Nine in Ten Enterprises Plan to Expand On-Premises Footprint amid Rising Cloud Costs and Data Sovereignty Mandates

New Cloudian survey finds organizations rebalancing workload placement — not abandoning cloud, but no longer defaulting to it.

Cloud migration was supposed to be a one-way door. For most enterprises, it turns out it isn’t.

A new survey of 212 senior IT decision-makers, commissioned by Cloudian and conducted by Centiment, finds that 89 percent of organizations plan to expand their on-premises infrastructure footprint over the next two years — and 75 percent have already moved at least some workloads back from public cloud in the past 24 months. The findings point to a broad rethinking of where data belongs, driven by tightening sovereignty requirements, cloud economics that have turned punishing at scale, and AI workloads that are exposing the limits of what cloud can cost-effectively deliver.

Notably, 76 percent of survey respondents already have more than half their workloads in public cloud today — making the repatriation signals all the more telling.

“This isn’t a story about enterprises souring on cloud,” said Jon Toor, CMO of Cloudian. “It’s about organizations getting smarter about workload placement. The data makes clear that for sovereignty-sensitive, AI-intensive, and large-scale storage workloads, on-premises is often the better answer.”

Sovereignty Has Become Non-Negotiable
Data sovereignty produced the survey’s most striking consensus. Ninety-nine percent of respondents said it is at least a moderate factor in infrastructure decisions, with 82 percent calling it a primary or significant driver. More than half (59 percent) cited concerns about cloud providers accessing their data for analytics or model training, and 53 percent are operating under customer or partner contracts that restrict where data can reside.

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Regulatory pressure is compounding the issue: 45 percent have experienced new cross-border data restrictions in the past two years — a reflection of accelerating data localization laws across the EU, Asia-Pacific, and elsewhere.

“The compliance landscape has gotten materially more complex, and it’s moved faster than most cloud providers’ infrastructure footprints,” said Toor. “When your data residency requirements don’t map cleanly to available cloud regions, on-premises stops being a legacy option and starts being the only viable one.”

Cloud Economics Aren’t What They Used to Be
The cost picture is stark — and nearly universal. Eighty-four percent of respondents are running over their cloud storage budgets, with nearly one in five exceeding them by more than 30 percent. Just 0.5 percent report being under budget. The leading culprits: data egress fees (46 percent), costs that escalate with data volume (45 percent), and premium pricing for residency-compliant regions (43 percent).

“The math that made cloud compelling for early-stage or variable workloads doesn’t hold when you’re storing petabytes and accessing them regularly,” Toor noted.

AI Is Accelerating the Timeline
If sovereignty and cost are the structural drivers, AI is what’s making the issue urgent. Eighty-five percent of respondents said AI requirements are influencing their shift toward on-premises infrastructure. More than half (55 percent) said cloud cannot consistently meet AI inference latency requirements, and 52 percent need to keep AI training data on-premises for security or compliance reasons.

When asked to name their top infrastructure priorities for the coming year, AI and ML infrastructure ranked first (57 percent) — narrowly ahead of data sovereignty and security (56 percent) and cost predictability (54 percent).

“AI is the forcing function,” Toor said. “Organizations that might have tolerated suboptimal cloud economics or sovereignty workarounds for conventional workloads are finding they can’t accept those same tradeoffs for AI. The latency requirements are different, the data sensitivity is higher, and the cost at scale is harder to absorb.”

A Rebalancing, Not a Reversal
The survey makes clear that enterprises are not walking away from cloud. Roughly 30 percent are still expanding their cloud presence. The more accurate picture is simultaneous expansion and repatriation — organizations optimizing workload placement rather than choosing sides.

“Hybrid isn’t a compromise anymore, it’s a deliberate strategy,” Toor said. “The enterprises doing this well have gotten very precise about what goes where and why. Cloud for elastic, unpredictable demand. On-premises for everything where you need predictable cost, low latency, and clear data jurisdiction.”

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