The quiet return of on-premise software
Some companies are moving workloads back from the cloud to control costs
A growing number of mid-sized companies are moving selected workloads back from the cloud to their own servers, a trend driven less by ideology than by finance teams looking at monthly bills.
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The project had stalled twice before, most recently last year, when a change in leadership at Meridian Foods put several initiatives on hold. This time, the company says, the budget is approved and the contracts are signed.
The move comes as the sector adjusts to a year of slower growth. Analysts at Ashgrove Research estimate that spending in the category rose just 3 percent in the first half, compared with 11 percent a year earlier.
"The companies that will come out of this stronger are the ones that treated the slowdown as a chance to fix their cost base, not as a reason to freeze," said Rafael Duarte, who follows the industry for Ashgrove Research.
Which workloads are moving
Executives at Meridian Foods said the plan will be rolled out in three stages, beginning with its largest markets. A second stage, covering smaller regional units, is scheduled for the second quarter of next year.
Not every investor is convinced. Shares in Meridian Foods slipped 2 percent after the announcement, with some analysts questioning whether the projected savings of $48 million a year are achievable on the stated timeline.
The figures are modest by the standards of the largest players but significant for a company of this size. According to its latest filing, Meridian Foods generated $48 million in revenue over the past twelve months, with margins improving in each of the last three quarters.