F5 CEO: AI Is Sparking Cloud Repatriation Movement

“It’s only in the last year that most enterprises I’ve spoken to say: ‘I’m hybrid and multi-cloud, and that’s where I’m going to be. In fact, I’m increasing my data center capacity.’ When you hear 80 percent of companies have repatriated apps, what that tells me is that enterprises are getting way smarter about where it makes sense to have an app,” says F5 CEO François Locoh-Donou.

Enterprises are getting “smarter” about where to put their application workloads and that’s leading to a cloud repatriation movement, according to F5 CEO François Locoh-Donou.

About 80 percent of organizations expect to see some level of repatriation for some applications and workloads within the next year, citing rising cloud costs and data sovereignty concerns as the chief reasons for the movement out of the cloud, according to IDC’s 2024 report, “Assessing the Scale of Workload Repatriation.”

“The big trend that you’ll see is enterprises are choosing the best environment for each application,” Locoh-Donou told CRN in an exclusive interview.

The movement also suggests that those 80 percent of enterprises cited in the study are never going to have 100 percent of their applications in the cloud or be located in a single-cloud environment. Rather, these enterprises are and have adopted hybrid and multi-cloud postures, Locoh-Donou said.

In the early days of cloud, many enterprises had mandates to go all-in on cloud, or adopt a hybrid cloud approach for a short period of time until the company could be 100 percent cloud. These mandates were oftentimes a top-down strategy from the C-suite, Locoh-Donou said.

“A new CIO says: ‘We’re going all-in, in the cloud. We’re going to be cloud-first.' So, the pendulum [swung] all the way. They put all these apps in the cloud and then [said]: ‘Hold on. This app is doing exactly the same thing it was doing, but it’s costing us three times the amount of money. Do we really want to do that?’”

Recently, however, the CEO said he’s noticing a turnaround. Cloud repatriation refers to removing specific workloads from public clouds such as AWS, Microsoft Azure, or Google Cloud Platform and rehoming these applications and workloads into a co-location environment, or private cloud/internally-hosted data centers.

“It’s only in the last year that most enterprises I’ve spoken to say: ‘I’m hybrid and multi-cloud, and that’s where I’m going to be. In fact, I’m increasing my data center capacity,” Locoh-Donou said. “When you hear 80 percent of companies have repatriated apps, what that tells me is that enterprises are getting way smarter about where it makes sense to have an app.”

AI specifically is driving enterprises to reinvest in data centers and increase their data center capacity as these businesses recalibrate their cloud and data center needs, said F5’s Locoh-Donou.

Many organizations were initially enthusiastic about moving entirely into the cloud, but the 100 percent all-in mandates stopped once these organizations got “a foot in the door” with cloud and realized higher costs and cloud-native tools not being as robust as hardware versions of the same product, said Austin Geraci, chief technology officer for F5 partner WorldTech IT, based in Austin, Texas.

The AI trend is accelerating the cloud repatriation shift as AI’s high costs are rendering some cloud solutions impractical. This is where hybrid approaches are becoming more common, with companies opting for a mix of cloud and on-premises solutions, Geraci said.

“The cloud solves the quick and easy problem. ‘We want to test this. We want to try this,’ but it doesn’t solve the scale problem, especially with AI,” he said. “It’s not a long-term solution and it make more sense to buy the gear yourself, capitalize it, and now it’s already paid for itself.”

WWT is still seeing big migrations to the public cloud, but it’s different by vertical. The firm is also seeing more initiatives around private data center buildouts, said Todd Hathaway, global head of AI security and cyber innovation for WWT.

Chinese open-source AI model DeepSeek has changed many organizations’ views on whether they could afford to build their own AI clusters within their enterprises, Hathaway said.

“A lot of companies were saying: ‘We’re going to do AI, but we’re going to do it in the hyperscalers.’ Now they’re [saying]: ‘Hey, maybe I can afford to buy my own hardware, because DeepSeek is showing me that we’re going to be able to do this in more efficient ways,’” he said.

The Partner Opportunity

Cloud repatriation isn’t an all or nothing proposition, said Locoh-Donou.

“That [80 percent of organizations repatriating apps] data point shocked me, [but] if you dig into that, it’s not like they repatriated all their apps. They may have put 100 apps in the public cloud, and they brought back 15 or 20 apps,” he said.

F5’s “2024 State of Application Strategy” report finds that organizations are migrating applications across environments more frequently than expected, with 71 percent of organizations moving apps from one location to another in order to optimize things like performance and cost efficiency at least four times a year.

The movement of applications and workloads presents an opportunity for partners, Locoh-Donou said.

“The trend our partners can leverage is going to customers and saying: ‘We can help you do what you’re trying to do but do it in a way that’s way easier than what you’ve had to do before,’ he said. “All these customers that are reinvesting in data centers and increasing data center capacity, but still need to have stuff in the cloud, how do we help them do that? Deliver and secure their apps in all these environments, but do it in a way that is ridiculously easy? That’s the exploitation that we can make that is a win for the customer, a win for the partner, and ultimately, a win for F5 as well.”