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Friday, 20 June 2014 10:48

Organisations are wasting more than £1 Billion A Year on Iaas cloud solutions

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Figures show that IaaS customers are regularly over specifying servers that are less than 50% utilised and consequently are over paying by around a billion pounds a year

The maths has been done and the calculations are in and the results don’t make for good reading. If you’re paying for Iaas the chances are you are paying way over the odds for the service you get. The problem lies in the way businesses are specifying their servers, their internal management and the providers who charge for bandwidth and capacity that is never used.


The figures come from cloud service provider ElasticHosts, who, it has to be admitted, have a vested interest in informing businesses of this cash loss. ElasticHosts launched a new service – Elastic Containers - back in April that charges users only for what they use rather than what they specify. However that aside the figures show just what could be saved by getting the right choice when it comes to specifying your Iaas server and creating the right management systems for your development  teams.


The real eye opener with the figures produced from ElasticHosts is not the £1 billion – more on that later – but the graphs of three typical use cases. Elastichosts picked out three typical Iaas uses, a disaster recovery solution, a web app server, and a test and development server.    




The web application customers tend to run cloud servers on a 24/7 basis, but utilisation patterns vary significantly throughout the day with web traffic. The graph above shows a typical web application running on a fixed cloud server set at 4GB RAM. As you can see, there are regular intervals when the server is being underutilised, but the red line is what you’re paying for.


As you can see there are times when capacity peaks and where there are performance issues, such as slow page loads or load errors. And while Richard Davies CEO of ElasticHosts  admits some  businesses will get around this “by spinning up VMs as and when they’re needed” to do this they would have to constantly monitor performance and “few do.”




With a test and development server - see above - a typical development team will run tests intermittently. Users do have the option of turning the server off when it is not being used, but many work in large development teams and for the sake of convenience they generally leave it turned on ready for the next user. However, this can mean the server can go unused for days, even though they are still being charged for the capacity.




Disaster recovery (DR) is the clearest example of waste – see above - . DR customers routinely replicate 50-100% of their servers as idle ‘hot spares’, constantly provisioning them at full capacity. As a result, they are effectively paying for capacity twice. ElasticHosts estimates that the costs of a fully-configured duplicate of the primary server that is running continuously could be reduced by 80% or more, if these idle ‘hot spare’ servers were billed on actual utilisation, rather than the amount provisioned.


ElasticHosts estimate that organisations deploying web applications can typically save around 50% through using auto-scaling containers, as opposed to fixed-size virtual machines, web dev servers costs could be reduced by a minimum of 50% and DR server applications by up to 80%.


As Davies, explains: “The latest updates to the Linux kernel have made containerised IaaS possible. This has huge ramifications for the IaaS market as customers no longer need to over provision – they are only charged for what they actually use and can therefore cut costs in half. In the same way that virtualisation disrupted the physical server market; containerisation is set to disrupt the cloud market and has the potential to deliver £1 billion worth of savings to Linux cloud compute users every year.”


ElasticHosts, looked at Linux IaaS servers as they’re the predominant servers in the Iaas market, but as Davies says the same would be true for Windows servers. However the savings can’t as yet be made on Windows servers as the technology behind ElasticHosts relies on the Docker open platform which relies on Linux-specific kernel features.


Where does the £1 billion saving come from?

Figures from Gartner estimate that the global IaaS market is worth £5.4 billion, of which the overall market for IaaS compute users is at least £2.7 billion of which the Linux Foundation estimates that 76% of organisations are using Linux servers for cloud, meaning Linux equates to £2.05 billion globally of the IaaS compute market. Stick with us as this is where it gets interesting.  Figures from IBM, McKinsey, Google and Gartner estimate that servers are currently utilised anywhere from 6% to 40% on average; we can therefore safely estimate that IaaS is being underutilised by a minimum of 50%, resulting in at least £1 billion (£1.026 billion) of wasted spending on Linux based cloud compute each year. See we told you!


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