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Using Flexible Capacity to Lower and Manage On-Premises TCO


In the ninth part of this hybrid cloud economics blog series, I discussed how you can use cloud-bursting to manage TCO in a hybrid cloud environment. In this tenth part of the series, I will talk about the benefits of a Flexible Capacity service.

As noted in an earlier blog, a recent 451 Research report highlights capacity as one of the important factors when comparing public and private cloud TCO. Capacity is closely linked to the economic benefit of agility because the ability to rapidly provision systems to meet a business need can mean the difference between being first to market and letting the competition get there first. However, relying entirely on private cloud resources to provide additional capacity is likely to result in higher fixed costs, as the private cloud will need to be “overprovisioned” ahead of time (and likely after the need for the additional capacity has passed, as well).

A classic real-world example is that of online retail where the ability to deploy additional capacity can be essential in supporting customers when demand surges during peak periods, such as the time between Black Friday and Christmas. If you’re prepared, your customers are happy. If you run out of critical capacity, the result could have lasting negative consequences, such as unhappy customers and missed revenue targets. Or–as a healthcare provider–if you don’t (or can’t) plan the precise amount of storage you’ll need next year for patient records and images, patient care could be impacted.

One option is turn to the public cloud to get the extra capacity. Another option is to buy capacity in advance of the need by making a large capital outlay of servers, storage, networking, and associated software. However, as we’ve noted, this option locks in costs, even if the demand falls off and the capacity is no longer needed. Now, I’ll take a look at a third option that gives you the flexibility of a public cloud, but with the benefits for a private cloud. We call this option “Flexible Capacity”.

How Flexible Capacity gives you the best of both worlds

Flexible Capacity is a service that provides all the benefits of an on-premises private cloud, e.g., security, while providing the benefits of a public cloud in terms of agility and cost control. In essence, we can work with customers to lower and control cost by reducing the need to over provisioning for on-premises IT.

Here, enough capacity is deployed in the data center to meet any likely increase in demand, even if that increase is short-term in nature. You won’t have to guess whether you can take on the next project, business opportunity, or new customer. Working with your IT team and the business, we forecast your base computing requirements as a minimum capacity, then forecast peak capacity requirements and growth, creating a local buffer of compute resources that are installed and ready for use. You don’t pay for this until you use it, above a minimum commitment.

Capacity usage is metered based on per server, per gigabyte of storage, per network port, or per Virtual Machine, per Core. The Flexible Capacity service can even include software and certain Microsoft Azure services in the monthly invoice. If you use more, the monthly bill goes up; if you return capacity to the “buffer”, your monthly bill decreases. If you consume too much of your “buffer”, your HPE team will work with you to assess the need. A simple change order will replenish the buffer. You avoid long, drawn out procurement processes, and you should never run out of capacity.

The bottom line

The impact on cloud economics and overall TCO compared to the traditional ownership model is significant. If customers overprovision by as much as 60 percent with their purchase cycles to be ready for growth, that money is pure cost savings, as overprovisioning drops to zero. Moreover, with an on-premises cloud, there isn’t the constraint of finite capacity that could limit success. 

With HPE Flexible Capacity, the impacts on cash flow and TCO are significant, predictable, and measurable. Rather than committing sizeable capital to a project, our Flexible Capacity customers manage an envelope of monthly IT cash flows. They know exactly what IT will cost for the next urgent project and can provide a cash flow projection that often shows much more realistic and positive ROI than is the case for a project requiring significant additional IT capacity.

In short, HPE Flexible Capacity is an alternative approach to relying on public cloud bursting–one that is gaining traction. If you are trying to achieve the agility of a public cloud with the added benefits of a private cloud, you can learn more about HPE Flexible Capacity at  In our next blog, I’ll take a closer look at the Flexible Capacity cost equation comparison between on premises and public cloud.

Lastly, I wanted to mention, HPE Discover is coming up in London. On Tuesday, November 29 at 11:30 am in Theater 7, I encourage you to come hear Andy DeBernardis deliver session T11799 on “Cloud Economics, Calculating and Comparing the Costs of Private vs Public Cloud in a Hybrid World.” And find out more about Flexible Capacity at Demo333.

Read the next blog in the Cloud Economics 101 series: A Closer Look at Comparing the Economic Impact of a Flexible Capacity Service

About the Author


I am the Chief Operating Officer and Vice President of the Hewlett Packard Enterprise cloud business unit, driving all aspects of operations and performance. I am a leader in HPE’s Cloud Economics campaign. I have also held various leadership roles in General Electric and Electronic Data Systems, and have a Master’s degree in Business Administration, Analytical Finance and Strategic Marketing from the Indian School of Business, Hyderabad in India. I am also Six Sigma Black Belt certified. Follow me on Twitter @lalitsingh17

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