Cloud customers are still paying for twice as much as they need

"Over-provisioning" isn't dead, it has just moved to the cloud. Large customers are only using half of the capacities they've paid for, according to an independent survey undertaken for ElasticHosts.
Written by Jack Schofield, Contributor on

An independent survery of 200 UK-based CIOs has revealed that they are only using about half of the cloud capacity they've bought and paid for, and that 90 percent of them see over-provisioning as a necessary evil.

Cloud provider ElasticHosts, which commissioned the survey, says: "Essentially, bad habits like over-provisioning and sacrificing peak performance are being carried from the on-premise world into the cloud, partly because people are willing to accept these limitations."

In other words, CIOs who have used over-provisioning to handle peak demand in their server rooms are doing the same thing in the cloud, where it shouldn't be necessary — assuming, that is, the cloud provider can handle the peak demand from multiple customers, even if these peaks coincide at lunchtime.

Further, 88 percent of these CIOs admitted they sacrificed some performance at peak times in order to control costs.

The survey was conducted online by Vanson Bourne. It surveyed 100 CIOs from organisations with 1,000-3,000 employees and 100 from organisations with more than 3,000 employees. Of the respondents, 50 were from financial services, 50 from manufacturing, 50 from retail, distribution and transport, and 50 from other commercial sectors.

A major part of the problem is that most companies are managing their cloud services manually, which adds to the cost. According to the survey, only 14 percent have automated the process. Automation could reduce the amount of overprovisioning required and thus cut costs.

Richard Davies
Richard Davies Photo: ElasticHosts

Richard Davies, ElasticHosts' CEO, says: "This research really highlights the short-comings of the pay-by-capacity billing model."

ElasticHosts is selling Linux IaaS (Infrastructure as a Service) where customers can be billed separately for on-demand memory, processor and disk use as the bandwidth they use. It can scale these very quickly because it is providing Linux containers rather than virtual machines (VMs). Several customers may be sharing a VM, though each company can only see its own partition.

This could be dismissed as ElasticHosts marketing. However, as I pointed out in an earlier story, the increasing support for LXC containers in Linux distros and the growing popularity of Docker suggests that containerization will become widespread. (See: Next-gen cloud services could save users almost $2 billion a year)

Davies says: "as the research shows, and as half of respondents recognised, cloud as we have it today really isn’t truly elastic — it does not expand and retract automatically to meet demands, and it is not paid for like a utility, based on consumption. However, with next-generation cloud and containerisation technology, change is afoot.

"Our question to organisations is: why would you ever choose to pay for capacity you aren’t using, sacrifice performance, and eat up your systems administrator’s time, when you don’t need to? Soon companies will be asking themselves the same thing, which will mark the end of capacity-based billing."

Bar chart shows over-provisioning
From the survey, 90 percent of CIOs see over-provisioning as a necessary evil (green bars) though some industry sectors are better than others... Credit: ElasticHosts


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