are rapidly advancing
Why on earth would you want to move away from the cloud? It seems counterintuitive to everything the tech industry has been saying for the last decade. The thing is, at the core of technology is impermanence. By nature it does not stay still; things move fast, and accommodate what is possible.
The cloud did and does make sense. It works on the same premise as utility providers: they generate something the masses need and it becomes a shared resource you can purchase as you require. When resources were expensive and big tech were the gatekeepers, over time this model was adopted by the majority.
We are moving into a technological era in which we are capable of harnessing power in a more compact way. This is true across multiple verticals. Small Modular Reactors (SMRs) are poised to be the most efficient way of providing localised power, running in a distributed architecture; keeping them safe is another story… We are seeing the same shift in technology: as compute becomes more powerful we are able to move into smaller devices requiring less power. Jensen Huang just announced the RTX Spark, a 1-petaflop superchip built to bring heavy-duty, agent-driven AI directly to laptops and desktop computers. You can now run powerful open-weight models (Llama, Qwen, DeepSeek and thousands of others) privately on your own machine via enabling technologies such as Ollama.
And what are the benefits? The primary driver for most businesses is cost reduction. The cloud has become expensive. Access to it has become paywalled in a way that penalises companies for continually accessing their own data, through egress fees and API limits, alongside hosting costs which could pay for an on-premise server within a year.
Data sovereignty is becoming increasingly important; in an age of data becoming the new oil, owning everything rather than piping it into the cloud for mass consumption is becoming increasingly valuable to companies, to the point where a company’s data becomes a defensible moat for the business.
The last thing to mention is the thing no one talks about in the cloud world: security. Your data is only as secure as the company you entrust it to. Is a large cloud provider’s primary focus the security of your data? It’s high on their list, but your specific data is a minor concern within their overall priorities. Take the example of Blue Yonder, a major provider of cloud-based supply chain management software. They were hit by ransomware from the Termite group in November 2024. This stalled Sainsbury’s, Morrisons, Starbucks, and many more. It took them weeks to recover, and they had to bring in external cybersecurity firms to harden their systems in the aftermath.
Is the cloud going away? No. Are disruptors entering the market with better solutions? Absolutely. Will it be a defining factor in the AI race? Almost certainly.
Is the cloud going away? No. Are disruptors entering the market with better solutions? Absolutely. Will it be a defining factor in the AI race? Almost certainly.
Localised compute is exactly what we build at Flow Dynamics: putting cost, control, and security back in your hands rather than the cloud’s. You can see how we do it here, or get in touch if you want to talk through what it could look like for your business.