“Fake” cloud services cause business concerns

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Survey also finds companies intend to decrease the amount of money they spend with the channel on IT infrastructure

So called “fake” cloud services are causing companies frustration and costing them money.

That’s the latest claims from ElasticHosts, which has found 83 percent of companies are frustrated with having to cut through marketing hype to find out which products are genuine cloud offerings and which are merely conventional hosting services with the word ‘cloud’ added to the title.

The cloud hosting provider said this view was supported by the fact that 67 percent of respondents had been offered ‘cloud’ services that are fixed term, 40 percent had been offered services that weren’t elastic or scalable and 32 percent had found that in many cases services weren’t even self-service.

The survey of 200 IT directors from businesses across the UK, also found that despite the availability of Infrastructure as a Service (IaaS) offerings which allow companies to pay by consumption, many are still paying for server capacity they are not using.

The company also claimed that on average, businesses are using less than half of their on-premise server capacity at any given time.  It said these figures indicated that underused on-premise server capacity still seems to be an issue a wide range of organisations are struggling with.

Richard Davies, CEO for ElasticHosts, said that according to NIST’s widely recognised definition of cloud, cloud is on-demand self-service, rapidly scalable/elastic and pay-as-you-go. However, he pointed out that the research had highlighted that there were many cloud providers that were providing traditional IT services and rebadging them as ‘cloud ’; even though they “failed to meet these criteria.”

He added that although businesses were demanding the real benefits of cloud to make their organisations more agile, resilient and cost effective, the fact that in many instances they were not being offered real cloud services and are being locked into minimum contracts was “quite frankly shocking”.

“When you consider the wasted capacity that companies are paying for it really brings home how much companies stand to gain from using IT as a utility on a Pay-As-You-Go basis. It is disappointing to see providers out there that are hindering the growth of the market by frustrating end-users and offering solutions that are not meeting expectations,” he added.

The survey of end user organisations also went on to highlight some of the impact cloud has had on customer buying preferences. It showed that the channel is not doing enough to provide expertise in cloud services and help businesses realise the benefits, placing itself in increasing danger from direct competitors.

According to the research, 71 percent of companies have a mixed purchasing model; buying some infrastructure products through the channel and some direct from vendors or cloud service providers. However, 38 percent of companies intend to decrease the amount of money they spend with the channel on IT infrastructure and are looking to make use of more direct services.

The company said this trend was particularly prominent in the retail, distribution and transport sector where over half said that they intended to decrease spending with the channel to take more direct offerings. Only nine percent of companies said they have already cut out the channel and instead use cloud service providers.

On the other hand, 86 percent would buy some cloud services through the channel if it provided the services they need. In fact, 31percent of companies said they are frustrated that their resellers do not have cloud services available to sell to them now.

This is particularly keenly felt within the manufacturing sector, where 42 percent of businesses are feeling frustrated by the lack of cloud services being offered by the channel.

“It is clear that there is a growing appetite for cloud services and a good opportunity for the channel to make profits,” Davies said.

“The fact that 86 percent of companies would buy some form of cloud services from the channel if they provided them is very telling, showing that the channel is already missing opportunities and driving business away.”


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