Rob Coupland, CEO of Pulsant, looks at how organisations are reconsidering their approach to digital infrastructure in navigating a new era of cloud.

For many businesses, 2020 marked the dawn of the cloud-first era, with organisations around the world embracing public cloud. And it made sense at the time; promise of reduced infrastructure costs, flexibility and scalability meant that leveraging cloud services was a no-brainer.

But with any new technology, the shifting tides that come along with its proliferation also informs the cyclical nature of its adoption. Many organisations weren’t aware of the implications of these migrations or the truly critical nature of their private data, however this has come into sharper focus in the last few years with increasing regulation and a better understanding of the high value of data.

Businesses now find themselves in a melting pot of challenges that are driving them to reconsider their approach to digital infrastructure. Firstly, you have bill shock from growing cloud costs, as well as regulatory and compliance pressures (both domestic and international), including data sovereignty. This has been amplified recently by geopolitical concerns about over reliance on a small number of US-based cloud providers. Lastly, the lack of supplier diversity has been flagged as a risk to flexibility, ability to manage costs and sovereignty. 

All of those concerns are making the grass look greener on other types of storage platforms. That’s where cloud repatriation comes in, or when you include data sovereignty and consider the situation in a broader sense; data repatriation.

The shift to repatriation is already underway

There is already mounting evidence that the wheels of repatriation are in motion across the country. Barclays’ 2024 CIO survey revealed that 83% of enterprises plan to shift workloads from public cloud to private/on-prem (up from 43% in 2021). Furthermore, it’s been found 94% of IT leaders have been involved in cloud repatriation projects and 25% of UK organisations have moved at least half their workloads back on-prem. 

Looking at our own client base, there’s a noticeable cohort of newer organisations ‘born in the cloud’ that have realised the economics were flawed and they would not have a viable business model if they continued to remain in it.

Moving data back into private cloud, on-prem or colocation provides predictable pricing vs fluctuating cloud bills, better performance and latency by being closer to users, and greater resilience by diversifying the type and number of infrastructure providers on which their businesses sit. With some hyperscalers openly admitting that they cannot guarantee data stays within a jurisdiction during its transfer, other types of infrastructure make it easier to maintain compliance with UK and EU regulations and avoid future financial and reputational damage.

Unlocking the value of private data 

At the same time, there has been a slow awakening to the underutilisation of private data. Given that there is 9 times more private data than public data, many organisations are sitting on untapped information that could drive AI, analytics, and business insights. This is only being compounded by the growth of AI and digital business processes. 

Achieving full ownership of that data through repatriation provides greater control, cost efficiency and enables greater customisation, allowing them to get the most value from their data. For example, Co-Pilot and ChatGPT are not sovereign or private, but by using colocation and private digital infrastructure to build LLMs, they can still protect their IP and benefit from innovative technologies.

The rise of data tariffs

If this all sounds too good to be true, there could be a potential drawback; as data repatriation accelerates, there is a chance cloud economics may shift toward data tariffs. With recent tariff announcements by Trump sending shockwaves around the globe, this issue has become more relevant than ever. While manufacturing sectors have felt the brunt of these tariffs, it’s crucial to recognise that many modern economies – particularly in the UK – are service-based, with data at their core.

If export tariffs are imposed on data transfers from US-based platforms to the UK, the costs of data repatriation could rise significantly. This potential shift in the cost structure makes it vital for businesses to carefully evaluate the risks of entrusting their data to foreign organisations. Companies must consider not only the financial impact of such tariffs but also the level of control and influence these foreign entities may hold over their operations.

In an era where data is the lifeblood of the economy, it’s essential for businesses to be proactive in understanding the implications of placing sensitive data in foreign hands and how external political dynamics could impact their long-term strategies.

Over the last few years, we have seen how quickly international relationships can change, as well as the economic consequences. As such, it’s important that organisations have control of their own data to insulate themselves from external shockwaves.

A defining moment for enterprise IT strategy

The evidence suggests that 2025 will be a pivotal year for cloud strategy. However, for businesses considering an exit from the public cloud, greater awareness is needed around viable alternatives. UK-based cloud providers must be positioned as a strategic advantage, offering benefits such as data sovereignty, regulatory compliance, and reduced latency.

Public cloud remains an essential part of the IT landscape – it’s a powerful tool, but not a one-size-fits-all solution. The future of enterprise IT lies in making informed, strategic decisions based on more than just cost, leveraging the right mix of cloud and infrastructure solutions for specific workloads and business needs.

Rather than a mass exodus from the public cloud, businesses will need to embrace a hybrid model that balances public cloud, private cloud, and on-premises infrastructure. This approach will not only optimise performance and costs but also provide long-term resilience in an evolving digital economy.