New research from ElasticHosts shows cloud server capacity is only half-used

Sept. 4, 2014 - PRLog -- London, UK – 4^th September 2014: Cloud server provider, ElasticHosts, today released the results of CIO study which found that most cloud customers are over-paying for cloud servers, while still failing to get the peak performance they need. Yet despite this, almost half believe this is delivering on the promise of cloud.

Traditionally, cloud servers have been paid for according to the levels of capacity provisioned; if you run a 4GB server, then you pay for a 4GB server, regardless of whether that capacity is being used. The study found that businesses use just half (51%) of the capacity they provision over a 24/7 cycle. As a result, customers are effectively paying twice as much as they should be for the capacity they are using.

When looking at the reasons behind this over-provisioning, 90% of respondents said they see over-provisioning as a necessary evil in order to protect performance and ensure they can handle sudden spikes in demand. However, despite this over-provisioning, performance is still suffering. Many companies are unwilling to pay extra for capacity that they only use a small amount of the time: 88% of CIOs admitted that they often sacrifice peak performance in order to keep costs down.

“This research really highlights the short-comings of the pay-by-capacity billing model,” said Richard Davies, CEO of ElasticHosts. “Essentially, companies are paying for space they are not using half the time because they are running with extra headroom so they can handle peaks in performance. Yet at times of high demand, when arguably it is even more important that everything is working smoothly, web applications or websites will run slowly or even fail because they do not have the amount of server capacity needed, However, this is set to change. Updates to the Linux kernel have enabled a new generation of container technology, providing an automatically scaling infrastructure that is charged by usage, rather than upper capacity levels - so companies can have their cake and eat it too.”

Traditional VM servers do allow users to scale their servers up and down according to need, and companies can create APIs that automate this process. However, only 14% of respondents fully automate this process, meaning most companies are still managing server capacity levels manually, which helps to explain why there is so much wastage. Many companies do not have the additional resources to enable a systems administrator to sit and monitor capacity consumption all day, meaning levels are often just set and left to run.  Yet despite these short-comings, the research found that almost half (49%) of businesses believe that the cloud has delivered on the promise of being a fully elastic solution.

“I’m not surprised that half of customers believe cloud is delivering on its promise, as up until recently it was – well, as far as it could,” Davies concludes. “Companies are still thinking in terms of the old world computing model, where over-provisioning was rife and expected,  so many have shifted these expectations into the new world of cloud. But 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.

About ElasticHosts

ElasticHosts is a global Cloud Server provider that offers easy-to-use Cloud Servers with instant, flexible computing capacity. As well as Elastic Containers, ElasticHosts also offers traditional Virtual Machines, Managed Cloud Servers and Reseller Programs. The company has thousands of customers in over 60 countries worldwide, and has 9 data centres located in UK, Europe, US, Canada, Asia and Australia. Its headquarters are in London, UK. ElasticHosts is committed to developing simple, flexible and cost-effective cloud services for businesses worldwide.